Centre loosens purse strings for J&K as Budget jumps 67%

The annual Budget of Jammu and Kashmir has seen a significant increase of 67 per cent since the abrogation of the erstwhile state’s special status under Article 370 and reorganisation of J&K into two union territories (UTs) in August 2019.

As J&K has been under Central rule since June 2018 when the BJP broke its alliance with the PDP forcing the chief minister of the alliance Mehbooba Mufti to resign, the Budget of J&K is passed in Parliament. On March 23, Union Finance Minister Nirmala Sitharaman passed the third Budget after the J&K Reorganisation Act-2019 came into effect. Compared to the 2019-2020 Budget, there has been a cumulative increase of 67 per cent in the 2022-23 Budget. This accounts for an additional Rs 45,532 crore of resources.

The Budget has been amicably drafted to benefit all sections of society keeping an empathetic approach. The spending in the Budget as a ratio of the UT’s Gross State Domestic Product (GSDP) for 2022-23 is projected to be more than 55 per cent compared to the corresponding figure for a hill state like Himachal Pradesh which is only 28 per cent.

At a glance, a key element in a strategy of transformation that began three years ago with the abrogation of Articles 370 and 35A and the full integration of the erstwhile state with the Union have started to show positive results. A look at the capital expenditure (capex) Budget trends would indicate a jump of nearly 179 per cent compared to the 2020-21 figures.

When Central government expenditure on roads and railways is taken into account, the actual capex is nearly double the amount reflected in the UT’s Budget. For decades, despite Centre’s generous assistance, J&K could not develop a strong private sector capable of generating either taxable revenues or productive employment.

This resulted in more public expenditure and public employment (J&K’s over 4.5 lakh strong workforce is among the highest-per-capita in the country) became the mainstay of the economy. The Budget estimates show that Rs 68,206 crore (34 per cent) of the income of the UT would come from the Centre as grants. This explains how central J&K is to the development plan of the government of India.

Funds for the development of 75 new tourist destinations have been allocated in the Budget 2022-23 to expand the tourism pie while bringing in more equity in this employment-elastic sector. The Centre has allocated Rs 786 crore budget for tourism in J&K which is nearly three times more than the previous years’ funds.

Similarly, in the horticulture sector, money for initiatives like thrust on cold storage capacity expansion, increase in fruit productivity through hybrid apple plantation, support to high value-low volume agro-products like aromatic and cash crops have been kept.

The recent trade agreements with the UAE to seek markets, investments and tourists are bound to open new vistas for development of the UT. Today J&K is well on its way to becoming a model state in the country with investments in infrastructure, tourism, social welfare and agriculture. There are investment proposals worth Rs 51,000 crore under consideration and adequate provision has been kept for providing incentives to prospective entrepreneurs as per J&K Industrial Policy for which Rs 28,400 crore have been allocated. All these programmes are likely to generate employment for lakhs of people.

As per the Budget, 800 MW Ratle power project and 624 MW Kiru power project have been granted Rs 476 crore and Rs 130 crore respectively. A provision of Rs 6412.71 crore has been kept for Jal Jeevan Mission in the Budget which is nearly four times more than the previous financial year.

After the abrogation of Article 370, the people of J&K have been benefited by the implementation of 890 Central laws. The various impediments which prevailed in the erstwhile State for industrial development have also been removed, and the industrial promotion scheme given by the government of India has opened new doors for the development of the UT. In other words, the Budget 2022-23 is a step towards boosting infrastructure and economy for J&K.

If the pace of development in J&K continues for a few more years, that day is not far when it would become the Switzerland of South Asia. But for that, peace has to prevail and a sustained security effort to eradicate militancy must continue. Any violence or turbulence can hamper the development and investment climate.

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