Budget approval paves way for fiscal, banking reforms in JK

Srinagar, Aug 9: The Parliament approved the budget of Jammu & Kashmir for 2024-25 with provision of Rs. 1,18,390 crore. While Lok Sabha passed the Appropriation Bill on Tuesday, Rajya Sabha approved it on Wednesday. This budget provides for revenue expenditure of Rs. 81,486 crore and capital expenditure of Rs. 36,904 crore.
This outlay surpasses the pre-actuals of the financial year 2023-24 by Rs. 30,889 crore. This jump has been possible thanks to the special financial support agreed by the Central Government. This package was necessitated due to the persistent under recoveries in power sector due to high ATC losses and low tariff in Jammu and Kashmir. The UT government had incurred off-budget borrowings of about Rs. 28,000 crore to clear the power sector dues which had piled up over the last several years.
To address these off-budget borrowings, Finance Department had started exercise since the last one year to bring them on the budget books. A detailed analysis of the UT’s fiscal situation was carried out to address the legacy challenges which include high staff strength, low revenue base, and high debt load. In this direction, the UT government increased its own revenues to over Rs. 20,362 crore in the year 2023-24 through improved GST return compliance, dealer registration, and transparent excise auctions. The UT government’s efforts to undertake metering and improve collection efficiency enhanced the non-tax revenues from Rs 5,148 crore in 2022-23 to Rs 6,500 crore in 2023-24.Administrative departments also intensified efforts and stepped up receipt of CSS funds from Rs 6,400 crore in 2022-23 to Rs 10,300 crore in 2023-24.
During 2023-24, the UT government also stringently enforced borrowing limits and curtailed the culture of overdraft and Hundis. With close monitoring of public debt, the UT government was successful in tapering down the off-Budget borrowings. The government also restrained the non-priority expenditure through austerity measures and biometric verification of beneficiaries. For the first time in 77 years, UT contributed to the contingency funds created by RBI.
Lieutenant Governor, Manoj Sinha, Chief Secretary, Atal Dulloo and Principal Secretary Finance, Santosh Vaidya led the UT’s efforts in this direction. Crucial meetings were held in June and July 2024 in Ministry of Home Affairs and Ministry of Finance to review the fiscal performance of the UT Government. Union Home Minister and Union Finance Minister personally reviewed the fiscal management of the UT Government.
Considering the challenges faced as also the reforms undertaken by the UT government, the Central Government has approved the special financial support of Rs.17,000 crore for Jammu and Kashmir. As a result of this Rs. 17,000 crore of special package, the fiscal deficit to GDP ratio of Jammu and Kashmir will reduce to 3.0% in the financial year 2024-25. The Union Government will provide for the salary, pension and other costs of Jammu and Kashmir Police for which an allocation of Rs 12,000 crore has been made in the Union budget. In addition, a special grant of Rs 5,000 crore is being provided to Jammu and Kashmir.
As part of the special package, the UT government has also committed to discharge its dues with J&K Bank in timely fashion. In fact, the UT government has repaid about Rs. 4,600 crore to the Bank to clear the past dues. It will reduce the fiscal stress of the UT government in multiple ways. The package will provide additional fiscal space to the Government to work towards fulfilling the developmental needs and aspirations of the people. It will also enable J&K police to undertake upscaled investments in modern weapons, police housing, and infrastructure facilities.
The budget of Jammu and Kashmir for 2024-25makes provisions for the ongoing initiatives for infrastructure development, sustainable agriculture, new industrial estate, PRI level works, employment generation, developing tourism, and social inclusion.