Odisha to borrow Rs 12K crore from CAMPA and OMBADC funds

BHUBANESWAR: The Odisha government is planning to borrow up to Rs 12,000 crore from the Odisha Mineral Bearing Areas Development Corporation (OMBADC) and the Compensatory Afforestation (CAMPA) funds, in the face of fast depleting revenue.

Both these funds sit in Odisha’s cash accounts with the Reserve Bank of India and are largely unutilised. “Despite the fact that we have a huge cash balance with the RBI, we were going back to the RBI for permission to borrow from the market for our capital expenditure. This was an anomaly,” state finance secretary Ashok Meena told ET.

The government is in the process of seeking approval of the auditor general as well as former supreme court judge Ananga Kumar Patnaik, who heads the oversight committee supervising OMBADC’s expenditures.

The Rs 17,000 crore fund was born when the Supreme Court on August 2, 2017 levied a compensation charge on miners for violations of environmental laws. The state was directed to spend the funds in districts affected by mining activities. Much of this money lies unspent, as does the huge amount iron ore-rich districts such as Keonjhar earn as tax levied towards district mineral funds.

The finance department plans to borrow 60% of both CAMPA and OMBADC’s unutilised funds, on a need basis, and pay both the same interest that they get from the RBI. This would save the state about 1-1.5 percentage point additional interest it would have paid had it opted for more expensive market borrowings.

The move was initiated before Covid-19 was declared a pandemic and would come to the state’s aid at a critical juncture. Its revenue so far in April, from both tax and non-tax sources, has fallen a steep 70% from a year earlier. Without the loans, the state is only earning enough to meet half its fixed costs such as salary pension and interest payments, according to officials of the finance department.

The borrowings from these mining-related mitigating and environment funds, and Rs 3,000 crore short-term borrowing from the market at an interest of 6%, along with the present rate of receipts will help the state tied over another eight to nine months. With this, the state will also not be going to the market and won’t be crowding out the available capital.

Earlier, the Centre had allowed states to tap into 30% of unutilised district mineral funds for use in the fight against Covid-19. Odisha may, if required, later also push its cash-rich PSUs to increase expenditure, to help boost economic activity.

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