impact on state finances as the outstanding liability of the state dropped from 33. 8 per cent of gsdp in march 2008 to 21. 1 per cent in march 2012 which is expected to further go down to 19. 6 per cent by march 2013. the reduction in liabilities significantly reduced the debt serving cost, thus opening up the space for higher capital outlays and social expenditure. given the developmental challenge to enhance social and economic infrastructure, it will be desirable for the state to step up mobilisation of its own tax revenues to scale up capital outlays without resorting to borrowings ( table 3 ). table 3 fiscal position of odisha ( as a per cent to gsdp ) note : minus ( - ) sign indicates surplus. source : budget documents of the state government. banking developments let me now turn to development of banking in the state. the formal financial system in india is dominated by banks and same is the case with odisha. the average population per bank branch in odisha declined from 16, 800 in march 2003 to 13, 800 in march 2011 which is bis central bankers ’ speeches somewhat comparable to the national average figure of 13, 400 ( chart 8 ). during this period the number of branches of commercial bank has increased from 2, 240 to 3, 234. apart from the branch network and its population coverage, another major indicator of banking development is the credit - deposit ( cd ) ratio. in the turn of the last decade in 2001, the cd ratio of odisha at 42 per cent was way below the national average of 54 per cent. as the state experienced rapid economic growth, the cd ratio not only accelerated but also exceeded the national average and peaked at 79 per cent in 2005 – 06. subsequently the cd ratio moderated, particularly after 2007 – 08 when growth slowed. as at end - march 2011, odisha ’ s cd ratio at 56 per cent remained significantly below the national average of 76 per cent ( chart 9 ). another indicator of credit penetration is credit to gsdp ratio. this ratio for odisha was also relatively low highlighting the scope for further development of banking in the state ( chart 10 ). bis central bankers ’ speeches not only that the c - d ratio has declined, the inter - regional inequality among districts in credit deployment has also increased in recent years underscoring the need for focused attention to deployment of comparatively less developed districts ( chart 11 ). chattopadhyay ( 2011 ) calculated a composite index of financial inclusion which showed that against the national

average rate of 7. 6 per cent, in line with the national level ( chart 1 ). bis central bankers ’ speeches in this growth dynamics, three important aspects stand out. first, in the earlier phase of 2003 – 08 growth was mainly led by industry. second, in the latter phase of 2009 – 12 growth was driven by the services sector. third, in both the phases agricultural growth remained low and volatile ( chart 2 ). at a more disaggregated level, the growth acceleration during the decade of 2002 – 12 was led by registered manufacturing, construction, mining & quarrying and trade & hotels ( chart 3 ). the varying growth trends are reflected in the compositional shift among sectors in the gsdp : the share of agriculture declined steadily ; the share of industry first rose and then moderated and the share of services first declined and then rose. in this structural transformation of the odisha economy, which is broadly consistent with the trend in the national economy, the rise in the share of industry is noteworthy ( chart 4 ). bis central bankers ’ speeches significantly, the initial growth spurt in odisha raised its gsdp share in national gdp from 2. 3 per cent in 2002 – 03 to 2. 7 per cent in 2008 – 09. as growth in gsdp slowed and converged to the national level, the share has since declined but remained steady around 2. 6 per cent after 2008 – 09. however, the most discerning impact can be seen in the rise of real ( at 2004 – 05 prices ) per capita nsdp from ₹13, 923 in 2002 – 03 to ₹25, 708 in 2010 – 11. this has helped improve odisha ’ s rank in terms of per capita income among the states from the bottom 3rd position in 2002 – 03 to 7th in 2010 – 11. notwithstanding this progress, odisha ’ s per capital income is still lower than the national average ( chart 5 ). while the economy is transferring towards industry and services, the labour force remains concentrated in agriculture. as against the national average of around 52 per cent of labour share in agriculture & forestry in 2010 – 11, the state has a much higher labour share of bis central bankers ’ speeches 59 per cent. furthermore, the share of manufacturing sector in the labour force remains lower compared to the national average despite the recent pick up in manufacturing activity ( table 1 ). moreover, labour force participation rate at around 50 per cent in 2010 – 11 was lower than the labour participation rate