A few good things that the budget 2011-12 contains include a proposal to bring six more services under the ambit of service tax. Presently 17 services in J&K are taxed, and with the new proposal the number would go to 23. The services proposed include those by commercial concerns in relation to new constructions, repairs, alterations or restoration of buildings, civil structures, services relating to TV and Radio programme productions, architects, interior decorators, chartered accountants and advertising by providing hoardings. The budget proposal to enhance toll on raw tobacco, VAT on cigarettes and cigars is also well placed.
The budget has some good proposals on agriculture and allied sectors. Proposal to increase the seed replacement rate (SRR) from 10 pc to 25 pc through research based extension programme is welcome. J&K has been far behind in achieving the desirable SRR level of national average which is above 25 pc. The CRR deficiency in J&K is because of limited resources available of breeder and foundation seeds. The desirable SRR without which achieving higher productivity is not possible, are 25 percent for self pollinated crops, 35 percent for cross pollinated crops and 100 percent for hybrids. The budget proposes toll exemption on milch animals to promote dairy industry. Toll has also been exempted on animal and poultry feed to encourage local production of poultry and sheep. Similarly, relaxation has been proposed in case of beehives and colonies in the budget. Again to give some concessions to the farming community, the budget proposes VAT exemption on pesticides, weedicides and insecticides. Previous year these items had been exempted from toll. The budget also exempts from service tax the installation of poly and green houses. Use of poly houses and green houses, if promoted in a big way, can prove highly beneficial in farming activities especially floriculture, vegetable cultivation and raising of nurseries. Presently, installation of green houses was attracting service tax of 10.5 per cent. The budget also proposes full refund of tax chargeable under the J&K VAT/GST Acts to the farmers who buy equipments and systems from manufacturers and suppliers or install them in green houses, fields, orchards and forms through contractors to ensure critical irrigation to various crops in horticulture, floriculture and agriculture sectors.  The budget proposed to exempt rice- and wheat-bran from the payment of toll while being importing into the state for use as poultry and cattle feed. The FM proposed to exempt outward as well as inward movement of beehives and bee colonies, transported seasonally through Lakhanpur from toll.
However, some major challenges that the state economy has been confronting over the years— and which in fact have become more severe in recent times— evade the attention of the budget. This budget does not stand testimony to a good effort by the government towards finding out innovative ways to increase the revenue mobilization. Except some tinkering and tweaking with the levying of the taxes here and there, and bringing a few more services in the tax net, there is no major suggestion in the budget towards increasing the internal resources of the state. Similarly, the budget does not hold anything substantial for areas like infrastructure in Industry, Education, Tourism, or for the power reforms. Even as the budget proposes an investment of Rs 316 crore under Skill Development Mission, which hopefully would help create employability among the youth, it is silent on the state of sick industries in Kashmir. The sick industries, if given adequate financial assistance to rehabilitate could help the state tackle the problem of unemployment to a great extent. Similarly, another concern is the rising non-plan expenditures. While the state’s own tax and non-tax revenues constitute just 18 per cent of the total revenues, the salary and pension liability gobbles a little less than half of the budget— 44 per cent to be precise. There is need to contain the unproductive expenditures in the administration, that the budget does not talk about.
To address the problem of inflation— though not fully in the hands of the state— the budget has done well to extend VAT exemption for another year on atta, maida, suji, besan, paddy and rice. However, it is strange that while the budget says a Master Plan for Jammu has been prepared costing Rs 1,037 crore, there is no mention of Srinagar.

Lastupdate on : Tue, 8 Mar 2011 21:30:00 Makkah time
Lastupdate on : Tue, 8 Mar 2011 18:30:00 GMT
Lastupdate on : Wed, 9 Mar 2011 00:00:00 IST