JK Govt seeks loans of Rs 1,500 crore, to be repaid with road, water, fuel taxes, ‘full use’ of timber

JK Govt seeks loans of Rs 1,500 crore, to be repaid with road, water, fuel taxes, ‘full use’ of timber

Srinagar: Road tax, water connection charges, taxes on petrol and diesel, and extraction of timber up to the “full permissible limit” – as much as 80 lakh cubic feet (cft) – will go towards repaying loans to banks of Rs 1,500 crore that the J&K Government is planning to borrow at a rate of 8.5% interest.
The Jammu and Kashmir Infrastructure Development Finance Corporation (JKIDFC), the government undertaking formed in 2018 to speed up pending, unfunded or languishing infrastructure development projects in JK, has already invited expressions of interest (EOI) from banks for lending Rs 1,500 crore. The corporation will pay an interest rate of 8.5 percent on the borrowed amount, it has declared.
The borrowed money, the government has decided, will be paid back from taxes under the Jammu and Kashmir (Motor Spirit and Diesel Oil) (Taxation of Sales) Act, road tax, and water connection charges. Revenue realisation by making full use of the permissible limit of 80 lakh cft of extraction of timber will also be used for paying back the loans. The amount would be raised within the remaining months of the current financial year.
“The bidders are requested that the maximum rate of interest decided by the authorities is 8.5%. The bidders are accordingly informed to quote the rate of interest at which they will offer the debt/ loan along with the amount they are prepared to invest during January-March 2020-21 and April-May 2021-22,” reads the EOI issued by JKIDFC.
The decision to borrow money comes at a time when the J&K Government’s Roshni scheme has just been scrapped. Under that scheme, state land was turned into private property for a fee. The money raised from these transfers was meant to fund power projects in Jammu and Kashmir. The new borrowing will be used to fund languishing projects, power projects one of them. The government has already started to map down incomplete projects where the raised funds would be utilised.
The borrowing of funds would further burden the state exchequer, which is already gasping for liquidity. The financially starved Jammu and Kashmir runs its operations mostly on New Delhi’s share of taxes, but these always fall short of the government’s expenditures. The power sector alone owes more than Rs 6,000 crore, which is just a part of more than Rs 50,000 crore debt that JK has on its accounts.
The new move has taken many by surprise, as it seems to signal a change in the means of funding for the JK government.

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