Living under Fiscal Rules: Fiscal Management Response and Resource Allocation Choices for the State of Odisha
- Pratap Ranjan Jena
- May 2019
- National Institute of Public Finance and Policy (NIPFP)
- India
An assessment of the remarkable success story of State of Odisha in making fiscal correction after adopting fiscal rules and policy responses. The degree of correction was one of the highest among the Indian States. The paper highlights that while fiscal discipline improves the ability of the Government to prioritize among policy choices and improve operational management, strict imposition of self-restraint and large adjustments may lead to distortions. After a decade of controlled fiscal management, as the State has started opening up by expanding the public spending, the shrinking fiscal space, slow growth of internal revenue, and high dependence on Central funds present new challenges. The paper examines the institutional reforms in this context to address emerging fiscal architecture.
