JK in debt trap
BCR runs into negative,debt/GSDP ratio touches 80 pc
Srinagar, Oct 27: In a concern, J&K’s Balance from Current Revenues (BCR), an important parameter to depict the health of state finances, has deteriorated considerably, while the debt/GSDP ratio has reached almost 80 percent against all India average of 35 percent.
“The BCR has witnessed a further drop from (-) Rs 4476 crore in 2009-2010 to (-) Rs 7617 crore in 2011-2012,” a senior official told Greater Kashmir.
To put it in a simple way it actually means that the State has “negative” resources and therefore, no resources of its own is available to fund annual plan.
“Our dependency on center for financial assistance has only deepened and it is not a good sign. We are becoming more and more addictive to borrowing,” said the official.
Another senior official said in states like Maharashtra and Gujrat the BCR is in positive. Though the money coming from Government of India is the constitutional right of the state, he said, in the face of negative BCR and the subsequent dependency on funds from the center, the situation is turning panicky.
“The BCR is current expenditure minus current revenue and it is a negative feeder in case of JK,” explained the official.
The situation is such that JK first requires support from centre to neutralize the negative BCR and then to fully finance the Annual Plan through Central Assistance.
He said almost 21 per cent increase in salaries to employees following implementation of the 6th pay commission report, creation of large number of posts, expenditure on police establishments and overall increase in non-plan expenditures are adding to the JK’s “sad story of finances.”
“We are living beyond our means and there is nothing to prove that government wants to change the standards,” he said.
From an employee to a minister, the official said everybody is contributing to the negative BCR. Few year ago government announced austerity measures, making it mandatory on ministers, bureaucrats and other officials to cut down their expenditures but the decision is going nowhere.
The unchecked allotment of government vehicles to bureaucrats and ministers and the fuel consumed by them, the maintenances cost for the government residences used by these authorities besides lavish parties arranged by the departments on regular basis continue to consume state finances.
“The TA/DA is flowing like water. We are only fooling ourselves. Time has reached when cutting down the expenditures has become a dire necessity,” the official said.
He said though JK’s OTR/GSDP ratio of 8.05 percent is better than all India average of 7.76 percent however due to state’s high revenue expenditure, government has been borrowing beyond its means.
He said the state is mired in a Debt/GSDP ratio of 79.40 percent as against all India average of 35.28 percent.
Absence of a long term policy on part of the state government to boost financial resources, and ensure fiscal discipline is seen among the reasons for JK’s mounting fiscal burden.
The liabilities have grown from Rs 3,358 crore with a percentage increase of 17% in 1991-92 to Rs 24,800 crore (percentage increase of 19.17%) in 2009-10.
Sources said total expenditures have touched Rs 26000 crore when the availability is only Rs 18,000 crore.
The payment of salaries, pension and payment of interest on loans are showing a steep upward trend. Officials said the deficit of around Rs 2,000 crore on power tariff returns, abnormal spending on police establishment and high employment ratio are major factors contributing to negative BCR.
Documents reveal that salaries and pension have witnessed “abnormally high growth” with total non-plan revenue expenditure going up from Rs 879 crore in 1988-89 to an abnormally high level of Rs 21,547 crore (BE) during 2011-2012. “This accounts for over 24 times increase in last two decades. The Salary bill which was merely Rs 224 crore in 1988-89, has reached to Rs 11360 crore accounting for 50 times increase and the pension bill which was Rs 26 crore in 1988-89, has reached an unprecedented level of Rs 2651 crore (BE) during 2011-2012. This accounts for over 100 times increase over two decades.”
Total Non-Plan Revenue Expenditure during 2007-2008 was Rs 11,666 crore which has surged to Rs 17,455 crore (RE) during 2010-2011, accounting for an increase of about 50 percent.
Lastupdate on : Thu, 27 Oct 2011 21:30:00 Makkah time
Lastupdate on : Thu, 27 Oct 2011 18:30:00 GMT
Lastupdate on : Fri, 28 Oct 2011 00:00:00 IST
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