State’s Economic Growth and GSDP Significant: Rather

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KL Report

Jammu

Asserting that the economy of the state is growing satisfactorily and the fiscal deficit is perfectly within the targeted parameters of the 13th Finance Commission, the Minister for Finance and Ladakh Affairs, Abdul Rahim Rather on Monday said that the economic growth has been consistently showing an upward trend since the last four years, which was a matter of great satisfaction.

Strongly countering Muzaffar Hussain Beigh’s asssertion that the budget is directionless and has no road map, Rather said Fiscal Responsibility and Budget Management (FR&BM) Act at the state level and Central Statistical Organization (CSO) at the national level are the most reliable guiding institutions to bring in and measure fiscal discipline, adding that it was a matter of great satisfaction that under their guidance, the state’s finances are marching forward in a right direction. He said J&K is one of the few states in the country where fiscal deficit has been contained as per the prescribed targets.

Rather also dispelled the notion that the state is wholly and soley dependent on central assistances, adding that the tax share distributed among different states comes from the central divisible pool under the provision of the Constitution. He said it is the Finance Commission which decided the grants for different states out of the consolidated fund of India. So it is not correct to say that states dependence on Central Assistance was increasing.

Rather said that the Comptroller and Auditor General of India in the Draft Report on state Finances for the year ending March 31, 2012 has appreciated the financial achievements of the state government. Quoting the CAG’s report, he said that the state has made good use of the opportunities presented by the increased economic activities to substantially increase tax revenues. There has been a record mobilization of commercial taxes and stamp duties in 2011-12, and the state’s own revenues have shown a very high growth. It is to the credit of the government that the state’s dependence on non-debt resources from the Central government (as %age of total expenditure) has come down from 67% in 2006-07 to 63% in 2011-12. CAG has said that even as concerns remained about delay in completion of ongoing projects, the state government’s capital expenditure has registered significant and steady increase. Likewise, it has been appreciated that the state’s switchover to government Banking with RBI with effect from April 01, 2011 after liquidating its entire overdraft with J&K Bank as on March 31, 2011 with Special Central Assistance in the form of Grant-in-aid of Rs 1000 Crore. During 2011-12, the interest burden on overdraft/ways and means advances came down by over Rs 220 crore as a result of this switchover to new banking arrangement. Report has also patted the state for taking significant decisions like introduction of National Pension Scheme (NPS) bringing more items under the ambit of VAT, some services under tax net, computerization of Commercial Taxes Department to be completed by 2013 and a host of other institutional and sectoral reform measures. The arrears in the accounts of PSU’s are being liquidated, the CAG report adds.

Giving detail about the measures to revamp the powers system in the state, Rather said that a new hydle policy has been announced in 2011 to facilitate construction of new power projects and contain Transmission and Distribution losses. He said a sum of Rs 3,875 crore has been spent to purchase power this year against a revenue of Rs 1460 crore thereby causing losses to the tune of Rs 2400 crore.

About employment, Rather said that the government is committed to provide over 70,000 – 80,000 jobs in government sector during next two years adding that around 50,000 youth were recruited in the state during last four years. He said government jobs alone cannot solve the problems of unemployment as the volume of educated unemployed youth is very huge. He said government announced SKWEPY, Seed Capital Fund scheme, Youth Start up Loan Scheme, UDAAN and Himayat schemes to train the youth so that they are able to put up their own income generating units.

Responding to the demands of most members, the Finance Minister announced to raise the honorarium of Panchs from Rs 300 per sitting to Rs 1000 per month. He said the rate of honorarium proposed for the sarpanchs and Panchs of the state is highest as compared to the neighbouring states.

About Fiscal discipline, the Minister said that every treasury officer has been asked to maintain the budget control register to check that no excess withdrawals take place. He said not a single complaint about excess withdrawal at any treasury of the state has come to his notice during the last four years. He said CAG has in its latest report appreciated the measures taken by the state to ensure fiscal discipline and budget management. He assured the members that appropriate provision will be made in the budget for bad pockets adding that this step has been taken by him.

On Tourism, Rather said that it has become imperative to develop some areas of Jammu and some areas around it like Batote, Kud and Patnitop, which will be bypassed by direct trains to Katra and four laning of NH-IA.  He said Rs 333 crore worth projects have been approved for developing tourism in Jammu whereas Rs 280 crore has been earmarked for development of tourism related infrastructure in Kashmir. This will be in addition to normal budgetary allocations.

Responding to the demands of the members, Rather announced that government has almost made the agriculture sector tax free. He said it was imperative to develop infrastructure for the postharvest management of fruit so that it reaches to the terminal Mandis in fresh condition and with original flavour.   He gave out figures to assert that Agriculture Sector has grown by 11.66% in current year (at current prices and 3.84% at constant prices and that its growth is better than the growth rate of last year.

Earlier in his one and half hour reply to the general discussion on budget, presented by him on Monday March 6, in the J&K Legislative Assembly, Rather said that the state’s GSDP, which was only Rs 42,315 crore at current prices during 2008-09, wass expected to rise to Rs 76,115 crore in the current fiscal. He said over the last year’s figure of Rs 65,979 crore, the growth rate at current prices works out at 15.36%. He said the corresponding GSDP figures at constant prices are Rs 34,664 crore for the year 2008-09 and Rs 43,628 crore for the current fiscal which reflects the growth rate at constant prices over the last year’s figure of Rs 40,771 crore at 7.01%.   This was higher than the national average.

As per a statement Rather while substantiating his budget proposals with a strong statistical back up said that the 13th Finance Commission has given a target to gradually cut down the fiscal deficit year wise which has been achieved by the state successfully and satisfactorily. He said that in 2010-11 the fiscal deficit was 4.32 per cent while it has been restricted to 4.54 per cent during the last fiscal adding that as per the new series of constant  prices (base 2004-05), these figures have further improved to 4.15 per cent and 4.29 per cent respectively. The position has been fully explained in the Economic survey and there was no contradiction anywhere.

“Likewise, the per capita income of the state   in 2008-09 was to the tune of Rs 30,212 which rose to Rs 44, 533 in last year and was estimated at Rs 50,806 in the current fiscal. At constant prices, the state’s per capita income rose to Rs 29,215 last year in comparison to Rs 25,641 in 2008-09. For the current financial year, the per capita income is estimated to was to Rs 30,889” at constant prices, Rather added.

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