J&K’s tax kitty swells four-fold in past decade, but inflation hovers above the national average
Srinagar: J&K’s own tax and non-tax revenues have experienced nearly a fourfold increase over the past one decade and have reached Rs 33,942 crores. However, its rate of inflation hovers above the national average.
Official data reveals that the size of the budget of the erstwhile state in 2012-13 was Rs 26,217 crore but its own tax and non-tax revenue was only Rs 7,993 crore. The state had received Rs 3,670 crore as its lawful share from the central taxes. The state also did receive Rs 14,354 crore as additional resources from the central government.
But over the past one decade, Jammu and Kashmir made big gains in the revenue collections on account of its own tax and non-tax assortments. The UT’s own revenues are estimated to touch Rs 41,742 crores during the current financial year, say the officials manning J&K’s Finance department.
The own tax revenues of the UT include GST, Sales Tax, Tax on goods and the Excise duty. Cumulatively the own tax revenues are expected to reach Rs 20,349 crores this fiscal.
Interestingly, the Excise revenues from country-made liquor and other alcoholic beverages are targeted to touch Rs 2,450 crores mark.
The non-tax revenues including interest payments, power receipts are anticipated to reach Rs 13,593 crores.
The UT will mobilize additional resources which shall generate Rs 7,800 crores, say officials. The tax performance of the UT has increased substantially, they added.
Central transfers including the UT’s share in the central pool of taxes, centrally-sponsored schemes, grant-in-aid, etc., during the current year shall be to the tune of Rs Rs 69,120 crores, they predicted.
Pertinently, the ending of the special status of J&K (abrogation of Article 370) in 2019 and the blocking of movement and communication badly affected its tax performance. It dipped to Rs 13,727 crores, thus recording a negative growth rate of -2.50 percent.
The raising of taxes has influenced the economy in beneficial ways. But it has simultaneously led to inflation, said a senior executive of Kashmir Chamber of Commerce and Industry, (KCCI).
Official data confirms the KCCI’s point. It informs that the price-rise in J&K hovered between 6 to 6.9 percent from 2018 to 2022. In comparison national figures on inflation remained around 4 to 6.7 percent during the same period.
The high rate of GST too has affected the micro and small enterprises badly, said the KCCI executive preferring privacy of identity.
Dr Javed Iqbal Khan, an economist at University of Kashmir, attributes the discordance in the tax and non-tax ratio in not keeping pace with the expenditure, to the lesser tax base of the Union Territory. The amount of economic activity here is very narrow which according to the economist has its own socio-political reasons.
The specific conditions, including its geographical position and other socio-economic conditions have trapped Jammu and Kashmir into a “dependency syndrome”. J&K like nine other states of India, is dependent on central resource allocation to meet its expenses.
However, in 2010, the special interlocutors deputed to J&K observed “if the central plan assistance is stepped up at the rate of 10 percent per year which is inadequate to neutralise the rise in prices.”
The economic activity is predominantly restricted to government expenditures in the form of large revenue expenditures and some capital outlays.
The visibility of corporate or the private sector is very less, say the experts.
“Genuine play of politics is one of the effective ways for solving the issue. A sincere democratic process aligned with people’s aspirations can catapult the region to self-reliance and lead to a robust growth in its own revenues including taxes,” suggest the experts.
Rashid Paul is Associate Editor at Kashmir Images.
He can be reached at [email protected]
