With the economy set to contract due to Covid-19, the State Government is likely to face a shortfall of Rs 25,000 crore on total revenue receipt during 2020-21 fiscal.

Financial advisors are now busy working out ways and means as to how to meet the shortfall so that allocation for various development sectors would be made available.

While the State’s resources heavily depend on Central taxes, it is apprehended that nearly Rs 18,000 crore would be the shortfall from this source during 2020-21. The Central transfer includes share in Central taxes and grants; and due to the Covid impact, the economy is set to contract at national and State levels. It is apprehended that both the share in Central taxes and the grants would go down as tax collection has been affected due to the pandemic at the national level.

As per the Budget Estimate, total Central transfer to the State was estimated at Rs 68,300 crore, out of which share in Central taxes was Rs 36,300 crore and grants was pegged at Rs 32,000 crore. By December 31, the State received Rs 33,872 crore, out of which the share in Central taxes was Rs 17,203 crore and grants amounted to Rs 16,669 crore. So, the total Central transfer was 19.5% less as compared to 2019-20 fiscal.

Looking at the trend of last nine months, officials expect that in all likeliness Rs 16,700 crore would be available from the Central Government; and in total, Rs 50,752 crore is likely to be received by March 31, 2021. So, Rs 17,728 crore would be less from the Central kitty as per the Budget Estimate. Secondly, there would also be a shortfall in the State’s own revenue sources as the economy has contracted.A total own revenue was estimated at Rs 56,000 crore; and by December 31, the collection on this count was Rs 34,051 crore. In next months, this receipt is likely to be Rs 15,405 crore. So, the total own revenue receipt would be Rs 49,500 crore, it is estimated.

And it is not known how to meet these shortfalls as there is high requirement of spending from health and livelihood sector for Covid-19 response.

Certainly, the State would opt for more market borrowing to meet the balance requirement. As on date, the State has a debt stock of Rs 1.01,000 lakh crore, which is likely to go up more by March 31, 2021. However, Odisha has more fiscal flexibility to go for more borrowing as the State is well within its FRBM limit and its financial prudence has been well-accepted.

Secondly, the Centre has allowed an additional 2% fiscal deficit for 2020-21 over and above the normal limit allowed under the FRBM Act. However, a conscious call has to be taken on the quantum of fiscal deficit as it adds to the State’s debt stock, officials say.