The Finance Department budget proposal for the next financial year is a step up over earlier allocation with a focus on infrastructure and certain concessions to sunrise horticulture
In the first bureaucratic budget for the first time after 1995, the governor’s administration has not interrupted the reforms process in the public finance management that was initiated in the last few years. Instead, it has set aside allocations to ensure the infrastructure development goes to the next level.
The Rs 88911 crore budget approved by the State Advisory Council for fiscal 2019-20 has a set of initiatives aimed at improving the infrastructure across socio-economic sectors. While Rs 1000 crore would be spent on completion of languishing projects, Rs 1500 crore has been set aside for new water supply schemes. The other major allocations include Rs 250 crore for upgrading the infrastructure of new colleges; Rs 100 crore for benches and desks of all the schools of the state; Rs 45 crore for water and electricity to schools; Rs 350 crore for completion of the buildings of the new medical colleges; Rs 87 crore for the twin AIIMS in Kashmir and Jammu; Cathlab for SMHS and MRI for SKIMS’s Bemina hospital. The budget has Rs 500 crore for broader sewage management and an addition Rs 100 crore for creating metropolitan authorities in Jammu and Srinagar.
There are two major interventions in the horticulture sector: 50 per cent subsidy in case of controlled atmosphere storage (CAS) and creating refrigerated transportation chains. Rs 500 crore has been set aside as subsidy for purchasing 500 buses in the private sector.
There are two interventions directly linked with the jobs. The budget has Rs 1000 crore for absorbing the temporary teachers. In the Panchayat set-up, 2000 accountants are being appointed to manage the finances. In the next 15 months, the budget estimates suggest, the twin systems of Urban Local Bodies and Panchayat’s would get a cumulative resource of Rs 3600 crore.
The major emphasis of all the state government budgets has been at improving public spending on the developmental front. Estimates suggest that Rs 30469 crore would be spent as CapEx which includes Rs 7340 crore as the state’s share in various Central Sponsored Schemes (CSS). However, only Rs 14073 crore is set aside for state plan, the district plan and PMDP.
The rest of the allocated money may not necessarily get into the developmental activities. These include Rs 72 crore slated for loans and advances; Rs 2106 crore of debt repayment which is due during the year; Rs 4056 as payment as equity and investment plus Rs 2822 crore that fall under “other” category of the capital expenditure.
This is despite the fact that, over the years, the state’s per unit revenue cost on spending a unit on capital expenditure has greatly reduced. J&K would spend Rs 5.62 for implementing a project of Re 1 in 2014-15. Between 2017-18 and 2018-19, it fell from Rs 4.8 to Rs 3.2 and finally has reached Rs 1.9 in the current fiscal.
The rest of the budgeted money, Rs 58442 crore will go to the committed expenditure. The main expenditure on the revenue side is the salaries of the employees. The state government has anticipated the requirement of Rs 28408.45 crore as salary to its 525980 employees in the next financial year excluding Rs 6380 crore of pension. It means an expenditure of Rs 34788.45 crore. If the Rs 1000 crore, set aside for adjustment of temporary teachers and the costs of taking 2000 accountants are added to it, the bill will be closer to Rs 40,000 crore. Interestingly, the government spent Rs 29415.21 crore on salary and Rs 5800 crore on pension thus booking Rs 35215.21 crore on the wages head alone during the current fiscal.
Borrowings are a major crisis for the public finances but cannot be avoided. On the borrowings front, the state government considers the Provident Fund of its employees as a loan and then goes on borrowings from the open market or even from the central government institutions. In the new year, the government will have total borrowings of Rs 13378 crore. By the end of 2017-18, the state government is indebted to the tune of Rs 68204 crore which makes 48 per cent of the state’s GDP.
The state government will spend Rs 6941 crore as an interest payment and Rs 2106 crore as debt repayment during the year. Interest payments are being made from the RevEx and the repayments from CapEx.
Daily analysis of the income and expenditure of the state government offers an interesting story. The government will be spending Rs 243.59 daily which is whopping expenditure for a population of slightly more than 1.25 crore people living across 22 districts of the state.
Though the exact details on daily basis may not be possible, broadly, it will look like this: Rs 95.03 crore will go as salaries and pensions to 525863 employees of the state government on daily basis. The state government will spend Rs 21.09 crore on power purchase as Rs 24.78 crore will go as repayment of loans and interests on a daily basis. The developmental activities will cost the government almost Rs 60 crore. More than Rs 2 crore is the daily expenditure for the state government to manage the assets it has created. Though the central government will provide the state government with an amount of Rs 4.86 crore on daily basis under SRE, the state will be spending much more to the security-related issue on daily basis.
On the income side, 59 per cent of the total resource will come from the central government in grants, share from the central tax pool and funded schemes. (In fact, 43 per cent of the income is a central grant and 16 per cent is the central tax share.) State’s own resources are only 21 per cent: 14 per cent comes from tax and seven per cent is non-tax. This leaves 20 per cent of the budget that will come from the borrowings, both debts creating and non-debt creating.