Odisha's capex challenges are part of a broader national trend, with 20 states utilising only 5.86% of their FY27 capex budgets in April-May, according to latest CAG data. Despite budgeted capex across these 20 states increasing from ₹9.29 trillion in FY26 to ₹10 trillion in FY27, absolute spending edged up by only about 1.7% in nominal terms. The second month showed signs of recovery, with states collectively spending close to ₹39,267 crore on capex in May 2026, about 9.5% higher than the ₹35,864 crore spent in May 2025, suggesting some momentum recovery after a notably sluggish April.
Odisha's capex utilisation of ₹44,457 crore against a budget outlay of ₹65,012 crore in 2025-26 places it among the weaker performers nationally. The state's ₹45,480 crore utilisation in 2024-25 against an outlay of ₹58,195 crore also lagged behind. However, recent data shows some improvement, with Maharashtra and Odisha both swinging into positive territory in May after recording net negative capex in April. Maharashtra spent close to ₹2,530 crore in May while Odisha booked nearly ₹2,425 crore, more than reversing their April performance.
The slow pace of capital expenditure has been attributed to inadequate human resources and technical personnel shortages across engineering departments. According to meeting minutes reviewed by Business Standard, the state had more than 94,485 vacant government posts across various departments as of February, with the School and Mass Education Department having the highest vacancies at 20,289, followed by 16,032 in the Home Department and 10,457 in the Health Department. Development Commissioner D K Singh has directed all engineering departments to prepare comprehensive five-year restructuring plans based on projected workloads and future infrastructure requirements, including ongoing projects, approved works and anticipated capital programmes over the next five years.
The government has planned significant restructuring across engineering departments and public sector undertakings. The Water Resources Department has been asked to restructure its major and medium irrigation wings as well as the minor irrigation wing, while examining reorganisation of its mechanical engineering cadre in consultation with the Works Department. The Works Department has been advised to prepare a restructuring proposal for Odisha Bridge and Construction Corporation (OBCC) Ltd covering both engineering and support staff. One of the most significant proposals under consideration is the creation of a unified engineering cadre across departments, with the Panchayati Raj and Drinking Water Department preparing a five-year restructuring roadmap for the water-supply sector.
Officials have acknowledged administrative bottlenecks arising from the growing practice of non-engineering departments transferring funds directly to Works and Rural Development departments for project execution. According to the meeting minutes, it has been decided that all funds relating to deposit works would henceforth be routed through the Treasury system, with non-engineering departments required to complete land acquisition and secure statutory clearances before seeking preparation of project estimates. The state has allocated nearly ₹50,000 crore under capital expenditure to engineering departments in 2026-27, apart from setting aside around ₹10,000 crore for implementation of key social-sector infrastructure projects in departments such as Health and Family Welfare, School and Mass Education, Higher Education and Odisha Lift Irrigation Corporation Ltd.
