SRINAGAR: Jammu and Kashmir’s fiscal strategy for 2025–26 centres on widening its revenue base, containing committed expenditure and tightening budgetary controls while continuing capital spending on infrastructure, according to Economic Survey 2026 which was presented to the assembly by the Chief Minister, Omar Abdullah. The Union Territory has approved a budget of Rs 1,12,310 crore for the current financial year and is attempting to balance development spending with rising salary, pension and debt servicing obligations.
The government projects the economy to expand alongside improved public finances. Gross State Domestic Product at current prices is estimated at Rs2,85,674 crore in 2025–26, reflecting an increase of 8.89 per cent over the previous year. Officials say the growth path has been supported by fiscal reforms and planned investments in core sectors.
Revenue mobilisation has shown a steady upward trend over recent years. Revenue receipts increased from Rs13,727 crore in 2019–20 to Rs21,121 crore in 2024–25. During the current year, Rs13,521 crore had already been realised up to November, accounting for 64 per cent of last year’s collections. With revenue receipts growing at a compound annual rate of around 9 per cent since 2019–20, the administration anticipates collections of about Rs23,022 crore by the end of 2025–26.
Taxes remain the backbone of the revenue system. Of Rs9,136 crore collected in taxes in the first eight months, the Goods and Services Tax accounts for nearly 59 per cent. GST collections alone contributed about 60 per cent of tax revenue and 40 per cent of total revenue in 2024–25. The government has focused on improving compliance, expanding the number of active dealers and using data-based scrutiny and risk-based verifications to curb leakages. However, GST receipts this year have been lower than the same period last year, which the survey attributes to the completion of major infrastructure projects, slower commercial activity and reduced tourist inflows following security and weather disruptions.
Non-tax revenue has also gained importance. Power tariffs have emerged as the second-largest contributor, with collections rising sharply to Rs4,908 crore in 2024–25, aided by smart metering and network improvements under central schemes. Overall non-tax receipts of Rs4,386 crore were realised in eight months, roughly two-thirds of last year’s total.
Despite better revenues, expenditure pressures remain high. Revenue expenditure during the first eight months stood at Rs45,157 crore, already 64 per cent of the previous year’s total. Salaries and pensions together account for more than 52 per cent of revenue expenditure, while interest payments and grants add further rigidity. Capital expenditure during the same period was Rs7,933 crore, about 42 per cent of last year’s capital outlay, reflecting the government’s attempt to protect investment spending even as routine costs rise.
The survey notes that committed expenditure on salaries, pensions and debt servicing constitutes around 65 to 70 per cent of revenue expenditure and 55 to 60 per cent of total spending, leaving limited fiscal space. Under-recovery of power dues, defined as the gap between power purchase costs and actual receipts, continues to strain finances and adds to the fiscal deficit. As a result, the scope for expanding capital spending depends significantly on central grants and assistance.
The structure of the budget underlines this dependence. Grants from the central government account for between 56 and 66 per cent of total resources. Own revenues contribute about 22 to 24 per cent, while 10 to 19 per cent is financed through borrowings and other receipts. In 2025–26, grants so far account for about 53 per cent of available resources, own revenues around 21 per cent and borrowings about 13 per cent.
Borrowing and debt management have become key components of fiscal policy. Public debt constitutes around 69 per cent of total liabilities, with internal market borrowings forming 68 per cent and loans from the Government of India making up a minimal share. The Provident Fund accounts for about 19 per cent of liabilities. Over the past decade, the share of internal debt has increased while provident fund liabilities have declined, which the survey describes as improved debt management and greater transparency.
The government has also lengthened the maturity profile of its debt to reduce rollover risk. The weighted average maturity of marketable debt has increased from 12 years in 2020–21 to 25 years in 2024–25. For the first time, Fiscal Responsibility and Budgetary Management targets have been formally notified after legislative approval, and contributions have begun to the Consolidated Sinking Fund and the Guarantee Redemption Fund to cushion contingent liabilities and reduce borrowing costs. Better liquidity planning has reduced the number of overdraft days from 135 in a year to 40.
Capital spending is increasingly channelled through centrally sponsored schemes because of the favourable 90:10 funding pattern. Receipts under such schemes rose sharply to more than Rs10,300 crore in 2023–24 but declined in the subsequent two years due to the closure of several projects and the transition to the new SNA-Sparsh system for fund flows. Even so, the administration has prioritised timely releases of its share to leverage central funds for infrastructure and service delivery.
Alongside fiscal consolidation, the government has rolled out multiple digital systems to improve transparency and efficiency. The BEAMS platform enables work-wise allocation and real-time monitoring of funds. E-stamping and e-Abgari have digitised stamp and excise collections. The Empowerment or Janbhagidari portal allows citizens to track projects, while geo-tagged verification and the PROOF platform monitor works on the ground. Procurement has been shifted to the Government e-Marketplace, with purchases rising from Rs830 crore in 2020–21 to Rs2,100 crore in 2024–25 and Rs1,500 crore already recorded by November 2025, with a large share benefiting local suppliers.
Taken together, the fiscal picture presented in the survey shows a government attempting to strengthen its own revenue streams, rationalise expenditure and manage debt more prudently while relying heavily on central support to sustain development spending. The challenge, as the document notes, lies in containing committed costs and improving cost recovery in sectors like power so that more resources can be directed toward capital investment and long-term growth.
