Jammu & Kashmir govt presents Rs 46,473 cr budget; discards 'old structure'

The Jammu & Kashmir government on Sunday unveiled a Rs 46,473 crore budgetpacked with a slew of schemes for farmers, traders, women and employees while stamping out "plan and non-plan classification".

The first budget of the PDP-BJP alliance government, led by Chief Minister Mufti Sayeed, projects a resource gap of Rs 4,336 crore, which it plans to finance with grants to state under the 14th Finance Commission grants and without seeking any additional funding.

In his Budget speech, state Finance Minister Haseeb Drabu said: "This is not a good position to be in. In fact, if anything, it should be exactly the other way round. But there is no way I can help it as it is a legacy of the last 30 years if not more."

"In 2015-16, the total public expenditure is budgeted to be Rs 46,473 crore. Of this Rs 11,246 crore is for building assets and infrastructure. The remaining Rs 35,227 crore is for current or revenue expenditure," the former economist said.

"The total revenue receipts of the state in 2015-16 are budgeted to be Rs 42,137 crore leaving a resource gap of Rs 4,336 crore. This is going to be financed by prepositioning of the 14th Finance Commission grants without seeking any additional funding," Drabu said.

Drabu later told reporters that the broad thrust of the budget is on revival of Jammu and Kashmir economy and it has discarded old plan and non-plan classification, while the focus is on a three-pronged initiative of "government, governance and changes".

Following the replacement of Planning Commission by NITI Aayog and the acceptance of the 14th Finance Commission Award, Drabu said, the state government has completely changed the structure of its budget.

"J&K is perhaps the first state in the country to align its budget to the changes in the federal fiscal system," he said.

"The entire old classification of the plan and non-plan has been discarded. This is a major change which has far reaching implications on the allocation, efficiency and monitoring of public expenditure," he said.

"This change will demystify the budget to a great extent. Now there will be only two categories of expenditure, current and capital; the former being what is spent to meet our daily expenses and the latter is what is spent on making assets on the ground," he said.

"In the years to come, we can start the mapping of asset creation with money that has been spent. This was impossible in the earlier classification. In the next budget we will provide this House with the details of the physical assets that have been created on the ground by the money that was spent".

He said total revenue receipts has been estimated at Rs 37,814 crore and capital receipts at Rs 4,323 crore with own tax revenue estimated at Rs 8,006 crore. The state's share of this central taxes is up at Rs 8,088 crore as against the figure of Rs 4,477 crores in the revised estimates for the year 2014-15. Drabu said revenue deficit grant is Rs 9,892 crore as against Rs 2,096 crore in 2014-15.

"Similarly, the revenue expenditure including security related expenditure will touch Rs 35,227 crore with capital expenditure account at Rs 11,264 crore," he said.

As many as Rs 499 crore is to be devolved to PRIs and ULBs under 14th Finance Commission grants. The earmarked provision of Rs 2200 crore is for DA to employees and pensioners, Rs 154 crore provision for 10 % employees share under new pension scheme introduced from January 2010, Rs 1017 crore for allocation for district sector capital expenditure.

Announcing new initiatives, he said that he waived off demand charges on electricity for seven months from September 2014 to March 2015. He announced exemption for passenger tax on vehicles which remained off due to floods from September to December 2014, remission of stamp duty on documents on fresh loans to persons effected due to floods, exemption under GST in respect of lodging services provided by hotels, lodges, guest houses to be extended up to March 2016.

Similarly, he announced exemption to hoteliers from payment of entry tax on goods imported from outside the state, waived off of 50% of KCC loans for smallest and vulnerable farmers, introduction of gold, silver loans for certain categories of registered dealers/traders. Besides other announcements include contemplating of amnesty under GST Act 1962 for waiving off interest and penalty, setting up alternative dispute resolution tribunal to speed up settlement of cases of traders, VAT exemption on paddy, rice, wheat, pulses, floor, Maida, sugi and baisen till March 2016, exemption of toll on fresh vegetables, VAT remission for local industry.

To restructure ailing Public Sector Enterprises (PSEs) in the state, he announced financial restructuring and administrative reorganisation of all the ailing public sector undertakings besides setting up of asset reconstruction company in partnership with J&K Bank.

"Government to float Dal Development bond for restoration of Dal, set up of pesticides revolution authority, (give) incentives to any reputed international firm to set up a unit in Valley and introduce loss of revenue insurance cover," he said.

To deal with the abysmal child sex ratio, he said, "Contribution of Rs 1000 per month on the behalf of every new born girl child for next 14 years and on reaching 21 years, she would receive around Rs 6.5 lakh under a scheme. To begin with, a pilot in six districts with the most adverse child sex ratio."

Besides this, a new scheme "Aasra" was announced only for widows or destitute women with no source of income. There would be a zero balance saving account, life insurance of Rs 25,000, an accident cover of Rs 25,000, sickness and disease cover of Rs 5000 and maturity/survival benefits of Rs 25,000 after five years, he said. 

Similarly, he said there would be a scheme to provide succour to 50,000 widows and destitute women of the state. An amount of Rs 100 crore has been provided for this purpose.

Drabu proposed J&K state family benefit scheme, wherein families whose income doesn't exceed Rs 75,000 per annum and who lose their breadwinner and are not covered under any other benefits, will get a one-time financial assistance of Rs 40,000. A provision of Rs 20 crore is being made for this scheme, he added.

On taxation, he said that the existing rate of sales tax in lieu of services is being enhanced by 2 %. There will be a levy of 5 % VAT on computers and computer peripherals, a uniform tax rate of VAT of 13.5 % on inverters and UPS and a modest increase of five paisa per kilogram in the existing rates of toll.

"I...propose to enhance the existing rate of sales tax in lieu of services by 2 % under the J&K GST Act, 1962. This measure is expected to generate a revenue of Rs 150 crore...propose a levy of 5 % VAT on computers and computer peripherals. This is likely to garner resources to the tune of Rs 10 crore," he added.

"Members are aware that Toll at Lakhanpur is charged on weight regardless of value. I propose a modest increase of five paisa per Kilogram in the existing rates of toll from the next fiscal," he said.

In view of the economic structuring, the government also contemplates to outsource Lakhanpur toll plaza, he said. On the issue of government employees, he said that the DA (Dearness Allowance) pending March 31, 2015 shall be credited into the GP fund account of the employees while DA will be paid in cash from April onwards. All employees covered under the NPS (National Pension Scheme) and pensioners will, however, receive the arrears in cash, he said.

"The revenue component of erstwhile plan shifted on revenue account addressing the long pending demand of employees borne on plan budget," he said. "Women employees of the state should be treated at par with central government employees with regard to admissibility of child career leave," he added.

The government will announce a high powered committee of ministers and some external experts, to tackle the gigantic problem of regularisation of more than sixty one thousand workers engaged on a casual basis, he added. Government also proposed to provide Rs 2 crore for enhancement of the retainership of various classes of law officers.

On a pilot basis, one village will be developed as a Model Basmati village in Jammu Division. One Model Apple village and one Model Saffron village will be developed in Kashmir Division. 

Similarly, one village will also be developed in the Ladakh region to demonstrate the use of solar dryers and modern technologies for horticultural processing, he added. The government proposes to give focus on construction of Model Ethnographic Villages to showcase intrinsic cultural and heritage strengths of our people, he said, adding the first pilot cultural village will be the one that was inhabited by Kashmiri Pandits.

"We propose to have land bank of over 10,000 kanals across the state which we propose to develop as Industrial Estates," he said.

On the new budgeting system, Drabu said: "Another benefit ...that I am introducing is that the large number of government servants who would have to wait for months together to get their salaries under plan head, will not have to wait any longer".

"By shifting all the plan revenue expenditure onto the revenue side from 2015-16, the hardships of these employees will be a distant memory," he said.

"In the new system, we will formulate our own scheme of financing the state budget. We will change the Fiscal Responsibility and Budget Management (FRBM) Act next year to ensure that over the next three years, it is mandated that borrowings are used only to finance creation of capital assets," he said.

"I hope to use the budget to enlarge the constituency of peace in the state. I hope to use the budget to share with the people of J&K the dividends of peace, something that they have been deprived of for many years," he said.

Drabu said he hopes to use the budget as an instrument for sustainable growth and balanced development within the state. In the process, he hoped to have a budget in which the revenues cover the expenditures of the state government.

"It is a tall order but I can assure this House that this government will give it the best that we have with sincerity of thought and honesty of purpose," he said.

"There are three main themes in my budget; first, build the credibility and confidence of the government in itself and its financial management," Drabu said.

"Let me do this by asserting in this House that I shall not seek any financial assistance or grants from the Centre other than what is provided for in the Constitution of India for all the special category states as a part of the federal fiscal system," the finance minister said.

"In common parlance, I am asserting that I shall not go with a begging bowl to New Delhi. This despite the fact that we not only have a friendly government at the Centre, we also have an exceptionally sensitive and accommodating Union Finance Minister," he said.

"By doing so, I do hope to restore the dignity of the people of J&K who are forever being accused of surviving on subsidies and largesse," he said.

"The goal of our government is economic self-reliance and fiscal autonomy. All of us want the J&K government to be able to pay not only for the salaries of its employees, but also for the development of economy and prosperity of people. The fiscal strategy and stance of this budget is expansionary. Not that I had much choice in it. With the people of the state in distress and the economy in shambles post the devastating floods last year, it is the responsibility of the government not only to give relief but also to rehabilitate and reconstruct", he said.