Three decades of major economic reforms in India showcase the structural and institutional paradigm shifts, and thereby results witnessed higher growth, efficiency, competition, and making choices available across different sectors. As the country embarks on Viksit Bharath@2027, many pandits now turn to the regional economies of States to leverage their capacity by empowering institutional reforms towards the achievements of aspirations of people and empowering cities as focal points for new growth engines. It’s also high time for timely implementation of State level institutional and decentralisation reforms for the next level of higher growth in India.

The Odisha Budget for 2025-26 is a case in point where the State aspires to become Samruddha or Viksit Odisha by 2036 which is in alignment with national goals. By 2036, Odisha aims to become a USD 500 Billion economy and a USD 1.5 Trillion economy by 2047. This is not an easy task in any yardstick because the State has quite low urbanisation and aims to increase it to 22% by 2030 from 19% at present. However, Case studies by experts highlighted that “process reforms in Odisha reduced the number of steps needed to access funds” by a programme implementing agencies at ground level and hence, the state has high optimism.

During the last three years the Odisha economy grew by 7.2% GSDP in 2024-25, 9.6% GSDP in 2023-24, 6% GSDP in 2022-23, and achieved average growth of 7.6% GSDP.  The State has allocated 22.4% (6.1% GSDP) of the total budget outlay to capital expenditures which will boost the State economy. However, the State is still predominantly agriculture-driven and catching up fast in industries and services sector growth. In 2024-25, agriculture, manufacturing, and services sectors are estimated to contribute 28%, 35%, and 37% of Odisha’s economy, respectively (at current prices).

The State’s fiscal parameters have been bolstered with an uptick in recent times with many institutional reforms. The fiscal deficit of the State is estimated at Rs 34,200 crore for 2025-26, 3.2% of GSDP which is higher than the revised estimate of 3.1% GSDP for 2024-25. In 2024-25, the revised fiscal deficit of the State is 3.1% of GSDP which is lower than the budgeted 3.5% of GSDP. Also, it is estimated that the State aims to achieve a revenue surplus of Rs 31,800 crore, 3% of GSDP in 2025-26, as compared to a revenue surplus of 2.9% of GSDP in 2024-25 (RE).

Odisha has abundant mineral resources, fertile agricultural land, and a 480 km-long coastline, with uniquely positioned to leverage its urban centres as growth engine development as a key driver. By population size, the state is comparable to countries like Argentina, Spain, and Uganda. What the State economies have to do is to find out the complementarity of central government support on top of governance and urban growth centres at a decentralised level of effective governance on the ground to make Samruddha Odisha realistic. 

The State budget for 2025-26 has emphasised many emerging sectors as transformative and focusing on urban centres for the establishment of new industries both manufacturing and services sectors supported by state-of-the-art infrastructure facilities by empowering the Tier–II and Tier–III cities in the State. Besides, the State is also giving impetus to social infrastructure facilities including “Skilled in Odisha” a global brand name by “Skilling for the World”. The State is also empowering women as one of key drivers of development and inclusion in the process of growth. In 2025-26, the State has allocated 72% of the total expenditure for social sector development and 1% less than the previous year.

The State’s pragmatic steps to bring a future-ready industrial landscape are aimed at a comprehensive range of incentives being offered to Semiconductor, Compound Semiconductor units, and Display Fabs under the Semiconductor sector which makes Odisha the fourth state in the country to offer dedicated incentives to semiconductor units. The Budget announced that the State would collaborate with IIT, Madras for developing a comprehensive Odisha Maritime Perspective Plan to develop new ports at Inchuri and Bahuda. Mahanadi Riverine Port for Ship repair and building. Further, Odisha is poised to become a leading producer of Green Hydrogen/Green Ammonia for the decarbonisation of industries and the heavy transport sector for which the State is collaborating with IIT Bhubaneswar to establish a Testing-cum-Research facility for Green Hydrogen.

Odisha has announced several transformative infrastructure projects that will not only strengthen Odisha’s logistics network but also fuel industrial expansion, trade, and employment, enabling for realization of the Samruddha or Viksit Odisha by 2036. The major initiatives announced in the Odisha Budget includes: comprehensive plan seeks to transform Odisha’s urban landscape into five engines of growth, powered by innovation, sustainability, and inclusivity, a Comprehensive City Road Decongestion Plan for Bhubaneswar city on 322 hectares in first phase and 3600 hectares in second phase with focus on service industry, IT, and R&D, establish a metropolitan development region of about 7000 Sq Km encompassing Bhubaneswar, Khurda, Jatni, Cuttack, Paradip and Puri, 2 key tourism development projects at Hirakud and Satkosia, improvement of 3000 Km of Road and development of Berhampur-Jeypore 6 lane Green Field Expressway, a ring road would be built in Barbil, a Greenfield Airport at Paradip for enabling to commence direct flight services to ten new domestic and three new international destinations making significantly enhanced air connectivity, new railway projects worth Rs.73,000 crore, an industrial corridor connecting Paradip– Choudwar – Dhenkanal – Angul -Sambalpur – Jharsuguda – Sundergarh –Rourkela region for seamless multi-modal transport services and develop Gopalpur and Paradeep as Blue Flag Beach.

As highlighted in the State Budget “these projects mark a significant step toward building a future-ready Odisha, ensuring seamless mobility, robust infrastructure, and sustainable urban growth”. Also, the vision of Samruddha Odisha by 2036 is achievable provided it is imperative that the State needs to ensure the efforts to maintain financial stability at the State level and consistent efforts to bring institutional reforms at the city corporations level for truly making it a growth center. Moreover, the State needs to position itself strategically by enhancing its capacity building at the institutional level for service delivery on time as well as propelling the potential of the State onto a fast-track growth trajectory.

The author is an Senior Economist and he was Former Consultant to Union Planning Commission (now NITI AAYOG), Government of India, New Delhi. He is Founder Chairman, AgaPuram Policy Research Centre

Views expressed by the authors are personal and need not reflect or represent the views of the AgaPuram Policy Research Centre.