‘Budget 2018-19 to generate income, pump money into system, set-off economic revival’
JAMMU: Minister for Finance, Haseeb A Drabu on Wednesday said the wide-ranging fiscal and welfare measures announced in the state budget were aimed at setting JK’s sluggish economy on the path of revival and recovery.
The finance minister said that J&K has landed up in a serious fiscal crisis because of various long- and short-term reasons including protracted political turmoil, 2014 floods, 2016 disturbances, demonetisation and GST, an official handout read.
“When I talk of fiscal crisis, let me make it clear, I am not talking about the government finances, but the entire economic system involving every section of the society,” he said and added that the only way to set the state’s economy on the recovery and revival path is to enhance autonomous public expenditure, which is the basic theme of this Budget, the handout read.
These measures would facilitate greater flow of cash in the system which would go a long way in the revival the sluggish economy, he added.
He further said there are 4.5 lakh employees and every employee has a family of at least five persons. “That means that a population of around 25 lakh souls is directly linked to the government. If they spend, the economy improves, if they save money, it also helps,” he said and added that the same dictum is the main reason for amnesties that are a part of the budget.
“When we announce some amnesty, we actually write off somebody’s liability and when there is no liability, it automatically becomes income,” he explained.
The state imports more from other states than it exports and hence more money goes out of the system. He said to attract more investment in the state, the government needs to handhold and incentivise the industry to attract more investments that will help to increase the flow of money in the system.
“In 2012-13, out of one rupee, 36 paisa were going out of the state towards imports while it has been gradually brought down up to 30 paisa this year that has helped to retain more money in the state,” Drabu informed .
He said the government has also been able to reduce the GPF liability from Rs 20,000 crore to Rs 8,000 crore besides reducing the liabilities of power and other concerned agencies.
He said the government is at the same time trying to bring up a new rural fiscal architecture by linking panchayats with rural and cooperative banks. “We want to effectively revive the institutions of rural local governance in the state with a sustainable supportive fiscal system side by side,” he said.
The capital infusion of Rs 250 crore to three cooperative banks and the decision to connect these banks with the panchayats will provide regular fund flow to these banks, he added.
He said a parallel financial structure has been initiated for empowering the panchayats and further boosting the rural economy.
Drabu said that the focus of the government is to promote commercial agriculture to transform the rural economy for which the spending is more than 10 times. “Horticulture is a major part of agriculture sector and thrust is on professionalising these sectors to generate more employment,” he said.
Defending the decision of keeping the Toll Tax regime intact in the GST era, Drabu said it is vital to the policy making in the state. “It is not a matter of revenue as that is too small an amount,” he said. “It is vital to the requirements of the state to know what and how much comes and goes out of the State. It is the only gateway we have and the information is required for the protection of the local industry. Trade balance is something that we must always know and the gap in it is surging.”
Drabu said the toll tax has been there since 1938. Between 2003 and 2010, it increased by half and now it saw a marginal shift and it has suddenly become an issue. “Toll is more important for protection of local industry,” he said.
Responding to the concerns of the Legislators regarding J&K Bank, Drabu assured the House that although he favours complete autonomy in the functioning of the bank, but as a regulator he will take the requisite measures to address the issues concerning the bank. “We would look into the issues, if any, in the JK Bank and ensure that its functioning is made more transparent. However, it should not be a reason for getting the issue to the House for a debate because it has costs for the finance institution,” he maintained.