Odisha lags in spending despite record budget, capex remains a concern

Despite a record Rs 3.1 trillion budget, Odisha's spending remains uneven, with subdued capital expenditure and several departments lagging in fund utilisation

Even as Odisha presented a record Rs 3.1 trillion budget for 2026-27, concerns persist over its ability to effectively utilise allocated funds, with expenditure levels in the current financial year trailing last year’s performance and several key departments lagging behind.

 

According to official data, total expenditure up to March 16 stood at Rs 2,06,368 crore, accounting for 72 per cent of the budget estimate, including supplementary provisions. Chief Minister Mohan Charan Majhi had presented a general budget of Rs 2.9 lakh crore for 2025-26.

 

The spending this time marked a decline from nearly 80 per cent utilisation recorded in 2024-25, when the state government had attributed slower spending to disruptions caused by simultaneous Assembly and general elections in 2024.

 

 

The programme expenditure this fiscal reached Rs 1,29,761 crore, accounting for nearly 70 per cent of the allocation and registering a 7 per cent increase in absolute terms over the previous year. However, capital expenditure, a crucial driver of infrastructure creation and economic growth, remained subdued at Rs 37,472 crore, or just 59 per cent till mid-March of the budgeted outlay of Rs 65,012 crore.

 

Official sources said more than 10 out of 44 departments are failing to utilise even 60 per cent of their allocated funds. Departments such as Sports and Youth Services have reported particularly low utilisation at 22.68 per cent, largely due to delays in execution of major infrastructure projects like ‘Development of Sports Infrastructure’ by executing agencies.

 

The MSME department has spent only 37.38 per cent of its allocation, while the Home department stands at 45.78 per cent. Similarly, the Industries department has utilised 49.27 per cent and has been asked to push spending to 70 per cent by March-end.

 

Even as some departments have performed relatively better, the expenditure pattern remains uneven. While the Rural Development department has reached 75.22 per cent, the Energy department has been advised to review PSU performance and consider restructuring, with a target of over 85 per cent utilisation.

 

In the Panchayati Raj and Drinking Water department, the expenditure stood at around 47 per cent and officials have been directed to ensure full utilisation of funds under state schemes like BASUDHA and take the spending level to at least 60 per cent by the end of the fiscal. The overall expenditure in disaster management was only 13 per cent.

 

In social sectors, performance has been mixed. The Health and Family Welfare department has achieved over 82 per cent utilisation under state schemes, while Mission Shakti has reported over 93 per cent spending. However, centrally sponsored components continue to lag in departments like Higher Education, where utilisation is as low as 10.37 per cent. The School and Mass Education department has recorded 66.28 per cent spending under state schemes and 50.41 per cent under centrally sponsored schemes.

 

Meanwhile, revenue receipts stood at Rs 1,82,741 crore as of March 19, indicating that mobilisation efforts will also need to be accelerated to meet annual targets. As less than a week is left in the financial year, nearly one-third of the allocated funds remain unutilised.

 

At a recent review meeting, Chief Secretary Anu Garg expressed concern over the slow pace of expenditure and directed all departments to take expeditious steps to ensure proper and timely utilisation of budgeted provisions. The Finance department has also stepped up monitoring, including directing audit scrutiny in departments such as Odia Language, Literature and Culture to assess scheme-wise fund utilisation.

 

Officials attributed the slowdown to multiple factors, including delays in project approvals, lengthy tendering and procurement processes, large-scale vacancies, and disruptions caused by the monsoon. Delays in the release of central funds have further slowed implementation, particularly in centrally sponsored schemes. In infrastructure-heavy sectors, execution bottlenecks by implementing agencies have compounded the problem.

 

Economists and former bureaucrats warned that continued under-utilisation, particularly in capital expenditure, could dampen the state’s growth trajectory. “The government must identify the bottlenecks and streamline fund disbursement to ensure that projects are implemented as planned. Officials, instead of focusing on meetings and reviews, should ideally stress effective utilisation of public money,” said former chief secretary Sahadev Sahoo. He cautioned that delays in rural infrastructure and social sector spending could affect employment generation and welfare delivery.