Introduction to Blog

I launched the website and the Blog after having spoken to government officials, political analysts and security experts specializing in South Asian affairs from three continents. The feedback was uniformly consistent. The bottom line is that when Kashmiris are suffering and the world has its own set of priorities, we need to find ways to help each other. We must be realistic, go beyond polemics and demagoguery, and propose innovative ideas that will bring peace, justice and prosperity in all of Jammu and Kashmir.

The author had two reasons to create this blog. First, it was to address the question that was being asked repeatedly, especially, by journalists and other observers in the U.S., U.K., and Canada, inquiring whether the Kashmiri society was concerned about social, cultural and environmental challenges in the valley given that only political upheaval and violence were reported or highlighted by media.

Second, the author has covered the entire spectrum of societal issues and challenges facing Kashmiri people over an 8-year period with the exception of politics given that politics gets all the exposure at the expense of REAL CHALLENGES that will likely result in irreversible degradation in the quality of life and the standard of living for future generations of Kashmiris to come.

The author stopped adding additional material to the Blog once it was felt that most, if not all, concerns, challenges and issues facing the Kashmiri society are cataloged in the Blog. There are over 1900 entries in the Blog and most commentaries include short biographical sketches of authors to bring readers close to the essence of Kashmir. Unfortunately, the 8-year assessment also indicates that neither Kashmiri civil society, nor intellectuals or political leadership have any inclination or enthusiasm in pursuing issues that do not coincide with their vested political agendas. What it means for the future of Kashmiri children and their children is unfathomable. But the evidence is all laid out.

This Blog is a reality check on Kashmir. It is a historical record of how Kashmir lost its way.

Vijay Sazawal, Ph.D.

Monday, June 14, 2010

J&K Government's Precarious Budgetary Situation

The sad fact is that 59% of the J&K State Budget is provided by the Indian Tax-payer and 14% is borrowed from financial institutions.

J&K’s Budgetary Reliance on New Delhi Mounting

Syed Junaid Hashmi (Kashmir Times)

Jammu: Jammu and Kashmir government’s precarious budgetary position has taken further dip with mounting wage bill, rising graph of non-plan expenditure and almost absolute reliance on New Delhi for financial requirements.

The total budget size of the state for year 2009-10 was Rs. 22885 crore, of which own revenues of the state including share of central taxes was around Rs.6249 crore i.e. 27.31 percent against which ‘central transfers’ contribution was Rs. 13432 crore i.e. 58.69 percent. The rest 14 percent came from borrowings and capital receipts.

Similarly, state expended around of Rs. 15672 crore on non-plan activities which included interest, salaries, pension, power purchase and repayment of loans. Besides, an amount of Rs.7, 213 crore was spent on developmental activities. This includes funds spent on projects which are being developed under Prime Minister’s Reconstruction Plan (PMRP) for Jammu and Kashmir.

A customary look at these figures indicates that New Delhi funds 72.69 percent of budgetary expanses of Jammu and Kashmir while state’s contribution is meager 27.31 percent. A report of state finance ministry on macroeconomic and medium term fiscal policy has brought forth this spine chilling and dismal picture of state finances.

The reports say that comparing the revenue flow of the state vis-à-vis Revenue expenditure for last 5 years, although the state was having revenue surplus due to central devolutions being revised in the ratio of 90 percent grant and 10 percent loan, fiscal deficit has increased from Rs.1052 crore for 2002-03 to Rs.2749 crore in 2008-09.

Report has cautioned that deterioration of fiscal deficit from 6.6 percent of GSDP in the year 2006-07, to 7.9 percent of GSDP in 2008-09 is unsustainable and requires immediate corrective measures. It has recommended that multi-pronged strategy in terms of mobilization of additional resources, greater tax and non-tax collections, cost of recovery of user charges, expenditure compression particularly establishment related is required to be put in place.

Pointing towards the fiscal position of Jammu and Kashmir, report maintains that there has seen a steady deterioration in the finances of the state through the 1990s due to number of reasons including rising cost of salary and pension bills, burgeoning hidden subsidies including power deficit, rising interest liabilities and loan repayments. It further maintains that deterioration has been much sharper since 1995-96 onwards, due to deficit on account of non-tax revenue and steep increase in salary bill occasioned by the fifth pay commission recommendations.

The report has envisaged further deterioration in the financial position after the thorough implementation of report of 6th Pay Commission. The report has said that Jammu and Kashmir government’s own revenue including share of central taxes to GSDP at current prices ratio is 16.32 percent. It maintains that this has shown slight improvement over years and relatively higher rate of growth of tax receipts is likely to be sustained because of proposed introduction of unified Goods and Services Tax (GST) from 2011-12.

The present tax revenues to GSDP ratio stands at 11.41 percent. Moreover, report admits that against total non-tax revenue estimates (RE) of Rs.1294, power revenue target of Rs.1002 crores forms 77 percent of estimated non-tax revenues. But referring to finance accounts of 2008-09, the report says that power revenue realization was only Rs.630 crore as against target of Rs.922 crore.

The report has outlined the fact that over the past decade and a half, there has been alarming increase in government expenditure on non-contributory pensions and in percentage terms, outgo on pension has witnessed 27 fold increase over the period from 1991-92 to 2008-09. And due to financial constraints to which it would have been exposed in times to come both on account of rising cost of pensions in the wake of successive pay commissions and demographic transition in increasing number of aged persons, state finance ministry introduced NPF for fresh entrants from January 1, 2010 on the pattern of central government.

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