Chapter-5 1 Economics of Odisha Odisha Economic Survey 2020-21 February 2021 Planning and Convergence Department Directorate of Economics and Statistics Government of Odisha © Copyright 2021 Government of Odisha Published by Planning and Convergence Department Government of Odisha This Report does not necessarily reflect the views of the Government of Odisha All Rights Reserved. No part of this publication may be reproduced, stored or transmitted in any form or by any means without the prior permission of the Government of Odisha ............................................. Price : `100 Prepared by Planning and Convergence Department Government of Odisha, Bhubaneswar Printed at: Odisha Government Press, Madhupatna, Cuttack FOREWORD Suresh Chandra Mahapatra, IAS Chief Secretary Government of Odisha Odisha Economic Survey, 2020-21 presents the challenges, opportunities and performance of different sectors of the State’s economy. The State endeavours to achieve sustainable and inclusive growth, remove regional disparity, reduce poverty and put in place an effective public service delivery mechanism and fast track infrastructure development. The survey provides an insight into the developmental efforts of the state government to fulfill the rising aspirations of the people for improvement in the quality of their life and realize their dream of a resurgent Odisha. The economy of Odisha has grown at 7.1 percent per annum during the period 2012-13 to 2019- 20 (at constant 2011-12 basic prices) and expected to contract by 4.92 percent in 2020-21 as per the Advance Estimates. The decline in the growth rate between 2019-20 and 2020-21 (Advance Estimate) is attributed to the impact of Covid-19. The measures taken by the State Government to fight Covid-19 has brought about sharp rise in public expenditure on health care to protect lives. Various social protection measures were also taken to save livelihoods. Quick response of the State Government in effectively tackling the pandemic, resulting in low mortality rate, in spite of heavy caseload has set an example for the rest of the country. Proper arrangements were made for provision of free food, shelter, medicine and transportation of the large number of home bound migrant labour force during the Covid-19 period. The State administration has set an example for others on this score. The Economic Survey Report provides a snapshot of the State’s Economy, composition of Gross State Domestic Product, developments in agriculture and allied sector, incidence of poverty and poverty alleviation measures, rural development, development in mining and industries, services sector and its growth prospects, social sector development including social protection measures, education, health and nutrition, governance reform and the state finances. In view of the unprecedented situation arising out of the global pandemic in early part of 2020, the survey has rightly made an attempt to present the impact of Covid-19 on various sectors of the State’s economy highlighting the response of the State Government in effectively fighting the pandemic and has also given out expectations of sharp recovery and growth. The survey concludes with overall development approach of the State Government and outlook for the future. Time series data on important socio-economic indicators has been appended to the Report which will be of use to researchers, policy planners, academicians and members of the civil society. I compliment the efforts of Planning and Convergence Department and Directorate of Economics and Statistics, Odisha in bringing out Odisha Economic Survey, 2020-21 and wish the publication all success. (S.C. Mahapatra) PREFACE Pradeep Jena, IAS Development Commissioner-cum-Additional Chief Secretary Government of Odisha Odisha Economic Survey 2020-21 presents a comprehensive review of the performance and structural changes in major sectors of the economy over the years along with emerging issues and challenges and the developmental strategies of the State Government. It identifies the major growth drivers of the State’s economy through precise analysis of the development process. The report also embodies the fiscal performance of the State and chronicles various policy interventions with an outlook for the future. Covid-19 pandemic has severely impacted the economies all over the globe and economic contraction is experienced by most of the economies. It is estimated that Indian economy will contract by 7.7% during the year 2020-21 as per the Advanced Estimates released by Government of India. Odisha’s economy is expected to have a relatively lower contraction of 4.9% during 2020-21. The Agriculture sector of the State is estimated to contract by 6.54% in comparison to a positive growth of 3.40% at National level. But the industry sector and services sector contracted by 8.83% and 3.18% in Odisha as compared to 9.57% and 8.77% contraction at National level during 2020-21. The stringent measures imposed by the State Government to contain the spread of Covid-19 in earlier phases and the impact of severe cyclone Amphan had greater impact on Rabi crops. Similarly, floods in some parts of the State and long dry spells and pest attack on Kharif paddy was accompanied with contraction of livestock sub-sector by 32.97%. These are the possible reasons for the downward trend in agriculture sector. The per-capita income of Odisha in 2020-21 is estimated at Rs. 1,02,156 in comparison to Rs. 1,04,566/- in 2019-20. The per-capita income of the State is expected to decline by 2.30% as against the decline of 5.41% at national level. In spite of devastating impact of Covid-19, the sectoral composition of the State follows almost the similar pattern like previous year. The agricultural sector, industry sector and services sectors continue to contribute 21.27%, 36.26% and 42.47% to the Gross State Value Added (GSVA) as against the respective shares of 21.38%, 37.92% and 40.70% during 2019-20. The annual average growth rate of state economy during 2012-13 to 2020-21 is also estimated at 5.72% against the National average of 5.01%. This points to the fact that the economic base of the state has become stable. It is capable of managing fiscal risks and continues on the path of prudent fiscal management with desired thrust on all round socio economic development for inclusive growth. Odisha Economic Survey, 2020-21 comprise of ten analytical chapters. The 1st one presents a broad outlook of macro economy of Odisha. The 2nd Chapter on Agriculture, Rural Poverty and Development is a critical analysis of the scenario and performance of the Agriculture Sector along with new initiatives. An in-depth analysis of development of industry and mineral resources and its role in propelling the economy is neatly presented in Chapter-3. Urban development is the challenge of the time. A profile of urbanization and the effort of State in meeting the requirement of housing, power, water, sanitation, transport etc. have been dealt in Chapter-4. Chapter-5 analyses the growth of service sector and its components, which is the key driver of the economy. Achievement on health and human development, water supply and sanitation, welfare of women and children, elderly, disabled, and ST & SC communities have been highlighted in Chapter-6. A snapshot of the governance reforms and institution building is dealt in Chapter-7. The performance of major fiscal indicators, receipts, revenue, liabilities and etc. is lucidly analysed in Chapter-8. The impact of Covid-19 in economy and responses of Government have been presented in Chapter-9. Lastly, development approach for Odisha has been synthesized. Economic Survey, 2020-21 is the combination of the collective effort of all Departments of the Government. Principal Secretary, Finance Department, Shri Ashok Kumar Meena and Secretaries of various Departments have provided valuable inputs for drafting of the Report. Officers and the staff of the Planning and Convergence Department and Directorate of Economics & Statistics have put up their best efforts in preparing the Odisha Economic Survey 2020-21. I hope the Economic Survey, 2020-21 will serve as a useful reference document for the economists, policy makers and all those who have an abiding interest on various aspects of the State’s economy. (Pradeep Jena) INTRODUCTION Ashok Meena, IAS Principal Secretary Government of Odisha Economy and Finances of the States are intertwined. Economic Survey sets the tone for the ensuing years Budget Estimates. Although it is not a part of the Budget documents, it provides the basic analysis and data on the State’s economy and income level to frame the Budget Estimates and provides the base for various fiscal indicators. Economic Survey, 2020-21 has been prepared during a very unusual time when the entire country is still grappling with the fight against Covid-19. The Survey provides an overview of the State’s Economy, dissection of various development sectors, current development strategies, governance and process reform measures undertaken across the State Government structure to improve public service delivery. The Survey also presents various facets of the public finances of the State, revenue resources and expenditure trends, major fiscal indicators, fiscal discipline and prudent financial management measures and its positive outcomes. The impact of Covid-19 on the State finances and the reforms in budget making process with a view to bring in more transparency, enhance credibility of fiscal policy, and the fiscal Risk Management and reporting exercise at par with international best practices have been highlighted. The Economic Survey, 2020-21 provides an insight to the economy and finances of the State and will receive wider attention. (Ashok Meena) ACKNOWLEDGEMENTS Debendra Kumar Jena, IAS (Retd.) OSD-cum-Special Secretary to Government Planning & Convergence Department Government of Odisha Odisha Economic Survey: 2020-21 is the culmination of the collective effort of all Departments of the State Government.