Rs 26,299 cr worth Central funding proposed for 15-16
Employees get 17 pc DA, Panel to examine issue of casual workers
Slew of concessions for flood victims, rehab from April 1
50 pc loan on KCCs waived off, Lakhanpur Plaza to be privatized
Sanjeev Pargal
JAMMU, Mar 22: Finance Minister Dr Haseeb Drabu today presented first budget of 22 days old PDP-BJP coalition Government headed by Mufti Mohammad Sayeed for the financial year of 2015-16 with total expenditure budgeted at Rs 46,473 crores and receipts at Rs 42,137 crores leaving gap of Rs 4336 crores, which will be financed by prepositioning of 14th Finance Commission grants without seeking any additional funding. This is after many years that a Finance Minister has not presented zero deficit budget.
In exactly an hour long budget speech, Dr Drabu brought several other Services including Chartered Accountants, Consultants, Surveyors, Security and Placement Services, health and beauty clubs etc under the net of Service Tax and increased Sales Tax in lieu of services by 2 per cent. He proposed levy of 5 per cent VAT on computers, proposed new Excise Policy by end of this month, increase of five paise per kilogram in existing rates of toll at Lakhanpur and outsourcing of Lakhanpur Toll Plaza.
Drabu presented budget in the Legislative Assembly in presence of Chief Minister Mufti Mohammad Sayeed while Minister of State for Finance Pawan Gupta presented it in the Legislative Council in present of Leader of the House Naeem Akhter. Drabu and Gupta later briefed media on budgetary proposals.
The Finance Minister did have financial bonanza for over 4.5 lakh Government employees as he released their entire 17 percent pending Dearness Allowance (DA) of last year proposing Rs 2200 crores in the budget but he failed to come up to expectations of lakhs of unemployed youths for whom there was nothing in the budget. In his press conference, Drabu gave just assurance to the army of unemployed that he would create conditions for more incentives for them in private sector instead of Government jobs.
The budget was, however, very disappointing for unemployed youths, who were expecting some kind of employment package for them from the new PDP-BJP Government. Drabu said the budget, which was aimed at reviving economy of the State, would create conditions that youths were lure to private sector with hefty packages instead of waiting for the Government jobs.
“If they get Rs 8 crore or Rs 9 crore package in private sector, why would they wait for Rs 8 lakh or Rs 9 lakh package in the Government sector or depend on Rs 80,000 salary receive by me”,? he asked but didn’t elaborate as to how the private sector will suddenly start attracting the youths of Jammu and Kashmir within the State.
Noting that the Government would need Rs 1925 crores per annum for regularization of 61,000 casual/seasonal labourers, he announced setting up of high powered committee of Ministers and some external experts to examine the issue and make recommendations but announced creation of 3660 posts to regularize Daily Rated Workers (DRWs) as Helpers.
Voicing concern over alarming child sex ratio between six to 10 years, he proposed Rs 1000 contribution per month on behalf of every new born child for next 14 years in six districts, whose names will be announced later. At the age of 21, these girls would receive Rs 6.5 lakh. The scheme, the Finance Minister clarified, is in addition to Prime Minister Narendra Modi’s ambitious plan of `Beti Bachao, Beti Padao’.
Asserting that he was not convinced by the method in which the previous Government had presented Rs 43,960 crores worth package for rehabilitation of flood victims as it was “adhoc and arbitrary for comfort”, the Finance Minister proposed slew of measures for rehabilitation, which would start from April 1 this year.
As a major gesture for the farmers, Drabu posed to waive off 50 per cent of the Kissan Credit Card (KCC) loans for smallest and most vulnerable farmers, who have outstanding balance of less than Rs 1 lakh. He earmarked Rs 150 crores for this purpose.
Spelling out his decision to outsource or privatize toll collection at Lakhanpur, he said the basic motive is to ensure round-the-clock efficient and corruption free working to that the vehicles didn’t remain stranded.
“The outsourcing will be done transparently on the basis of secure contract including banking procedures and security, increased revenue and with minimum guarantee fee,” he added.
In another significant policy decision, the Finance Minister abolished Plan and Non-Plan heads and replaced them with Current and Capital expenditure. This, he said, will held in making everything clear and avert any crisis like payment of salaries, which earlier formed part of Non-Plan.
Yet another significant aspect of the budget was that the Finance Minister didn’t keep any budgetary proposal for much hyped and over ambitious project of previous NC-Congress coalition Government for creation of nearly 854 new Administrative Units in the State.
Subjected to a question at post-budget press conference, Drabu evaded direct reply but it was clear from the budgetary proposals as well as the Finance Minister’s reply that no funds have been kept for the new Administrative Units.
As per the budgetary proposals, Drabu proposed Rs 26,299 crores worth Central funding from Centre for upcoming financial years of 2015-16 including Rs 19698 crores as entitled grants and Rs 6601 as Other Grants. They included Rs 8088 crores under Share of Central Taxes, Rs 9892 crores as Revenue Deficit Grants, Rs 229 crores as SDRF/NDRF, Rs 794 crores as Security Related Expenditure, Rs 196 crores as Cost Sharing Schemes, Rs 499 crores as FC grants (Rs 374 crores for Panchayati Raj Institutions and Rs 125 crores for Urban Local Bodies), Rs 600 crores under Prime Minister’s Re-construction Plan (PMRP) and Rs 6000 crores under Centrally Sponsored Schemes.
The budget pegged total liabilities of Jammu and Kashmir for past nine years up to 2013-14 at Rs 44,646 crores.
In another decision, the Finance Minister announced comprehensive transformation of all 19 Public Sector Enterprises (PSEs) by drawing them out of the ambit of different administrative departments and bring them under one managerial and administrative basket for holistic corporatization and financial restructuring.
Drabu expanded the net of Services Tax by bringing more Services under the tax net. The Services, which have been proposed to be included under the Services Tax, included advertising agencies other than the newspapers, Security and Placement Services including manpower recruitment and/or supply agency services, Chartered Accountants, Cost and Works Accountants (only in the shape of accounting and auditing services when they annual turnover is Rs 5 lakh or more, Consultants including survey, feasibility, exploration and impact assessment including technical testing/analysis services, beauty salons, health clubs, gymnasiums, fitness/wellness centres, games/sports club or slimming centres and nursing homes.
He proposed increase in the rate of Sales Tax in lieu of services by 2 percent under the J&K GST Act, which will generate revenue of Rs 150 crores.
Drabu posed levy of 5 per cent VAT on computers and computer peripherals, which would garner Rs 10 crores to the Government. He proposed increase of VAT on UPS from 5 per cent to 13.5 per cent bringing them at par with inverters. He also proposed increase of five paisa per kilogram in existing rates of toll at Lakhanpur from the next financial year.
He announced that the Government would come up with new Excise Policy before the close of current financial year i.e. March 31. Disclosing that the Government would come up with new Industrial Policy on July 1, 2015, he said he will link tax rates and exemptions with the new Policy. Till announcement of the new Policy, the Finance Minister said, existing incentives and remissions will continue as on date unless specified otherwise. The existing Policy will be in force till June 30, 2015.
Projecting total budget at Rs 46,473 crores, the Finance Minister earmarked Rs 11,246 crores for building assets and infrastructure and remaining Rs 35,227 crores for current revenue expenditure. Admitting that this was not the good position as the figures should have been the other way round, Drabu quipped: “there is no way I can help as it is legacy of last 30 years if not more”.
As against Rs 46,473 crores worth budget, total revenue receipts were budgeted at Rs 42,137 crores, which will leave resource gap of Rs 4336 crores, which the Finance Minister proposed to finance by prepositioning of the 14th Finance Commission grants without seeking any additional funding.
He disclosed that total income of the State has declined by 1.5 per cent in 2014-15 to a little less than Rs 88,000 crores. With this, the average per capita of common man in Jammu and Kashmir has declined from Rs 59,279 to Rs 58,888. “Total receipts of the State have decreased by Rs 4100 crores.
Asserting that aim of the Government would be to help the traders run business in flood affected areas of the State, he said: “jab dukan chal padey gee, makaan tou ban hi jaye ga (when the business get running, the houses will be re-constructed)”.
Noting that he was not convinced by the method in which the Government had estimated Rs 43,960 crores worth financial assistance over and above the SDRF-NDRF framework for rehabilitation of flood victims and the manner in which it has been designed, Drabu dubbed it as “far too adhoc and arbitrary for comfort”.
The relief measures proposed by the Finance Minister for flood victims included waiving off demand charges on electricity for seven months from September 2014 to March 2015, no payment of passenger tax under J&K Passenger Tax Act for the vehicles, which remained off road from September to December, 2014, extension in remission of stamp duty up to March 31,2016, which is charged on documents executed between borrowers and lenders on fresh loans, extension in exemption of under the GST in respect of lodging services provided by hotels, lodges and guest houses up to March 2016 and exemption to all hoteliers from payment of entry tax on furniture/office equipment/kitchen equipment/other goods imported into the State for replacement and refurbishment till June 2015.
The Finance Minister proposed extension of zero VAT on the items like paddy, rice, wheat, pulses, floor, atta, maida, suji and besan till March 31, 2015. He also proposed exemption in toll on export of fresh vegetables. He proposed extension in the concession of VAT remission to local industry by another year i.e. up to March 31, 2016.
He reduced VAT on aluminum foil from 13.5 per cent to 5 per cent. He proposed to include “tree spray oil’ in zero percent tax rate under VAT and completely exempted baby diapers, adult diapers and female sanitary napkins from VAT. He proposed to place almonds and its kernels in zero per cent tax rate under VAT on the analogy of walnut and walnut kernels. He also proposed to abolish `Aabiyana’ saying the abolition will provide relief to all farmers across the State.
The Finance Minister announced contribution of Rs 1000 per month on behalf of every new born girl child for next 14 years in six districts of the State, which have not been named in the budget but will be notified by the Government later. At the age of 21, the girl child will receive around Rs 6.5 lakhs. The scheme will be launched in six districts with most adverse child sex ratio. Proposing an amount of Rs 35 crores for the scheme, he hoped that it will continue for next 14 years for every girl child born after April 1, 2015.
He also proposed a scheme for 50,000 widows and destitute women of the State to detect early diseases and their treatment. He proposed Rs 100 crores for this in the form of insurance and saving scheme. Names as `Aasra, the scheme will have benefits like zero balance saving account, life insurance of Rs 25,000, accident cover of Rs 25,000 sickness and disease cover of Rs 5,000 and maturity/survival benefits of Rs 25,000 after five years. He added that only widows or destitute women with no source of income will be entitled to the benefits of this scheme.
Drabu had a good news for over 4.5 lakh Government employees apart from pensioners, whose two installments of DA to the tune of 17 per cent were pending since last year.
He said 17 per cent DA pending on March 31, 2015 will be credited into the GP Fund account of the employees while it will be paid in cash from April onwards. All employees covered under the National Pension Scheme and pensioners will receive the arrears in cash.
He proposed to introduce Child Care Leave in State Rules at par with the Centre in term of which, the women Government employees will become entitled to Child Care Leave of two years in entire service for taking care of two eldest surviving children, whether for rearing or for looking after any of their needs such as education, sickness etc.
Noting that around 61,000 casual/seasons labourers have been engaged at various level by officers subordinate to the Administrative Department, Drabu said the Government was now confronted with gigantic problem of regularization of these workers.
“If the entire lot of such workers is regularized, the financial implications will be to the tune of Rs 1925 crores per annum ,” Drabu said though these implications were beyond ways and means position of the Government, still it will announce a High Power Committee of Ministers and external experts to examine the issue and make recommendations.
However, he said, the Government has decided to create 3660 posts of Helpers for regularization of an equal number of Daily rated Workers. The Government will create more posts of Helpers to cover the Departments from where the information has not been received.
On remuneration of Numberdars and Chowkidars, the Finance Minister proposed setting up of a Committee comprising the Finance Minister, the Revenue Minister and the Rural Development Minister. The Committee will examine all relevant issues, take view of stakeholders and submit recommendations within the three months.
Drabu said there are three main themes in his budget; first, build the credibility and confidence of the Government in itself and its financial management.
Let me do this by asserting in this House that I shall not seek any financial assistance or grants from the Centre other than what is provided for in the Constitution of India for all the special category states as a part of the federal fiscal system.
“In common parlance, I am asserting that I shall not go with a begging bowl to New Delhi. This despite the fact that we not only have a friendly Government at the Centre, we also have an exceptionally sensitive and accommodating Union Finance Minister. By doing so, I do hope to restore the dignity of the people of J&K who are forever being accused of surviving on subsidies and largesse,” he added.
He said goal of his Government is economic self-reliance and fiscal autonomy. “All of us want the J&K government to be able to pay not only for the salaries of its employees, but also for the development of its economy and the prosperity of its people.
“Second, while the budget is about government’s finances; it is also about private businesses. We have said in our Agenda for Alliance that economic policy shall not be formulated only for Government but for private businesses and enterprises. This budget is a first step in that direction,” he declared and said, “third theme of the budget relates to the elimination of corruption by making all Government-public interfaces non-discretionary, criteria based and transparent.
“The fiscal strategy and stance of this budget is expansionary. Not that I had much choice in it. With the people of the state in distress and the economy in shambles post the devastating floods last year, it is the responsibility of the Government not only to give relief but also to rehabilitate and reconstruct.
“We will not be able to bankroll the entire rehabilitation on our own or even in partnership with the Centre but we will have to find ways and means of doing so. That is what the Government is all about,” the Finance Minister said, adding all out efforts will be made to put economy back on rails.
Drabu said after replacement of Planning Commission by NITI Aayog and the acceptance of the 14th Finance Commission Award we have completely changed the structure of our State budget. J&K is perhaps the first State in the country to align its budget to the changes in the federal fiscal system.
“All resource transfers from the Centre to the State are now in the form of Finance Commission transfers. The plan transfers decided by the erstwhile Planning Commission have now been subsumed under those of the Finance Commission. As such, share in taxes, statutory grants, and plan grants are now a part of the Finance Commission transfers and hence statutory. All discretionary grants have been abolished.
“In this new scheme of transfers, I have completely changed the framework of the state budget. Starting from the next fiscal, i.e., 2015-16, our budget will now have only two parts; the Receipts Budget and the Expenditure Budget. The expenditure budget will, in turn now have only the revenue and capital expenditure estimates,” he said, adding that entire old classification of the plan and non- plan has been discarded. This is a major change which has far reaching implications on the allocation, efficiency and monitoring of public expenditure.
He said this change will demystify the budget to a great extent. “Now there will be only two categories of expenditure, current and capital; the former being what is spent to meet our daily expenses and the latter is what is spent on making assets on the ground. In the years to come, we can start the mapping of asset creation with money that has been spent. This was impossible in the earlier classification. In the next budget we will provide this House with the details of the physical assets that have been created on the ground by the money that was spent”.
“Another benefit of the new budgeting system that I am introducing is that the large number of Government servants who would have to wait for months together to get their salaries under plan head, will not have to wait any longer. By shifting all the plan revenue expenditure onto the revenue side from 2015-16, the hardships of these employees will be a distant memory,” Drabu said.
In the new system, he added we will formulate our own scheme of financing the state budget. “We will change the Fiscal Responsibility and Budget Management (FRBM) Act next year to ensure that over the next three years, it is mandated that borrowings are used only to finance creation of capital assets”.
He proposed a comprehensive scheme granting immunity from payment of interest and penalty under the J&K General Sales Tax Act, 1962 to address the this issue subject to the condition that the principal amount is remitted in one go. “The proposed scheme will also include grant of immunity on payment of penalty in case of Transporters/Goods Carriers on the Goods’ Receipts (GRs) seized under section 15-A(4) of the J&K General sales Tax Act , 1962 and unauthorisedly got released by them”.
“With a view to giving relief in these difficult times, making this provision less stringent, I propose that industrial units committing an offence inadvertently under the aforementioned sections shall be liable only to pay tax, interest and penalty for the goods in respect of which error is committed, provided that, in case the error is repeated then the unit shall not be entitled to any tax remission for the quarter in which the offence is committed,” he said.
“Formulating economic and taxation policy in an environment of litigation is not easy. I noticed that there are nearly 3 lakh court cases with the Session and High courts. Nearly 500 of these relate to finance and commercial taxation. This involves around Rs 400 crore causing an uncertain business environment.
“I propose setting up of an Alternative Dispute Resolutions Tribunal (ADRT) which will be empowered to speed track the settlement of all these cases. The mandate of the ADRT will be to encourage out-of-court settlement in a time-bound manner keeping in view the urgency of business and the loss of income that litigation causes,” Drabu said.
“The Bureau of Public Enterprises was created in the year 2013 to review, coordinate and evaluate functioning of 19 PSEs in the state. A task force had gone into the categorization of the 19 PSEs and recommended certain measures for their revival.
However, time has come to bring out a comprehensive transformation of these enterprises to make them relevant to the contemporary market context,” Drabu said and proposed business process re-engineering, financial restructuring and administrative reorganization of the ailing PSEs.
“The first step in this direction will be to draw the PSEs out of the ambit of different administrative departments and bring under one managerial and administrative basket for holistic corporatization and financial restructuring.
“All the public enterprises will be classified into two groups, financial and non-financial, and held in two holding companies. Once the re-engineering is complete, divestment will be done at the level of the holding companies. The J&K Bank, in which the State Government has a majority stake and The J&K Power Development Corporation (J&K PDC), shall be kept outside the ambit of this restructuring.
“The first step in the process of financial restructuring is that the budgetary support provided by the State Government to these PSEs over the years shall be converted into equity capital and accepted standard of accounting and audit shall be put in place,” the Finance Minister said.
The Government will also carve out some administrative departments and put them into the non-departmental fold. The prime candidate to start this change being the State Motor Garages (SMG).
He added that the Government will come up with a centralized policy of outsourcing transport services. Ideally, the SMG should move from being an administrative department to being a non-departmental undertaking. The first step is to make it into a PSE with one large dedicated client.
“It will be infused with funds and if it works well, it could be hived off as a separate corporation. We can try an innovative solution of making all the operational people the shareholders in this enterprise. It goes without saying that this move will also reduce the extent of leakage and corruption in the system”.
“With a view to bring a turnaround in this situation and resurrect the cooperatives, I propose to amalgamate and reorganize the existing societies, including the marketing societies,” Drabu said.
He said the Government will implement full suite of e-Panchayat solution in J&K imaginatively through the Panchayati Raj department to bring transparency and radically transforming grass root governance in the state.
“This will lead to automation of internal workflow processes of Panchayats to help in improving delivery of services to citizens. This solution will also help in enhanced Transparency, Accountability, Efficiency and RTI compliance of Panchayats. The solution will lead to strengthening of local self-Government,” he added.
“On a pilot basis, one village will be developed as a Model Basmati village in Jammu Division. One Model Apple village and one Model Saffron village will be developed in Kashmir Division. The Model Apple village, for instance will be provided with a small CA store, a grading and picking line and a packaging unit. This village will also be given the right root stock to develop a high density orchard. Similarly the Model Basmati Village will have all the facilities from growing, packaging and branding of basmati. One village will also be developed in the Ladakh region to demonstrate the use of solar dryers and modern technologies for horticultural processing,” Drabu said.
He said the Government proposed to lay focus on construction of Model ethnographic villages to showcase intrinsic cultural and heritage strengths of our people. “The first pilot cultural village will be the one that was inhabited by Kashmiri Pandits. It will be re-built to recreate aspects relating to the tradition and culture of Kashmiri Pandits.”
For Micro, Small and Medium Enterprises which have been declared sick,” Drabu proposed setting up of an Asset Reconstruction Company in partnership with the J&K Bank. It will deal with stressed assets, do asset stripping where need be and formulate a revival package where it feels that the revival is possible.
“In order to develop backward areas, I am making provision of Rs 35 crore in the budget for a higher capital investment subsidy on plant and machinery to encourage setting up of new industrial units in such areas,” he said.
He proposed to float a Dal Development Bond for restoration of the Dal lake. “I hope to make a pilot project to involve the non-resident state subjects of Jammu and Kashmir. I want to leverage their professional competencies, financial strength, and emotional equity. If they participate in it, I can commit to you that in three years we will restore this lake to its pristine glory”.
“The problem of unemployment in the State of Jammu and Kashmir is one of the most serious challenges to the Government, Policy Makers and the Society as a whole. The problem has in fact assumed serious dimensions both in term of scale and intensity particularly with reference to educated unemployed youth who graduate from various educational / professional institutions and join labour market.”
“The Government considers Youth and Entrepreneurs among the most important stakeholders to our governance agenda. Our endeavour is to make youth the most important resource in rebuilding J&K. As a tribute to their role in the recent floods, the Government announces dedication of the year 2015 to the youth,” the Finance Minister said.
‘Employment through Enterprise’ shall remain the sole policy preamble of the government to address the problem of unemployment. In order to create an overall enabling environment for Entrepreneurship and Self Employment in the State, the Government proposed some immediate initiatives, which included restructuring the J&K State Development Finance Corporation as a Start-up Finance Institution (SFI). The restructured DFC shall channelize local domestic household savings to fund local start-ups with lower risk and higher return.
“The Apex Court has held that oral gift (Hiba-e-zabani) made by Muslims does not require registration. It is felt that the power to approve the mutation of oral gift should rest in higher authority not below the rank of Deputy Commissioner concerned. Further, where the oral gift is to be made to any person or institution outside the blood relation, the prior approval of the Government in Revenue Department for carrying out the mutation by the Deputy Commissioner must be made mandatory. Law and Revenue Department will concretize the arrangements in this regard,” the Finance Minister said.
“The Law Officers of the Government such as Government Advocates, Public Prosecutors and Standing Counsels have been demanding a substantial increase in the scale of their monthly retainership. The lower scale of remuneration also has an adverse impact on the quality of service rendered. For better advocacy of Government concern in various courts and forums, I propose to earmark an additional amount of Rs 2 crore for enhancement of the retainership of various classes of Law Officers. The Law Department will notify the details of enhancement,” Drabu said.
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