Neeraj Rohmetra
JAMMU, Mar 3: Expressing concern over the financial health of the State, the 14th Finance Commission has clearly pointed out that Jammu and Kashmir continues to have high debt burdens and fiscal deficit.
The Commission headed by former RBI Governor, Y V Reddy, which placed its report before Parliament says, “though Jammu and Kashmir has been given the highest grant of Rs 60,000 crore among the revenue – deficit States, it continues to have high debt burden”.
Commenting on the fiscal deficit of the State, the Report says, “except for few States including Jammu and Kashmir, all of their counterparts had reduced their gross fiscal deficit to below 3 per cent of GSDP. Both Jammu and Kashmir and Mizoram were to achieve the 3 per cent target by 2014-15, but there seems to be little progress”. The 2013-14 (RE) figures clearly indicate that the State had incurred fiscal deficit in excess of 3 per cent of GSDP.
“However, the State had managed to increase its own revenue base and there had been rise in the tax revenue to GSDP ratios of the State”, says the Report.
The Commission has assessed that the State has pre-devolution revenue deficit of Rs 18,640 crores (2015-16) and the figure is likely to touch Rs 29,385 crore at the conclusion of five year plan. However, the post-devolution revenue deficit of Jammu and Kashmir, which is obtained by adding the share of State in Central taxes, the amount comes out to be Rs 9892 crores (2015-16) and is likely to touch Rs 14,142 crores by the end of financial year 2019-20.
To overcome the Revenue deficit, the Commission has recommended revenue deficit grant for each year of the award period. “For Jammu and Kashmir, it has recommended total grant-in-aid of Rs 59,666 crores, which will be spread over five years. The year-wise grants would be Rs 9892 crores (2015-16), Rs 10,831 crores (2016-17), Rs 11,849 (2017-18), Rs 12,952 (2018-19) and Rs 14,142 crores (2019-20)”, says the document.
“The purpose of the grant to cover non-Plan revenue deficits and the objective is to give grants to State like Jammu and Kashmir, which are projected to have post-devolution non-Plan revenue deficit in any year, on a normative basis”, sources in Finance Department said.
Referring to transfers from the Union, the document says, “despite an overall increase of about 0.7 percentage point in the aggregate Union transfers to States as a percentage of GDP between 2004-05 and 2012-13, there was a decrease in the level of these transfers to the GSDP in case of nine States including Jammu and Kashmir. At the same time, there have been fluctuations in the levels of transfers from the Union, over this period, for individual States”.
Commenting over the preferential treatment being given to the border States, the Report says, “the share of Plan grants in total transfer to the States has shown an increasing trend in recent years, particularly since 2006-07. However, within Plan grants, the share of normal Plan assistance distributed under the Gadgil-Mukherjee formula has shown a declining trend, particularly after the practice of the Union Government giving Plan loans to the State Government was stopped following the recommendations of 13th Finance Commission. Only the North-Eastern States as well the hill States including Jammu and Kashmir continue to receive substantial portion of Plan grants by way of normal assistance for State Plans”.
“As service tax is not levied in Jammu and Kashmir, the State doesn’t have any share in the entire proceeds of the Union tax and same is distributed among the remaining 29 States in the country”, says the documents.
While elaborating on the disasters eligible for funding, the Report says, “up to 10 per cent of the funds available under the SDRF can be used by a State for occurrences, which it considers to be ‘disasters’ within its local context and which are not in the notified list of disaster in the Ministry of Home Affairs. Also, while calculating the requirement of funds from the NDRF, during several calamities, the existing practice of adjusting the contribution made by Union Government to SDRF should continue”.
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