The Union Finance Minister Nirmala Sitharaman past week presented her budget estimates for Jammu and Kashmir for 2023-24. It is her fourth consecutive budget for J&K presented in the national parliament. Since for the past four years J&K is without a legislature and is under the direct control of the centre, so the annual financial statement of the territory is presented in and passed by the parliament.
Previously when J&K was yet to be relegated to the position of a Union territory, an Economic Survey, a flagship annual document of the state, used to be presented in its legislature. The document provided the feedback for creating the budget and guided the state government in prioritising the sectors for the ensuing fiscal. It was a kind of report card that search lighted J&K’s economic scenario, analysed the state of its economy, its strengths and challenges. The report, albeit in a controlled fashion, would inform the general public, the economic health of their state. But this vital document, which identified the quality of policy responses needed under the prevailing economic situations is missing since 2019. The budget is now a old-style document, guesstimated by a set of bureaucrats at the central secretariat with hardly any local input.
The budget has estimated an expenditure of Rs 1, 18,500 crores for the next fiscal which is apparently 12000 crores more than the previous one. Given the escalating rate of inflation, the addition dos not seem to be so impressive. Refreshing, however, in the budget is that J&K shall have an estimated Capital Expenditure, (Development Expenditure) of Rs 41,491 crores. The previous budget document also estimated a Capital Expenditure of Rs 41,335 crores but for unknown reasons it was later on revised at Rs 31,785 crores.
To fund its Capital Expenditure the Union Territory shall have to raise loans form Government of India, borrow from its Central Bank, or divest itself of the stakes in some Public Sector Undertakings. But liabilities of the Territory have almost outsized its annual budget. J&K’s debt GDP ratio has already swelled to an alarming 52 percent. Eight percent of its every rupee goes out for interest payments.
Borrowings according to economists are nothing but deferred taxation and inflation. The prices of essential commodities have already risen due to a host of direct and indirect taxes by the central and the local governments. The current inflationary period is one of the worst and has drastically affected the cost of living of the general public and eroded their purchasing power.
The budget estimate has pegged the Fiscal Deficit, (the gap in the total revenue and the expenditure) at Rs 12,012 crore. This is almost 2500 crore more than the previous financial year.
The Revenue Expenditure is slated to be Rs 77,009 crores. This non-productive expenditure on public administration such as salaries, pension, interest payments and other establishment outflow has been terrifically increasing over the years leaving little for the infrastructure development. The Revenue Expenditure of J&K has been hovering around 65 to 70 percent over the years. The phenomenon does considerably lead to the macroeconomic instability of the former state. The centrally administered region like most of the Indian states is heavily dependent on central flow to meet its budgetary expenses.
The four consecutive income and expenditure statements presented by the Union Finance Minister for J&K do not even slightly deflect from this negative trend. The Union Territory shall have to expend Rs 46,000 crores on salaries and pension in the upcoming fiscal which is almost four thousand crores extra than the outgoing financial year. There is already a saturation of workforce in most of the branches of the administrative machinery. An educated but unemployed army of youth in J&K have neither any hope nor any other reliable option, except the government service for eking out a sustainable livelihood.
Given its special geographical location, J&K can be a bridge between India, China, Pakistan and Central Asia. But an imaginative approach that impartially invests in peace in J&K, and simultaneously engages with the bordering peoples can create here infinite wealth and opportunities. It can also enable India to emerge a big player in the prophesied Asian Century.
