Press Release

CAG pats J&K for better fiscal management: Rather

JAMMU, FEBRUARY 17- Dispelling the perception that Jammu and Kashmir was dependent on Centre to meet its financial requirements, the Minister for Finance and Ladakh Affairs, Mr. Abdul Rahim Rather today said that whatever the State receives from the Centre, is our right guaranteed under 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 Centre and States.
“Grant of funds is not discretion of the Centre but are transferred to all states under fixed norms. Being part of the federation (Union of India), these funds are our right”, he said adding that getting funds from the Centre doesn’t mean that the State is dependent on the Centre.
In his one and a half hour long reply to the two days debate on Budget in the Legislative Assembly in which 26 Members of the August House participated, Mr. Rather said that State’s own tax revenue has been increasing at an average growth of 30% since the year 2009, adding that the tax revenue which was just Rs. 2,683 crore in 2008-09 has increased to Rs. 6700 crore during current fiscal which is estimated to touch Rs. 7500 crore in the next financial year. This signifies an overall growth of more than two and a half times in a period of 5 years and the annual growth rate comes to nearly 30%, which is a record performance by any standard.    
He said this steep increase in tax revenue has been registered without levying any fresh taxes, mainly due to better fiscal management and plugging of loopholes in the existing taxation system. He said implementation of Fiscal Responsibility and Budget Management Act has extra ordinarily helped the state to bring in tangible improvement in the internal resource mobilization which has been appreciated by the apex monitoring forums at the national level including Planning Commission of India, Comptroller and Auditor General (CAG) and Union Ministry of Finance. He ridiculed previous government for not implementing FRBM Act during its regime adding that due to this lapse on their part, the state could not get Rs. 230 crore debit relief from the Centre.
“After implementation of the Act by the current dispensation, the State got a benefit of Rs. 115 crore grants in aid annually”, Mr. Rather maintained.
The Minister said by bringing financial accountability and fiscal reforms, the state has been successfully able to bring down its fiscal deficit as per the assigned targets of the 13thFinance Commission adding that against the target of 5.3% in 2010-11, the fiscal deficit was 4.15%. Similarly, against the target of 4.7% in 2011-12, the achievement was of the order of 4.29 (Q.E) and against the target of 4.2% in 2012-13, the achievement registered was 3.91%. He said fiscal deficit during previous regime was alarmingly high at 7.5% in 2007-08.
Mr. Rather while quoting year wise figures said that the plan expenditure during last five years has been upto the mark adding that it was 90.38% in 2008-09, 96% in 2009-10, 96.13% in 2010-11 and 96.32% in 2011-12. The plan expenditure during 2012-13 was 82.13%, because of short receipts of Rs. 1666 crore from Government of India.
Referring to the stupendous and record increase in the tax revenue, Mr. Rather quoted CAG as saying “the State has made good use of the opportunities presented by increased economic activities to substantially increase tax revenue. There has been record mobilization of commercial taxes and stamp duties in 2011-12 and the state’s own revenue has shown very high growth. It is to the credit of the government that the state’s dependence on non-debt resources from Central Government (as percentage of total expenditure) has come down from 67% in 2006-07 to 63% in 2011-12”.  Even as concerns remain about delay in completion of ongoing projects, the state government’s capital expenditure has registered significant and steady increase, a stray peak in 2010-11 notwithstanding. The state switched over to government banking with the RBI w.e.f 1st April 2011 after liquidating its entire over draft with the J&K Bank as on 31 March with special Central assistance in the form of grants-in-aid of Rs. 1000 crore. During 2011-12, the interest burden on over draft / ways and means advances came down by over Rs. 220 crore as a result of this switch over to new banking arrangements. The State government has taken significant decisions like introduction of new pension scheme, bringing more items under the ambit of VAT, more services under the tax net, computerization of commercial tax department and a host of other institutional and sectoral reform measures. The arrears in the accounts of PSUs are being liquidated. All these are positive features”.
Saying that the State government has been applauded by the Principal Accountant General for its good performance in fiscal discipline, Mr. Rather quoted, “the Principal Accountant General has eulogized the Hon’ble 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 J&K is one of the few states in India having an organized internal audit system in place for proper guidance and enforcement of the financial discipline”.
 Responding to suggestions of some members, Mr. Rather said that introduction of New Pension Scheme is a major reform measure as it will ensure that the employees recruited after 01.01.2010 receive guaranteed superannuation benefits and regular monthly pension in a structured manner adding that posterity shall be reaping the benefits of this historical measure. He said the Pension Bill has reached to whooping Rs. 3673 crore during the current fiscal which was just Rs. 938 crore in 2005-06 and is likely to reach to Rs. 4000 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.
Mr. 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.
Mr. 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, Mr. 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 (one hundred in each district) involving 44000 women. He also dwelt on measures to be taken up for establishing a dependable cold chain mechanism for boosting horticulture industry in 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.
Mr. Rather said that there has been a steady growth in the GSDP of the state during the last five years adding that in comparison to the GSDP figure of Rs. 42314.84 crore at current prices during the year 2008-09, the GSDP reached Rs. 75574.31 crore last year as per Quick Estimate, and is estimated to reach Rs. 87318.72 crore during the current financial year as per Advance Estimate. It has more than doubled during the last five years. The current year’s rate of growth over the last year’s figure works to 15.54%.
“At constituent prices, the GSDP was Rs. 34664.22 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%”, Mr. Rather added. He said the state’s growth rate during the current year has been better as compared to all India level.        
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