Dispelling the perception that Jammu and Kashmir is dependent on Centre to meet its financial needs, state Finance Minister Abdul Rahim Rather today said whatever it receives from the central government is its right guaranteed under the Constitution.
He said grant-in-aid for the state is being decided by the Finance Commission under Articles 268 to 279 of the Constitution of India which deal with distribution of revenue between the Centre and states.
“Grant of funds is not the discretion of the Centre, but are transferred to all states under fixed norms. Jammu and Kashmir being a part of the Federation (Union of India), these funds are our right,” Rather, who also holds the portfolio of Lakah Affairs, said. Getting funds from the Centre doesn’t mean state is dependent on the central government, he added.
In his one-and-a-half hour long reply to two-day debate on Budget in the Legislative Assembly in which 26 members participated, Rather said state’s own tax revenue has been increasing at an average growth of 30 per cent since 2009.
The tax revenue, which was just Rs 2,683 crore in 2008-09, has increased to Rs 6,700 crore in current fiscal and is estimated to touch Rs 7,500 crore in the next financial year, he said.
This signifies an overall growth of more than two-and-a-half times in a period of five years and the annual growth rate comes to nearly 30 per cent, which is a record performance by any standard, the Minister added.
He said this steep increase in tax revenue has been registered without levying any fresh taxes. It is mainly on account of better fiscal management and plugging of loopholes in the existing taxation system, he added.
Rather said implementation of the Fiscal Responsibility and Budget Management Act (FRBM) has helped the state to bring in tangible improvement in internal resource mobilisation, which has been appreciated by Planning Commission, Comptroller and Auditor General and Union Finance Ministry, among others.
He criticised previous government for not implementing FRBM Act during its regime. Due to this, the state could not get Rs 230 crore debit relief from the Centre, he added.
“After implementation of the Act, the state got a benefit of Rs 115 crore grants-in-aid annually,” he said.
Rather said by bringing financial accountability and reforms, the state was able to cut down its fiscal deficit as per assigned targets of the 13th Finance Commission.
The fiscal deficit was 4.15 per cent in 2010-11 against the target of 5.3 per cent. In 2011-12 it was 4.29 per cent (Q.E) against 4.7 per cent. Next year, against the target of 4.2 per cent, the achievement was 3.91 per cent, he said.
He said the fiscal deficit during previous regime was alarmingly high at 7.5 per cent in 2007-08.
Rather while quoting year-wise figures said the plan expenditure during last five years has been up to the mark.
It was 90.38 per cent in 2008-09, 96 per cent in 2009-10, 96.13 per cent in 2010-11 and 96.32 per cent in 2011-12.
The plan expenditure during 2012-13 was 82.13 per cent because of short receipts of Rs 1,666 crore from Centre.
On tax revenue, Rather quoted CAG as saying that the state has made good use of the opportunities presented by increased economic activities to raise collections.
There has been a record mobilisation of commercial taxes and stamp duties in 2011-12 and the state’s own revenue has shown very high growth, he said,
It is to the credit of the government that the state’s dependence on non-debt resources from central government (as a percentage of total expenditure) has come down from 67 per cent in 2006-07 to 63 per cent in 2011-12, he said.
Even as concerns remain about delay in completion of projects, states’s capital expenditure has recorded a rise.
The state switched over to government banking with the RBI with effect from April, 2011 after liquidating its entire overdraft with the J&K Bank with special central assistance in the form of grants-in-aid of Rs 1,000 crore.
During 2011-12, the interest burden on overdraft/ ways and means advances came down by over Rs 220 crore as a result of this switch over to new banking arrangements.
The state introduced new pension scheme, brought more items under VAT and more services under tax net, computerised commercial tax department and launched sectoral reforms.
Arrears in the accounts of PSUs are being liquidated. All these are positive features, he said.
Rather quoted the Principal Accountant General as saying that “the Principal Accountant General has eulogised the Minister for providing exemplary leadership to the Finance Department and said that under his stewardship the financial discipline and the functioning of the department has improved.
The Principal Account General has further said that Jammu and Kashmir is one of the few states in India having an organised internal audit system in place for proper guidance and enforcement of the financial discipline”.
Responding to suggestions of some members, Rather said that introduction of New Pension Scheme is a major reform measure as it will ensure that the employees recruited after January 1, 2010 receive guaranteed superannuation benefits and regular monthly pension in a structured manner.
He said the Pension Bill has reached to whopping Rs 3,673 crore during the current fiscal which was just Rs 938 crore in 2005-06 and is likely to reach to Rs 4,000 crore next year.
At present the number of pensioners has reached to 1.61 lakh persons as against 90,000 in 2005-06, he said stipendiary mode of recruitment will facilitate engagement of large number of educated youth adding that unlike Rehbar-e-Zirat Scheme, youth recruited under this scheme shall be permanent employees of the Government from day one they get appointed.
Rather also enumerated measures taken for the betterment and employment of educated unemployed youth adding an amount of Rs 98 crore has been paid as seed capital fund so far and about 16634 persons are working in various enterprises under SKEWPY.
Besides, around 50,000 un-employed educated youth are getting Voluntary Service Allowance (VSA) upon which Rs 50 crore are spent annually.
Rather also gave a detailed account about the concessions and incentives provided to Agriculture and Industries sectors adding that tax relief amounting to about Rs 750 crore was provided to Industrial sector to bring the state on the industrial map of the country.
About gender budgeting, Rather said that a grant of Rs 3.50 crore has been earmarked in the budget in favour of J&K Women Development Corporation (JKWDC) for setting up of 220 Self Help Groups in all the districts of the state.
Responding to the demands of members, the Minister said that District Plan allocation has been almost doubled during the last five years adding that against Rs 968 crore in 2008-09, the allocation has increased to Rs 1971 crore during last fiscal. In addition, District Plans are also supplemented under State Plan.
Rather said that there has been a steady growth in the GSDP of the state during the last five years adding that the GSDP reached Rs 75,574.31 crore last year as per Quick Estimate as against Rs 42,314.84 crore at current prices in 2008-09. It is estimated to reach Rs 87,318.72 crore during the current financial year as per Advance Estimate.
The current year’s rate of growth over the last year’s figure works to 15.54 per cent.
“At constituent prices, the GSDP was Rs 34,664.22 crore in the year 2008-09. It is now estimated at Rs 45399.45 crore for the current financial year, indicating an increase of about 31 per cent”, Rather added.
He said the state’s growth rate during the current year has been better as compared to all India level.