- ₹1,484 Cr for Urban Infra, ₹3,983 Cr for Rural Connectivity
“While the allocation has seen a slight reduction, the focus on improving governance, fiscal discipline, and sectoral investments remains intact. Key reforms in revenue augmentation, power sector efficiency, and centrally sponsored schemes have strengthened the UT’s financial health. The steady growth of the Gross State Domestic Product (GSDP), improvement in tax-to-GDP ratio, and effective utilization of budgetary resources signal a positive trajectory for Jammu and Kashmir’s economy.”
The Union Budget for the financial year 2025-26 has allocated Rs. 41,000 crore to Jammu and Kashmir, marking a slight reduction from the Rs. 42,277 crore allocated in the previous fiscal. This budget continues to emphasize infrastructure development, social sector growth, and fiscal reforms while addressing the persistent challenges faced by the Union Territory (UT). Despite the decrease in total allocation, the focus remains on strategic investments to improve governance, strengthen fiscal discipline, and boost economic activity.
Budget Size, Revenue Estimates: The budget for Jammu and Kashmir in 2024-25 was set at Rs. 1,18,390 crore, an increase of Rs. 30,889 crore compared to the previous year. Revenue receipts are estimated at Rs. 98,719 crore, while capital receipts stand at Rs. 19,671 crore. This indicates a positive shift towards an improved revenue framework and highlights the government’s commitment to strengthening the UT’s economic foundation.
Sectoral Allocation Of Revenue Expenditure: The revenue expenditure for 2024-25 is estimated at Rs. 81,486 crore, with significant allocations across various sectors. The administrative sector has been allocated Rs. 9,881.68 crore, while the social sector receives Rs. 24,870.50 crore. The infrastructure sector, crucial for the UT’s development, is allocated Rs. 15,719.40 crore, and the economic sector receives Rs. 5,555.48 crore. These allocations are aligned with the government’s long-term vision of achieving sustainable growth through targeted sectoral investments.
Capital Expenditure, and Developmental Investments: Capital expenditure, which is focused on developmental projects, is pegged at Rs. 36,904 crore. The administrative sector has been allocated Rs. 1,190.50 crore, while the social sector receives Rs. 4,217.65 crore. A significant portion (40%) of the social sector expenditure, amounting to Rs. 1,675 crore, is directed towards health and medical education. The infrastructure sector has been given Rs. 11,664.45 crore, with 35% of this allocation (Rs. 4,062 crore) dedicated to public works. Additionally, the economic sector receives Rs. 6,943.20 crore, with over half (54%) of this expenditure targeted towards rural development. Capital expenditure’s contribution to Gross State Domestic Product (GSDP) is projected at 14.01%, reinforcing its role in driving economic expansion.
Economic Growth Projections: The GSDP for 2024-25 is projected at Rs. 2,63,399 crore, reflecting a growth rate of 7.5% over the previous year. Additionally, the tax-to-GDP ratio for 2024-25 is projected at 7.92%, which is significantly higher than the previous year’s 5.68%. This improvement is a result of enhanced revenue collection measures and the government’s focused approach towards increasing the tax base while maintaining fiscal discipline.
Historical Fiscal Challenges, Reforms: Jammu and Kashmir has historically faced economic and fiscal challenges, primarily due to militancy -related disturbances and inefficiencies in fiscal management. However, in recent years, the UT government has made significant strides in revenue augmentation, expenditure reforms, and overall fiscal discipline. These efforts have contributed to increased revenue collection, better project execution, and more effective financial governance.
Revenue Augmentation Measures: In terms of revenue augmentation, the UT government has implemented several strategic measures to enhance tax collection and reduce losses. Improved GST compliance, the introduction of an e-Stamping system, expansion of dealer registrations, and transparent excise auctions have all played a crucial role in improving tax revenues. As a result, tax revenues have increased from Rs. 12,753 crore in 2022-23 to Rs. 13,900 crore in 2023-24, marking a growth of 9%. GST collection has witnessed an increase of 12%, while excise collection has risen by an impressive 39% in FY 2023-24 compared to the previous fiscal year.
Power Sector Reforms And Revenue Efficiency: Another crucial reform in the power sector has been the installation of 5.74 lakh smart meters by June 2024. This initiative has led to a 25% reduction in Transmission & Distribution (T&D) losses and a 10% increase in tariff collection per month. These improvements reflect the government’s commitment to enhancing efficiency in revenue collection while minimizing financial leakages. Additionally, the UT government’s efforts in metering and improving billing and collection efficiency have resulted in an increase in non-tax revenues from Rs. 5,148 crore in 2022-23 to Rs. 6,500 crore in 2023-24, reflecting a growth of 25%.
Effective Utilization Of Centrally Sponsored Schemes: On the expenditure front, the UT government has effectively leveraged Centrally Sponsored Schemes (CSS) to secure additional funding. The receipt of funds under CSS has seen a sharp increase from Rs. 6,400 crore in 2022-23 to Rs. 10,300 crore in 2023-24. This increase has facilitated better infrastructure development and social sector initiatives. The government has also undertaken technological reforms to enhance transparency and accountability in budgeting and expenditure management. A systematic drive was launched to physically monitor and verify all developmental works through independent officers, ensuring greater accountability in fund utilization.
Technology-Driven Fiscal Reforms: Aadhar seeding and biometric verification have been systematically implemented to clean up databases of welfare schemes, reducing instances of duplicate and fraudulent beneficiaries. Cost savings have also been achieved through competitive procurement methods, such as the Government e-Marketplace (GEM) and e-Tendering. These reforms have collectively contributed to reducing financial leakages by Rs. 400 crore annually, thereby optimizing the allocation of resources for developmental initiatives.
Improved Fiscal Management, Debt Reduction: The UT government has also demonstrated effective fiscal management over the past few years. Budgetary transparency has significantly improved, and long-pending power sector dues amounting to Rs. 28,000 crore have been repaid. For the first time in 77 years, Jammu and Kashmir contributed to the contingency funds created by the Reserve Bank of India (RBI), including the Consolidated Sinking Fund and the Guarantee Redemption Fund. This move underscores the government’s commitment to fiscal prudence and long-term financial stability. Additionally, fiscal discipline has been reinforced by curtailing the practice of raising Hundis and overdrafts. The government has also brought off-budget borrowings onto its books from 2023-24, ensuring timely repayment. As a result, the stock of such borrowings has begun to taper down, further strengthening the UT’s financial health.
Economic Growth, Institutional Strengthening: These reforms and initiatives have yielded visible improvements in Jammu and Kashmir’s economy. Through strategic investments, enhanced revenue collection, and effective expenditure management, the UT government has improved its overall fiscal health. The GDP of Jammu and Kashmir has doubled from Rs. 1.17 lakh crore in 2015-16 to Rs. 2.45 lakh crore in 2023-24, with projections suggesting it will reach Rs. 2.63 lakh crore in 2024-25. This economic growth has been achieved despite numerous challenges, including the massive floods in Kashmir, persistent terrorism threats, and the economic shock of the COVID-19 pandemic.
J&K Bank’s Financial Turnaround: One of the most notable success stories is the turnaround of J&K Bank. Over the past four years, the bank has transitioned from a loss of Rs. 1,139 crore in 2019-20 to a profit of Rs. 1,700 crore in 2023-24. Additionally, Non-Performing Assets (NPAs) have been reduced from 11% to the current level of 5%. The bank’s focus on improving professionalism, efficiency, and transparency in business operations has contributed to its remarkable recovery.
“The effective implementation of centrally sponsored schemes, coupled with technological interventions for governance efficiency, will be key to ensuring transparency and better service delivery. Moreover, long-term fiscal sustainability should remain a priority. Strengthening revenue collection mechanisms, rationalizing expenditures, and reducing fiscal deficits will help in creating a stable financial ecosystem.”
Strategic Investments For Comprehensive Development: The 2024-25 budget for Jammu and Kashmir reflects a commitment to holistic development through significant investments across critical sectors. A major portion of the budget, Rs. 9,400 crore, has been allocated to ensure a stable power supply through subsidies and agreements with the national grid. Infrastructure development remains a priority, with Rs. 3,983 crore dedicated to the construction of roads and bridges under various schemes like PMGSY and NABARD. Strengthening education infrastructure is also a key focus, with Rs. 1,875 crore set aside for initiatives such as Samagra Shiksha Abhiyan (SSA) and PM SHRI. Additionally, Rs. 1,808 crore has been allocated for decentralized governance to enhance local development initiatives.
Social Welfare, Urban Transformation: To improve living standards and promote urban development, significant funds have been allocated across multiple social welfare programs. Rs. 1,714 crore is directed towards the Jal Jeevan Mission to enhance tap-water connectivity, while Rs. 1,484 crore will support Smart City projects in Srinagar and Jammu, along with flood recovery efforts. Social security remains a priority, with Rs. 1,430 crore earmarked for schemes benefiting the elderly, widows, and persons with disabilities. Healthcare infrastructure is set to be strengthened with Rs. 1,317 crore under the National Health Mission, ensuring better medical services across the UT. Housing development also receives attention, with Rs. 1,104 crore allocated under PM Awas Yojana-Grameen to support rural housing construction.
Boosting Agriculture, Industry, Environmental Sustainability: The budget emphasizes economic growth through agricultural transformation, industrial expansion, and environmental conservation. Rs. 1,068 crore has been earmarked for the welfare of Kashmiri migrants, including transit accommodations. The agriculture sector is set to benefit from Rs. 1,021 crore allocated under the Holistic Agriculture Development Programme (HADP), ensuring enhanced productivity and rural livelihoods. Rs. 923 crore has been allocated for industrial estate development and GST incentives, supporting business growth and job creation. Investments in renewable energy and hydroelectric projects receive Rs. 776 crore, while Rs. 586 crore will be used to provide universal health insurance. Additionally, Rs. 500 crore is set aside for MGNREGA to boost rural employment, and Rs. 401 crore is allocated for environmental conservation efforts, including the preservation of Dal Lake and afforestation projects. These allocations highlight the government’s comprehensive approach to ensuring sustainable development and economic stability in Jammu and Kashmir.
Kashmir Horizon View: The Union Budget 2025-26 for Jammu and Kashmir reflects a strategic approach toward economic stabilization, infrastructure development, and social sector advancements. While the allocation has seen a slight reduction, the focus on improving governance, fiscal discipline, and sectoral investments remains intact. Key reforms in revenue augmentation, power sector efficiency, and centrally sponsored schemes have strengthened the UT’s financial health. The steady growth of the Gross State Domestic Product (GSDP), improvement in tax-to-GDP ratio, and effective utilization of budgetary resources signal a positive trajectory for Jammu and Kashmir’s economy. Furthermore, the turnaround of J&K Bank and the clearance of long-standing liabilities highlight the administration’s commitment to financial prudence and institutional strengthening. Looking ahead, the way forward for Jammu and Kashmir lies in consolidating the progress made through sustained policy interventions and structural reforms. Strengthening the investment climate, particularly in tourism, agriculture, and industry, will be crucial in generating employment and boosting local entrepreneurship. Continued efforts in infrastructure expansion, including power generation, road connectivity, and digital services, will further enhance the ease of living and business opportunities in the region. Additionally, social sector investments must be deepened to ensure inclusive growth, with a particular focus on education, healthcare, and skill development. The effective implementation of centrally sponsored schemes, coupled with technological interventions for governance efficiency, will be key to ensuring transparency and better service delivery. Moreover, long-term fiscal sustainability should remain a priority. Strengthening revenue collection mechanisms, rationalizing expenditures, and reducing fiscal deficits will help in creating a stable financial ecosystem. Expanding public-private partnerships (PPPs) and attracting private sector investments can accelerate growth across key sectors. By maintaining fiscal discipline, fostering economic diversification, and leveraging its natural and human resources, Jammu and Kashmir can achieve long-term stability and prosperity. The government’s continued focus on infrastructure, governance, and social welfare will pave the way for a self-reliant and resilient economy, ensuring sustainable development and improved living standards for its people.
(In commitment to continuous improvement the “Team Kashmir Horizon” invites it’s valuable readers to share their valuable feedback and suggestions with the “Team Kashmir Horizon”. The insights of readers will surely play a vital role in improving the content quality of “Kashmir Horizon” and contribute more for the empowerment of people. Please feel free to reach out to us at editor@ thekashmirhorizon.com. Team “Kashmir Horizon” eagerly anticipates thoughts and ideas of it’s readers, which will help us serve people and even more effectively. The inputs of valuable readers are highly valued as “Kashmir Horizon” strives to provide it’s readers the best possible experience. Thank you for being a part of the reader community!)
