Budget of Dependence

The National Conference-Congress coalition government of Jammu and Kashmir presented the last budget of its 6-year term on Thursday. With an eye on elections, Finance Minister Abdul Rahim Rathar, a seasoned politician with 14 state budgets to his credit, has doled out a number of populist measures in the name of welfare schemes this year. Marked mostly by incentives and tax concessions for various sectors, his plan does not suggest any new avenues for resource mobilization.

Though, mercifully, ordinary people seem to have been spared the added burden of further taxes, a budget ought not to be an income-expenditure statement of the state but represent visionary financial management keeping in view immediate requirements, as well as long term developmental needs.

Rathar’s projection of a requirement of Rs 43,543 crore for 2014-15 may be a 14 per cent increase over last year, but 76 per cent of this will go as salaries, pensions, power purchase and security-related expenditure. Since the government has announced to add 1 lakh new jobs over the nearly 50, 000 recruitments already, the enhanced size of the financial outlay, if and when the Government of India turns generous enough to approve the increase, ceases to impress as it would be eaten up by new salaries.

So far there is no budgetary provision for the proposed new administrative units. When they come into being, financing them will be additional burden on the state’s coffers.

With a further cut,  capital expenditure, which goes into development work and infrastructure, has been reduced to Rs 11,000 crore.  Most of this will come from New Delhi under different sponsored schemes. One has to bear in mind that last year, the Planning Commission of India didn’t agree to the state’s demand of enhancing its plan size despite the coalition partners here being allies in the Union Government as well. And one cannot rule out a change of guard in New Delhi.

Despite having had various options to generate resources within the state, by investing in power, which has huge potential, and bringing certain services in the tax net, the Finance Minister has either shown lack of will because of an election year, or the government’s lack of ideas. When commodities like diesel and electricity are levied at 13.5 per cent, why should the government not charge a single penny from mobile phone companies who earn billions from the state? By showing the state no way to finance its own expenditure, Rathar has brought a budget of dependence.