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The debt level of Odisha is now within the stipulated limit and it is expected to increase by 4 per cent by the end of financial year 2026-27, according to the status paper published by the Odisha Finance department on public debt.

As per the report, the total outstanding public debt of the state as per the revised estimate for the financial year 2022-23 stood at Rs 97,037 crore, which is 12.7 per cent of the State's Gross Domestic Product (GSDP).

Over the next three years, total public debt is expected to increase to approximately 16.7 per cent of GSDP in 2026-27, which will be within the stipulated limit of 25 per cent.

The 15th Finance Commission and Odisha FRBM Act, 2005 prescribe for limiting the debt to GSDP ratio within 25 per cent. The current debt level of Odisha is within the stipulated debt limit. Besides, the debt stock is considerably lower than that of the Central government, which is 57 per cent of GDP as per the Union Budget.

This will be driven by fiscal deficit arising on account of higher capital spending in various programmes of the state government.

The government has expected that the total debt stock will increase to Rs 1,12,882 crore by the end of financial year 2023-24 and again it will go up to Rs 1.40 lakh crore in 2024-25, Rs 1.72 lakh crore by 2025-26 and rose to Rs 2.09 lakh crore by the end of 2026-27.

The Odisha government has not resorted to open market borrowing during 2022-23 because of funds from other low cost sources like the Odisha Mineral Bearing Areas Development Corporation (OMBADC) and Compensatory Afforestation Fund Management and Planning Authority (CAMPA).

The loan from these dedicated funds is available at interest rates 2 to 2.5 per cent
lower than the open market borrowing (OMB). The state government can borrow up to 60 percent of the surplus fund available in these funds.

The open market borrowing stood at Rs 24,058.07 crore. As per 2022-23 revised estimate, the share of open market borrowing in total debt of the state is around 24.8 per cent.

The share of the open market borrowing has gone down from 30 per cent in FY 2021-22 to 24.8 per cent in FY 2022-23 and is expected to decrease further in the coming financial year.

Similarly, the total loan guarantees (guarantee to State PSUs, Urban Local Bodies, Co-operative institutions) as on December 31, 2022 stood at Rs 5,134.91 crore which is 0.7 per cent of GSDP.

The guarantees do not constitute a part of the state government's loan, but in case of default by the state PSUs, the state government is liable to repay the loan.

The guaranteed loan as a percentage of revenue receipts has been reduced from 123.37 per cent in 2001-2002 to 6.3 per cent during 2022-23 against the ceiling of 80 per cent.

At present the future debt outlook of the state looks stable. If the debt will grow in the medium term, it will be within the sustainability limit. However, it also depends on the policy priorities of the state government, said an official.