The Central Government is set to grant Rs 8,820 crores to the newly created Union Territories of Jammu & Kashmir and Ladakh to boost their economy and give impetus to development.
According to officials, the grant of Rs 8,820 crore is in lieu of 14th Finance Commission Award which was sanctioned for the erstwhile State of Jammu and Kashmir. The erstwhile State was estimated to receive Rs 1,25,000 crore from the Centre during five year award period 2015-16 to 2019-20 of the 14th Finance Commission.
“Union Finance Minister Nirmala Sitharaman has presented Rs 8820 crore worth first batch of Supplementary Demands for Grants in both Houses of Parliament for newly created UTs of J&K and Ladakh in the remaining months of current financial year 2019-20,” said a senior Finance Department official.
“J&K and Ladakh will get the funds once both Houses of Parliament pass the grants tabled by the Union Finance Minister,” the official said.
The Centre transfers 42 percent of the total taxes it collects to States as per the recommendations of the 14th Finance Commission. Among the States, Jammu & Kashmir’s share was 1.854 percent of total taxes devolved. The award of the 14th Finance Commission is for a five year period ending 31 March 2020.
The powers of presenting grants for the UT of J&K are vested with the Central Government in absence of the Legislative Assembly. In case of UT of Ladakh, which as per the J&K Re-organisation Act hasn’t been granted Legislature, its financial requirements will be met by the Central Government.
Meanwhile, the Central Government has extended the term of 15th Finance Commission by 11 months as it needed time in the wake of change of status of Jammu and Kashmir State, which was divided into two Union Territories on 5 August.
Term of the Finance Commission, scheduled to end on November 30, has now been extended till 30 October 2020.
As a State, the size of Jammu and Kashmir Budget for 2019-20 stood at Rs 89,819 crores. So far, J&K like all other States, used to receive a share in the devolution of taxes collected by the Central Government. However, post downgrading of J&K into two UTs, it is not eligible to receive finance commission award, but the Central Government has asked the 15th Finance Commission to include J&K into its scheme of things so that it can get financial award for the next five years.