Sunday, March 4, 2012

Jammu Kashmir Budget Today

Jammu and Kashmir is likely to get its yet another ‘zero-deficit’ budget tomorrow when the Minister for Finance and Ladakh Affairs Abdul Rahim Rather will present budget for 2012-13 in the state assembly at 11 AM.

This will be the fourth budget of the present coalition government in a row to be presented in the J&K Legislative Assembly by A R Rather.

Though the final plan size has yet to be okayed by the Planning Commission of India (PCI), the Finance Minister may use approved projection by PCI in the budget. The state government this year too has sought a step-up of 10 percent over the plan size of previous year (2011-12) and Rs 1200 Cr under Prime Minister’s Reconstruction Programme (PMRP) and is very optimistic of PCI nod to its projections.

Last year, the state got a plan size of Rs 6600 Cr besides Rs 1200 Cr under PMRP.PMRP extension, which in all probability is certain, will be for the third time for the state.For fiscal year 2011-12, the Finance Minister had presented zero deficit budget by projecting state’s total budgetary receipts at Rs 31,212 Crore indicating an increase of 20 percent over 2010-11’s Budget Estimate figure of Rs 25, 984 Crore. The fiscal deficit was pegged at Rs 2979 Crore.

Notably for purpose of fiscal adjustment, 13th Finance Commission has divided special category states into three groups:

i) States having a base level deficit of more than 3 percent but less than 6 percent (Manipur, Nagaland)
ii) States having a base level fiscal deficit of 6 percent and above (Jammu and Kashmir, Mizoram).
iii) States having a base level fiscal deficit of less than 3 percent (Arunachal Pradesh, Assam, Himachal Pradesh, Meghalaya, Tripura).
States under group (i) have been tasked to bring down fiscal deficit to 3 percent in 2013-14, states under group (ii) will bring down fiscal deficit to 3 percent of GSDP in 2014-15 and states under group (iii) would be doing the same by 2011-12.
All special category states are required to remain in surplus on revenue account during the period.
Owing to the fact that state government receives all central transfers under a 90 percent (Grant): 10 percent (loan) dispensation, J&K is a revenue surplus state.

According to 13th Finance Commission, the Fiscal Deficit has slightly recovered from 6.6% of GSDP in 2006 -07 to 4.96 percent of GSDP in 2010-11.

The measures needed to be taken in the effort to contain the fiscal deficit to a large extent would be to:
Strengthen the revenue surplus and thereafter build up adequate revenue surplus at a sustainable level to utilize such surplus for discharging the liabilities in excess of the assets as for funding capital expenditure;
Pursue policies to raise non-tax revenue with due regard to cost recovery and equity;
Lay down norms for prioritization of capital expenditure;
Expenditure policies that would provide impetus for economic growth, poverty and improvement in human welfare/standard of life;
announce policies whereby massive investment proposals get attracted towards our state thus throwing open ample job opportunities for local youth in private sector.
Focus on outsourcing activities of Government to promote and strengthen private enterprises in the state.
However, cutting the fiscal deficit and bringing it down to a level of 3 percent by the year 2014-15 appears difficult.

For additional resources mobilization, more taxes are almost certain in the budget 2012-13 though while creating a facade of skeletal relaxations in the wake of ensuing local bodies polls.

Earlier the Minister for Finance A R Rather gave final touches to the budget 2012-13 at Civil Secretariat Jammu on Sunday i.e., March 4, 2012.

This will be the 12th Budget to be presented by A R Rather in the state legislature so far. Before this, he has presented budgets in 1983, 1984, 1987, 1988, 1989, 2000, 2001, 2002, 2009, 2010 and 2011. Rather has also presented vote of Account on two occasions.

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