Odisha plans engineering department overhaul as capex utilisation slows

The state is considering cadre reforms and restructuring engineering wings after manpower shortages hindered utilisation of one of India's largest capital expenditure allocations

Despite making one of the highest capital expenditure (capex) allocations in the country, the Odisha government has been facing a persistent shortage of manpower and technical capacity in its engineering departments, preventing full utilisation of development funds.

 

While capex utilisation stood at 78 per cent and 68.38 per cent in 2024-25 and 2025-26, respectively, Odisha has earmarked ₹72,100 crore towards capital outlay in the 2026-27 Budget against a total budget estimate of ₹3.1 trillion. The capex allocation is about 6.5 per cent of the state's gross state domestic product (GSDP), the highest in the country.

 

According to Budget data, the state could spend only ₹44,457 crore of the capital outlay of ₹65,012 crore in 2025-26, while capex utilisation in 2024-25 was ₹45,480 crore against an outlay of ₹58,195 crore. The capex allocation constitutes nearly 23 per cent of the total Budget outlay and about 40 per cent of the programme expenditure outlay for 2026-27.

 

The slow pace of capital expenditure came to the fore during a recent high-level meeting chaired by Development Commissioner D K Singh, where senior officials reviewed the institutional capacity of engineering departments responsible for implementing the state's ambitious infrastructure programme.

 

Senior officials attributed much of this shortfall to inadequate human resources, a shortage of technical personnel and limited execution capacity across engineering departments. "The utilisation of capital outlays generally remains in the range of 65-80 per cent in the state for the last three years, indicating a substantial gap between budgeted expenditure and actual spending," said a senior official who attended the meeting.

 

The state had more than 94,485 vacant government posts across various departments as of February. The highest number of vacancies, at 20,289, was in the School and Mass Education Department, followed by 16,032 in the Home Department and 10,457 in the Health Department.

 

During the Assembly session in February, Chief Minister Mohan Charan Majhi informed the House that the Higher Education Department had 5,826 vacancies, Panchayati Raj and Drinking Water 5,154, Fisheries and Animal Resources Development 4,154, Forest, Environment and Climate Change 3,589, Scheduled Tribes and Scheduled Castes Development 3,352, Agriculture and Farmers' Welfare 2,955, and Water Resources 2,724 vacant posts.

 

The shortage of required human resources has prompted the state government to undertake a comprehensive restructuring of engineering wings and public sector undertakings (PSUs) involved in infrastructure execution.

 

After reviewing capex utilisation and the manpower gap, Singh stressed the urgent need to strengthen engineering departments in terms of both manpower and technical expertise to ensure timely and efficient utilisation of public investment.

 

According to the minutes of the meeting (MoM) reviewed by Business Standard, all engineering departments have been directed to prepare comprehensive five-year restructuring plans based on projected workloads and future infrastructure requirements. The workload assessment will include ongoing projects, approved works and anticipated capital programmes over the next five years.

 

The government has also planned significant cadre reforms. The Water Resources Department has been asked to restructure its major and medium irrigation wings as well as the minor irrigation wing. It has also been advised to examine the reorganisation of its mechanical engineering cadre in consultation with the Works Department, while the Works Department has been advised to prepare a restructuring proposal for Odisha Bridge and Construction Corporation (OBCC) Ltd covering both engineering and support staff.

 

One of the most significant proposals under consideration is the creation of a unified engineering cadre across departments. The Panchayati Raj and Drinking Water Department (PR&DW) has been asked to prepare a five-year restructuring roadmap for the water-supply sector in consultation with the Housing and Urban Development (H&UD) Department.

 

Officials also acknowledged administrative bottlenecks arising from the growing practice of non-engineering departments transferring funds directly to the Works and Rural Development departments for project execution. "It has been decided that all funds relating to deposit works would henceforth be routed through the Treasury system. Non-engineering departments will also be required to complete land acquisition and secure statutory clearances before seeking preparation of project estimates," the MoM stated.

 

Moreover, the state has allocated nearly ₹50,000 crore under capital expenditure to engineering departments in 2026-27, apart from setting aside around ₹10,000 crore for implementation of key social-sector infrastructure projects in departments such as Health and Family Welfare, School and Mass Education, Higher Education and Odisha Lift Irrigation Corporation Ltd (OLIC). "The engineering departments need to be strengthened for better utilisation of funds," the official added. 

Course correction

• FY26 capex utilisation stood at 68.38% with ₹44,457 crore spent of ₹65,012 crore outlay
• Nearly ₹50,000 crore earmarked for FY27 capital expenditure in engineering departments
• Officials attribute shortfall to staff shortages and limited execution capacity 
• To address the issue, the state asked engineering departments to draft five-year restructuring plans
• The state is also considering a unified engineering cadre across departments