Eye on elections, govt presents Rs 43, 543 cr tax-free budget

Srinagar: Amid rising expenditure and increasing salary bill, Jammu and Kashmir government, with an eye on upcoming elections in the state, on Thursday presented ‘tax free’ Budget for financial year 2014-15 suggesting no further options of revenue mobilization for the state.
Finance Minister Abdul Rahim Rather presented 6th consecutive budget of National Conference-Congress coalition government with an estimated expenditure of Rs 43,543 crore for running the yearly affairs of the government.
Continuing with slew of welfare measures for return and rehabilitation of Kashmiri Pandits, extra schemes for Panchayat members and one lakh new government jobs, there is no proposal or plan for new revenue generation avenues in the budget.
“As such, I do not, repeat do not, propose any changes in the existing rates of taxes on any commodities or services, nor intend to bring any new service under the taxation net for the next financial year,” Rather said in his budget speech.
However, experts believe that with neither any extension in the tax net nor suggesting any other means of income, with such welfare schemes it is the states much needed capital expenditure where the bite has been taken out to meet these welfare measures.
With 14 per cent increase in the budget as compared to current year, the spending will mostly go into revenue expenditure (Rs 32,948 crore). Only Rs 10595 crore, 24 percent of total expenses, at least one percentage point down from current year, will go for capital spending or infrastructure creation.
According the budget proposal, the projected plan expenditure for 2014-15 is Rs 11,300 crore. An increase of Rs 500 crore has been projected over the current year’s plan size, mainly to take care of the net increases in the committed plan revenue expenditure and expansion part in the state component. The non-plan expenditure will be Rs 31,643 crore.
The expenditure on salaries and allowances of the government employees, besides the pension, which will be more than half of the total government spending, is the biggest component of state expenditure.
“The total expenditure on account of salaries and pension payments comes to Rs 18,441 crore,” Rather said. Grant in aid of 800 core to autonomous bodies (PSU and state universities) mostly aimed at meeting the salary component, will be in addition to it.
The 17 per cent of the total proposed budget spending has been put in the ‘other’ component, most of which is meant for the security-related expenditures and remains unexplained in the budget speech.
State has kept eight per cent of the budget each for the power purchase and interest payment for the borrowings, which is one percentage point down from the current year’s budget.
On the side of revenue mobilisation, the budget proposals show at least one percentage point decrease in its own tax generation down to 17 per cent, where as the loans and grants from New Delhi have been proposed to 53 per cent as compared to 51 per cent for current year suggesting more dependence on government of India funding.
Budget proposal has also mentioned decrease of one percentage point of total revenue mobilisation from capital side (loans and borrowings) to 10 per cent as compared to 11 per cent in last year’s budget proposal. Whereas share of central taxes, and own non-tax revenue has been kept constant at 12 per cent and 8 per cent respectively.
Despite witnessing mismatch between state government and Planning Commission of India’s plan allocation for current year, Rather has proposed plan size of Rs 11,300 crore for the next financial year.
“I have included a plan size of Rs 11,300 in my next year’s Budget Estimates,” Rather said, adding, “The issue of projecting an appropriate plan size for the next financial year has been discussed at length with the Planning Commission at the official level.”