Appreciating the need for bringing about financial discipline in the state, the government has announced new fiscal policy for 2011-12. While the new policy contains the same old slogan of ‘compressing the non-productive expenditures’ without actually identifying any radical or innovative way to do it, the best feature it has is ‘to promote private enterprises in the state.’ Although the immediate need for a new policy seems to have been goaded by the 13th Finance Commission guidelines that require the state to reduce the government expenditure and bring the fiscal deficit to minimum possible level. The good thing is that a genuine realization has perhaps dawned on the government to put its financial house in order. However, what needs to be understood is that the task to bring about fiscal discipline in the state is easier said than done. It really needs some hard-headed decisions on the part of the government, which of course should begin to be implemented right from the corridors of power. State’s tight financial position can be gauged from this: Over 60 per cent of our budget comes from the Centre in different forms. Another about 15 per cent is borrowed from various financial institutions. There remains only a little that actually comes through our own tax and non-tax revenues. This tight position of state finances surely calls for utmost prudence in spending. No responsible government or its functionaries can evade their responsibility to ensure careful and diligent use of its resources. But sadly that does not seem the case. We continue to splurge a good amount of our total resources on interest payments. Similarly, we turn lavish when it comes to meeting out the unproductive expenditures in the administration. Not just that, our power sector continues to be a white elephant for the state exchequer. With our persistent failure to upgrade the worn out and decrepit transmission and distribution system in the state, we are losing a significant chunk of our resources on this sector. It is no exaggeration that it is the mumbo-jumbo state administration and the laggard power sector that not just dent our exchequer, but also emaciate our financial strength. The bad news is that the challenges on financial front are not going to ease for us before. The position rather is going to become tighter. The state has a commitment to pay the 6th pay commission arrears to its employees and pensioners. The state sector which has bloated over the years into a behemoth gulping down our budget cannot be truncated in absence of a vibrant private sector in the state. Nonetheless, even as the government can understandably do little to increase its internal tax and non-tax revenues as levying more taxes/fees on the people who have been in the vortex of abnormal situations for more than two decades now, won’t be advisable. But nothing prevents it to devise policies and plants to compress, wherever possible, its non-productive expenditures and bring about some improvement in its power sector. One of the ways to bring down the expenditure in the government sector would be to encourage and help improve the private sector in the state which in turn could relieve the government of some of the burden on account of job creation.
Luckily, the policy has identified certain good initiatives which hopefully could be fruitful provided they are strictly acted upon. The steps like outsourcing different activities of the government with a view to curb establishment related expenditures; devising new method of employment in the government services; continuing with the austerity measures for the current year, are welcome. However, what needs to be understood is that the target fixed by the 13th Finance Commission for J&K is not an easy one to achieve. Against its fiscal deficit of 9 per cent in 2009-10, it has to bring it down to 3 per cent up to 2014-15. Perhaps some more steps need to be taken.

Lastupdate on : Tue, 3 May 2011 21:30:00 Makkah time
Lastupdate on : Tue, 3 May 2011 18:30:00 GMT
Lastupdate on : Wed, 4 May 2011 00:00:00 IST