JAMMU: Jammu and Kashmir Finance Minister Omar Abdullah has said that the Union Territory continues to face fiscal stress due to high committed expenditures, which account for over 70 per cent of total spending, with salaries and pensions alone making up nearly 60 per cent of revenue expenditure. He attributed the situation to limited revenue streams, an unfavourable geographical location, and years of unrest, which have hindered industrialisation and deepened financial constraints.
Presenting the budget, Abdullah highlighted the government’s recent efforts to expand revenue, curb non-priority spending, and enhance fiscal transparency. He said that GST compliance has improved through rigorous monitoring and dealer expansion, with further measures such as GST tracking for capital works and risk-based e-way bill verifications in place to strengthen revenue realisation. Additionally, red-flagged cases are being scrutinised using inputs from the Business Intelligence Unit (BIU) and GST Network (GSTN) to prevent tax leakages.
The government has also introduced e-stamping for registrations and launched the e-Abgari platform for the Excise sector to ensure greater transparency. As a result of these measures, non-tax revenue has risen to Rs 5,824 crore as of January 31, 2025, while tax revenue has reached Rs 11,650 crore, surpassing last year’s collections. The finance minister affirmed that these initiatives would continue to be built upon to enhance revenue generation and fiscal management.
Additionally, high Aggregate Technical and Commercial (AT&C) losses and under-recoveries in the power sector have further strained finances. The government is addressing this through reforms in metering, billing, and collection, with under-recovery dropping from Rs 6,552 crore in 2022-23 to Rs 5,244 crore in 2023-24, and a target of Rs 4,200 crore for 2024-25. Expanding the consumer base, installing smart meters, and introducing online billing and aerial bunched cables are among the measures driving this turnaround.
The finance minister noted that high AT&C losses had resulted in substantial outstanding liabilities for power purchases, necessitating a borrowing of Rs 28,000 crore in recent years. This has led to an increase in public debt from 48 per cent of the Gross State Domestic Product (GSDP) in 2015-16 to 52 per cent in 2023-24. The government is now focusing on reducing high-cost debt, optimising liabilities, and restructuring repayment schedules for long-term fiscal stability.
To tackle fiscal challenges, Abdullah said that austerity measures are being implemented to curb non-priority spending, while Aadhaar seeding and biometric verification are streamlining welfare databases in the food supply and social security sectors. Furthermore, to enhance fiscal transparency, all developmental expenditures are available for public scrutiny on the Empowerment/Jan-Bhagidhari portal. Independent officers are also systematically verifying projects to ensure timely completion and quality execution.
The finance minister said that steps are being taken to strengthen debt sustainability, including keeping all borrowings within approved limits and pursuing a fair apportionment of Jammu and Kashmir’s erstwhile public debt between the successor Union Territories. The government has also begun contributing to the Reserve Bank of India’s contingency funds, including the Consolidated Sinking Fund (CSF) for debt repayment during financial stress and the Guarantee Redemption Fund (GRF) for sudden financial obligations.
Highlighting the role of Jammu and Kashmir Bank in the region’s financial system, Abdullah said that the institution has continued its reform journey, strengthening capital adequacy, corporate governance, and professional management. These measures have revitalised its financial health, with operating profit expected to rise to Rs 2,100 crore this year from Rs 1,760 crore last year. Additionally, a key reform in pension management has been introduced to address delays in account reconciliation and mounting reimbursement dues, with the government ensuring timely pension reimbursement to the bank, with zero dues from July 2024 onwards.
The finance minister asserted that fiscal discipline is being strengthened by curbing reliance on Hundis and overdrafts. Improved liquidity management has significantly reduced the government’s dependence on ways and means advances or overdrafts. The budget, he said, lays the foundation for a fiscally prudent development path.
Abdullah also emphasised the importance of Centrally Sponsored Schemes (CSS) in addressing Jammu and Kashmir’s financial needs. He noted that CSS receipts had risen from Rs 5,997 crore in 2022-23 to Rs 10,324 crore in 2023-24 and that efforts were underway to sustain this momentum. The government is ensuring faster execution, timely submission of utilisation certificates, and proactive engagement with central ministries to maximise benefits from these schemes. Additionally, it is working to enhance the efficiency of developmental spending and promote private-sector participation to complement government finances and accelerate economic growth.
Recognising the significant infrastructure deficits in road connectivity, water supply, sewerage, tourism, and power, Abdullah said that substantial financial resources and continued support from the Central Government were required to address these gaps. He said that the government had actively engaged with the Centre, leading to the formation of an expert committee to resolve fiscal issues. Meetings with the Prime Minister, Union Home Minister, and Union Finance Minister had resulted in special financial assistance being approved for Jammu and Kashmir, along with support for fiscal reforms to enhance revenue and expenditure management.
Omar announced that the budget for the Jammu and Kashmir Police, which accounted for around 11 per cent of the allocation, had been migrated to the Ministry of Home Affairs (MHA) budget from 2024-25 onward. Additionally, Jammu and Kashmir would receive an extra Rs 5,000 crore in grants for 2024-25 and 2025-26. The finance minister expressed gratitude to the Central Government for its support in strengthening the region’s fiscal health and fostering growth.
As a result of fiscal reforms and central assistance, Abdullah said that the fiscal deficit would be reduced, bringing the Union Territory closer to its Fiscal Responsibility and Budget Management (FRBM) target. He projected that Jammu and Kashmir’s economy would grow at 7.5 per cent in 2024-25, with an estimated GSDP growth of 9.5 per cent in 2025-26. This momentum, he said, would be driven by strategic policy measures, infrastructure development, and business-friendly initiatives aimed at securing long-term economic stability and prosperity.
