J&K's Whopping Liability

Tongues of  Social and Economic Scientists are moist / untiring and  the News Papers replete with headlines & columns harping on the same string that J& K  has a whopping  liability of  Rs.68,204 crore in 2017-18. In six years  from 2011-12 the liability is stated to have risen to 88.11 percent on the basis of spell of  liabilities mounting annually which are as follows. 2011-12 Rs.36,256 crore-2012-13 Rs.40,248 crore-2013-14 Rs.44,646 crore-2014-15 Rs.48,314 crore-2015-16 Rs.55,346 crore-2016-17 Rs.60,673 crore and 2017-18 Rs.68,204 crore. Perusing these figures the liability ranges between  some Rs.4,000 crore and Rs.8,000 crore. The average liability works out to Rs.5,325 crore approximately. In the binary of Centre-state relationships especially financial arrangements every centre has a  bounden responsibility to provide funds to each state irrespective of its magnitude  and level of income and expenditure. In Public Finance reasonably increasing expenditure is a sign of a growing economy. If zero deficit budgets are prepared no new models of economic development can be devised and a State becomes  standstill  lagging behind the advancing states. Browsing  through the past period  of 72 years  since the Central Government took the reigns of Jammu & Kashmir in  1947, the mounted liability of Rs.68,204 crore  seems to be negligible as it averages to Rs.961 crore approximately annually and the corresponding  budget( 2018-19) of Rs.80,000 crore  to Rs.1,127 crore  circa. If this deficit had been liquidated  annually  there would have been no such liability  to taunt Jammu & Kashmir( J & K).

The continuous debt  has  led  J& K to be in  a deriding position. Centre has a wide & fertile base of tax and non-tax revenues comprising customs, income tax, corporation tax, gift tax , capital gains, hotel expenditure tax, tax on foreign travel, interest receipts, surplus profits from reserve bank of India, currency/coinage/mint charges, railways, profit of public enterprises etc. The commoners including the writer having some knowledge of the nitty-gritty of state-centre working know that in a democratic/ federal  set up of governments there is not much difference between state and the centre. Most of the functions  are analogous  save in case of Ministries of Foreign/Defence Affairs, Telecommunication,  Heads of state that is Prime Minister and the President, some major Research & Development Industries including exploration & tapping  of underground wealth. With  this set of governance  mechanism any centre enjoying full powers and control over currency/coinage and mint has funds available sufficient enough to help states through  the medium of yearly financial statements besides carrying  on its own programmes   at national level. States are wheels to a centre. Strong the wheels stronger the  centre, prosperous the country, happier the people.

J & K is being  reproached for a bulging salary/pensions bills expenditure held mainly responsible for swollen liability when other side of the coin is overlooked. The  J & K  particularly  Srinagar side  having no industrial base due to  inefficient and insufficient electricity the Government jobs  remain a Hobson’s choice for the youth hungry  and thirsty of employment. This leads to steep rise in the salary &  pension bills and the administrative costs. Moreover,  effect of structure of revised pay, allowances and other perks to officials has also been an additive burgeoning the burden of liability. Load shedding for almost seven months  aggravated with the pesky cuts and outages during the scheduled electricity hours hampers the process of industrialisation. That is why hundreds of  plots allotted by the government in the established Industrial Estates at nominal charges and the entrepreneurs botoxed by  the  number of doses of subsidies, tax remissions, refunds, exemption of freight charges, providing subsidy on purchase & installation of Plant & Machinery and installation of pollution control devices, capital investment subsidy , toll tax exemption of import of raw material, plant and machinery, building material etc, fail to convalesce  and start. This  leads to meager and feeble tax and the non-tax revenue bases increasing more dependence of J & K on Centre to augment the liquidity position. On the trade & commerce side our exports, whatever  we have, fail to keep pace with inter-states balance of trade & balance of payments. The price of our exports generally and wet exports by way of apple, peach, cherry etc. particularly  fail to  neutralize  the imports. With the wet fruits with short shelf life  and under subjugation of vagaries of nature,  involvement and frequency of high costs of inputs on sprays of fungicide,/insecticide/germicide, vermicide etc, our only biggest fruit industry faces losses more often than not pushing  J& K into deep deficits.

It is a fact that J & K  has sufficient natural perennial water resources. It is mentioned to have hydro power potential of producing 20,000 mega watts of which only one-third has been exploited till date. However, major portion of  it goes  out of  J & K to which a meager 12 percent royalty is given resultantly the source  becomes a purchaser  as electricity  bill for Rs.4,000 crore  is loaded  annually against J & K for some time past. In this  year’s (2019-20) budget  of Rs. 88911 crore J & K  has an increased outlay of Rs.8,598 crore over the previous year’s Rs.80,313 crore budget. J & K also plans to raise Rs.8,000 crore public debt this year. If  the power purchase  bill is eliminated by increasing the percentage of royalty  to that extent there will be no such debts and deficits. In turn revenues  more than double will   generate through  its multiplying effect. Besides other  genuine options and possibilities of production & revenue generation in hard ware/soft ware and intellect are also to explored continuously to keep pace with changing needs. The wheels of industry will start to spin indubitably filling the J & K kitty besides the industrialists.  Under such circumstance no body will have any chance and guts to jeer at  Jammu  & Kashmir as holding a begging bowl always in its hands but as an entity at least free of such debts. Above all story of weak & strong is a history of nature no one can alter and a touchstone for people to test their spirit of  humanity. As people differ  in  body mass, colour, height, qualities and strength so are the states. Had there been equality and uniformity in financial & physical strengths there would have been no national consolidated fund also.  Besides as per national statistics we have good indicators of per capita income/wealth. The need is of distribution now. If there is a will there is definitely a way. Pray will and the way mature soon.

The author is a former Sr. Audit Officer working as Consultant in the A.G’s Office Srinagar. (Mohammadjalaluddin2012@gmail.com)

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