Spending Rs 1 Lakh Cr


In the second consecutive budget that Nirmala Sitharaman presented to the Lok Sabha, the major expenditures continue to remain the same, reports Tasavur Mushtaq

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Nirmala Sitharaman Union Finance Minister

Historically the budget proposals of Jammu and Kashmir have remained major exercises inciting a lot of interest for varied reasons. Earlier, the key focus would remain around the changes in the tax basket but the imposition of GST, a single uniformed tax, has evaporated that part of the interest. The people would also look at the proposals to see how the centre would behave in devolutions, grants and aides and where the focus of the public expenditure would remain.

After the August 2019 decision-making demolished the state structure, now the interest in the budget is restricted to understanding how differently, the centre wishes to plan its expenditure in Jammu and Kashmir.

On the governance level, though, the focus has always remained on one thing – the budget must be seen as trendsetting and huge. To most of the politicians, the size of the budget matters more than the quality of expenditure. So Nirmala Sitharaman’s second consecutive budget for Jammu and Kashmir is no different on those basic parameters.

Apparently, the focus of Sitharaman’s Rs 108621 crore budget is on jobs, good governance, socio-economic development and infrastructure building. But the poetry of statistics is not very different from the prose of development narrative that predates Lok Sabha takeover of Jammu and Kashmir’s public spending – borrowings, surging debts and the revenue expenditure scale remains almost unchanged.

The Income

For fiscal 2021-22, Jammu and Kashmir has put a requirement of Rs 108621 crore. Of this, Rs 16276 crore is tax revenue that will come from within Jammu and Kashmir (Rs 10462 crore as GST, Rs 1650 crore as sales tax, Rs 1978 crore as excise duty and Rs 2186 crore as other taxes) and Rs 8209 crore is the non-tax revenue including Rs 5500 crore as power tariff receipts. The major chunk of funds, Rs 62656 crore will come from the central government as grants, share from taxes and other aids. Then the proposals suggest, the Jammu and Kashmir will raise another Rs 10,000 crore as part of its additional resources mobilisation during the years.

The devolutions from the central government are anticipated to increase from Rs 55273 crore in the current fiscal to Rs 62656 crore in 2021-22 and the break-up gives a detailed idea of where and how. Rs 29165 crore will be MHA’s Revenue Deficit Grant, Rs 2500 crore as Security Related Expenditure (SRE), Rs 1313 crore for PRIs, Rs 432 crore as other central schemes and Rs 279 crore as SDRF. Then, two major funds will come as Rs 10242 crore for PMDP and Rs 18725 crore as central sponsored schemes.

This leaves a gap of Rs 11480 crore and this amount will be filled by borrowings, raising fresh debts (capital receipts). These include Rs 1600 crore of negotiated loans, Rs 7614 crore of market borrowings. The administration had lifted Rs 16438 crore loan during 2020-21. Besides, the administration had raised additional Rs 11025 crore debt under Atma Nirbhar Bharat Abhiyan for clearing power purchase liabilities.

Budget 2021-22: The Speech

The Expenditure

On the spending front, there are two broad categories – the committed expenditure (revenue expenditure) and the expenditure on asset creation (capital expenditure).

Jammu and Kashmir’s revenue expenditure devours most of the budget – Rs 68804 crore (63.34%) will go to the committed expenditures. The employees will take home Rs 38720 crore (Rs 30131 as salaries and Rs 8589 crore as a pension). The government will pay interest on the accumulated debts worth Rs 7692 crore and will purchase power for Rs 5500 crore.

On the capital expenditure front, Jammu and Kashmir will make repayment of loans worth Rs 4226 crore, invest Rs 800 crore in equities, extend Rs 109 crore as loans and advances leaving Rs 15336 crore for central sponsored schemes, Rs 1313 crore for newly set-up Panchayat Raj Institutions. The major amount of Rs 18033 crore will go to fund the major projects already announced under Prime Minister’s Developmental Programme (PMDP).

Major Expenditures

There are certain key areas where most of the budget of the go.

Mandatory disclosures under the Jammu and Kashmir FRBM Act, 2006, suggest that Jammu and Kashmir 541528 people on its rolls directly and indirectly. In the current fiscal, they are supposed to take Rs 32022.17 crore home as their salaries. In 2021-22, they will be taking Rs 34233.38 crore of salaries in addition to Rs 8589 crore as pension which means, Jammu and Kashmir will be eventually spending Rs  42822 crore on its staff only which makes almost 40 per cent of the budget. If other benefits like leave salary and medical bills are also added, it may go up to 45 per cent.

Debt is a perpetual crisis in the public finances of the states and Jammu and Kashmir, despite not being a state, is hugely indebted. During 2021-22, Jammu and Kashmir government will be spending Rs 11918 crore on repayments of debts or the interest accrued on it. It means almost 11 per cent of the overall spending will go to debts. This is taking place at a time when the administration will be making a fresh borrowing of Rs 11480 crore, of which Rs 9214 crore is the net debt creation.

Though the fresh borrowings are permitted and fall below the red line (as part of the ratio of the SGDP), debt is still a debt. According to disclosures made by the government, Jammu and Kashmir has cumulative liabilities of Rs 83573 crore.

The Security Related Expenditure (SRE) has remained a perpetual additional expenditure in Jammu and Kashmir. For the last financial year, the government had allocated Rs 2698 crore of which, it seemingly has been able to spend only Rs 2000 crore, according to revised estimates for the current fiscal. Now the allocations for 2021-22, stand at Rs 2500 crore.

New Initiatives

 The budget documents have listed various initiatives where the funds will be spent during the next 12 months. With most of the items not very different but there are certain expenditures during the year which require a mention. The government will be paying Rs 800 to Jammu and Kashmir Bank as part of the capitalization, a process initiated last year.

Engaging youth is a key focus area. Under the Mission Youth Programme, a new vertical that will now be led by Dr Shahiq Iqbal Choudhary, Rs 200 crore has been allocated. This Mission will tackle skill upgrade and a variety of activities with a focus on the youth bulge. For theatre and cinema, Rs 100 crore has been allocated. Kashmir lacks big screens since 1989 and there are some initiatives to bring it back.

Two years after the golf was opened for commoners to take away its elite-exclusivity, the budget has allocated Rs 20 crore for the promotion of the game.

With the democracy debate now restricted to the revived Panchayat Raj Institutions (PRI), a lot of funds have been set aside for this setup. These include Rs 30 crore for the establishment of DDCs/BDCs offices; Rs 1313 crore for PRIs/ULBs for rural and urban infrastructure; and Rs 80 crore stand earmarked for PRI Security.

While on the health sector, the Golden Card continues to dominate the narrative, the newer initiatives include setting up two medicities in Srinagar and Jammu for Rs 50 crore each. There is a provision of Rs 10 crore for drug de-addiction and an additional investment of Rs 50 crore for technology in the health care sector in Jammu and Kashmir.

While the World Bank is helping Jammu and Kashmir by providing Rs 367 crore for purchasing medical equipment, the budget suggests that it will install 37 Oxygen Generation Plants in all medical colleges, associated hospitals and district hospitals by investing Rs 227.73 crore. These plants are a key area in fighting Covid-19 and was in the pipeline for a year. Two new medical colleges – Handawar and Udhampur, five nursing colleges, and a cancer hospital each in Srinagar and Jammu are also part of the health relative initiatives. The Cancer Institute within SKIMS is ready for inauguration.

A provision of Rs 200 crore has been made for the Metro Corporations in Kashmir and Jammu. This is in addition to Rs 100 crore grant each to the two capital cities.

On the creation of new jobs in the Jammu and Kashmir government, the budget proposals suggest that the administration has identified 12379 gazetted and non-gazetted vacancies besides 10000 Class- IV vacancies for the accelerated recruitment drive.

The budget has formalised the public announcements regarding the involvement of NAFED in the horticulture sector at both pre-harvest and post-harvest levels.


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