JK Budget 2018-19

…old wine in new bottles

Dr. Javid Iqbal
Srinagar, Publish Date: Jan 16 2018 11:24PM | Updated Date: Jan 16 2018 11:24PM
JK Budget 2018-19

Calling JK budget 2018-19, old wine in new bottles might be a worn out caption, I wish I could name it otherwise. Taking the broad contours of the budget in view, it is indeed what it has been named. Apart from a sop here or a sop there to some segments of the society, the budget lacks the essential quality that marks a budget notches above a run in mill presentation. That quality is vision, where you create avenues for growth by working out assets. The assets that are meant to stoke productivity and maintain a state of fiscal autonomy. However, it may be noted that by implementing Delhi tailored GST in Toto, JK state has surrendered, whatever the measure of fiscal autonomy, it might have had. Having done, what was least desirable, the state in fiscal terms remains much more constrained than it was in the past. No amount of window dressing by hyping fiscal figures and eloquence in presenting sops can hide the stark reality.

Finance Minister Haseeb Drabu has the reputation of being a financial expert. He has been presenting budgets ever since BJP-PDP combine assumed power post 2014 elections. There was an expectant air, as high profile finance portfolio was allocated to him. BJP did not demur, as Drabu was one of the architects of BJP-PDP deal with Ram Madhav—reputed RSS operative assigned to work for BJP. Whatever the manner of Drabu’s brief as finance minister, the expectant air was belied, as one budget presentation after another carried the same figures, as was the wont of Abdul Rahim Rather as finance minister of NC-Congress combine in yester-years. Hardly a trace of financial expertise could be detected in one presentation after another. The predominant factor remained, what some financial circles like to call the ‘Goshwara’ an account noted of how the rupee comes and how the rupee goes.  ‘Goshwara’ could hardly be called visionary, where there is a striving for creating avenues of growth.   

On the rupee as it comes, the figures continue to be matching the figures of yester-years. Total receipts amount to 80, 313 crores. It may be noted that Abdul Rahim Rather’s figures of total receipts over six years of NC-Congress combine from 2008 to 2014 varied from 33,000 to 46,000 crores. The hike to almost the double of 80,000 crores plus is worked out by combining the state budget with central schemes, instead of treating the two as separate financial entities, as was the wont of Abdul Rahim Rather. It may not thus carry the impression that state is twice richer with Drabu heading the finance portfolio in terms of receipts. The break-up of receipts is provided as revenue receipts of 64, 269 crore rupees, while the capital receipts amount to 16044 crore rupees, making up a total of 80, 313 crores. Against the revenue receipts of 64, 269 crores, the revenue expenditure is shown to be 51,185 crores leaving a revenue surplus 13084 crores. On capital receipts however, the expenditure is shown as 29, 128 crores leaving capital deficit matching exactly the revenue surplus—13084 crores. Such a precision could be termed a wizardly act, a magician’s trick, where the revenue surplus matches the capital deficit up to the last figure. This is merely to exhibit that there is no unfunded gap in budgetary allocation. It would indeed be a wonder, if the figures ultimately workout to be as precise as exhibited? 

The receipts worked out in percentage terms show as high as 43% in central grants. Central grants to the tune of 43% of revenue receipts get explained by fiscal arrangement between centre and states as per articles 268 to 279 of the Indian constitution. The fiscal arrangement is worked by finance commission appointed every five years by the President of India, as per article 280. State’s own taxes work out to be 14%, state’s share of central taxes 16%, own non-tax 7%, leaving a whopping 20% to burrowing. The burrowing to the tune of as much as 20% adds to loans and liabilities, a considerable portion of state’s spending goes to debt servicing—the interest payments. In percentage terms, the rupee as it goes is as much as 30% on salaries, 6% on pensions. That makes it more or less one third spending on the elephantine bureaucracy that state maintains, adding to revex—the revenue expenditure, leaving little room for capex-the capital expenditure, meant to create avenues for growth. It is questionable whether the amount allocated to salaries makes economic sense, given the fact that over the years, the state bureaucracy has hardly contributed to productivity to the extent of what gets allocated to it in monetary terms.  The state continuing to be the major employer is not a happy augury. There is hardly an effort to create employment opportunities by widening the private sector and creating avenues for self-employment.

 

Out of the rupee as it goes, 6% goes to interest payment and as much as 9% as power purchases. This continues to be a sore point, as the state’s power production of 2000 plus MWs remains linked to northern grid, making the state to pay for its own produce. This leaves 36%, barely one third for capital expenditure, while as allocation for capex should constitute bulk of budgetary allocation to fuel growth. As much as 13% is allocated as other expenditure, which could otherwise mean administrative expenditure, which yet again shows what it takes to maintain the state, the efficacy of which has a serious question mark over it? Less said of it, the batter!

 

Yaar Zinda, Sohbat Baqi [Reunion is subordinate to survival]

 

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