[India] Orissa wishlist for poverty relief is long

From The Financial Express

The wish list is long, the expectations high, for Orissa, with the central Budget round the corner.

Saddled with a huge loan burden and limited scope for resource mobilisation, Orissa is in no position to pull its 50% below the poverty line (BPL) population into the national mainstream. And, therefore, looks at the Centre to bail it out.

The Orissa government had presented a memorandum to the Centre seeking a Rs 10,096 crore special financial package, but no decision has been taken by the Centre so far.

“We hope Mr Chidambaram announces a special financial package for Orissa in his Budget 2006-07,” says state finance minister Prafulla Chandra Ghadei. Mr Ghadei’s confidence stems from the fact that Mr Chidambaram had announced a Rs 3,500 crore special package for Bihar in his previous Budget. “They have given such packages to Punjab, Jammu & Kashmir and North-Eastern states, why not Orissa, one of the poorest states in the country,” wonders Mr Ghadei.

Mr Ghadei has been quite disturbed for the past few years, as the state has not been getting its share in central taxes as projected. The shortfall amounts to a staggering Rs 614.15 crore estimate for the period 2000-05.

“The union finance minister should come out with a mechanism for compensating poor states like Orissa, as they are heavily dependent on their shares from central taxes,” proposes Mr Ghadei. Asserting that the state has proved its efficiency by collecting more taxes than projected by the Eleventh Finance Commission (EFC), he argued that the state should not be left to suffer for the Centre’s inefficiency in collection of taxes.

The state finance minister also suggested that some of the service sectors be handed over to the states for collection of service taxes.

Orissa, having suffered huge tax losses due to branch transfer of stocks by many manufacturers, expects the Budget to spell out the levying of transition tax on such goods. It is a disturbing fact that the branch transfer of stocks by central-sector Nalco and Sail’s Rourkela Steel Plant, as well as Hindalco has increased in recent years. Branch transfer by Nalco, at 48.18% last year, touched almost 50% during the first nine months of 2005-06. This led to negative growth in the state’s Central Sales Tax (CST) collection. “Chief minister Naveen Patnaik has taken up the matter with the union finance minister,” says state special secretary, finance, PK Mishra.

Another expectation is a special project. “The union finance minister had gifted a Rs 100 crore special project—drinking water for Chennai—for his home city in his last Budget. Mr Chidambaram will hopefully announce a similar big-ticket special project for Orissa,” says a senior state official. There is hope for a long-pending demand for a coastal highway, to serve as an embankment and a marine drive for tourists, as well as a road network connecting economically important coastal districts.

The state expects a special fund for development of infrastructure—roads, railways, ports, and water supply in the state. “High national growth rates can not be sustained unless backward states like Orissa are pulled into the development zone,” says Sarit Rout of CYSD, an Orissa-based development sector NGO.