This report assesses the ongoing transition in Orissa. It examines how and why the successes were achieved. It attempts to outline the dimensions of the challenge ahead, as Orissa marches forward into the second phase of policy and institutional reforms, building on its improved fiscal position to deliver rapid and inclusive growth. It highlights key issues and binding or soon-to-be binding constraints. The concluding section identifies priorities for public expenditure and public policy outcomes in the immediate, medium-term, and long-term future. The report is intended as a contribution to the public debate and consultation initiated by Government of Orissa on the state's long-term vision and development strategy until 2020. The first two chapters focus respectively on economic growth performance and fiscal performance during the past 5-6 years. The subsequent three chapters focus respectively on key aspects of the outstanding challenge facing the state, namely: infrastructure, human development, and public accountability for service delivery. The final chapter summarizes the main findings and recommendations and poses considerations about priorities and sequencing.