“The increase in budget allocation and the special financial package are expected to address the pressing challenges faced by J&K, including the power sector’s financial strains and the need for infrastructure development. The enhanced funding will facilitate investments in modernizing police infrastructure, improving public services, and supporting economic growth.”
The Parliament recently ratified the Jammu & Kashmir (J&K) budget for the fiscal year 2024-25, marking a significant milestone in the region’s financial management. With an allocation of ₹1,18,390 crore, this budget represents a notable increase of ₹30,889 crore from the previous fiscal year. The enhanced funding, approved by both the Lok Sabha and Rajya Sabha, reflects a strategic move by the Central Government to address ongoing financial challenges and drive economic development in the region.
Budget Allocation And Its Implications: The approved budget comprises ₹81,486 crore for revenue expenditure and ₹36,904 crore for capital expenditure. This substantial allocation underscores the Central Government’s commitment to supporting J&K’s financial stability and development goals. The significant increase in budgetary allocation is crucial given the persistent challenges faced by the region, particularly in the power sector.
Challenges In The Power Sector: J&K’s power sector has long struggled with high Aggregate Technical & Commercial (ATC) losses and low tariffs, exacerbating financial strains. The state government had previously resorted to off-budget borrowings amounting to approximately ₹28,000 crore to address these issues. These borrowings were a temporary measure, highlighting the urgent need for a more sustainable financial strategy.
Fiscal Reforms And Financial Management: In response to these challenges, the J&K Finance Department initiated a comprehensive fiscal reform program a year ago. The primary objective was to integrate off-budget borrowings into the official budget and tackle legacy financial issues. The reform process involved a detailed analysis of J&K’s fiscal health, focusing on high staff numbers, a low revenue base, and significant debt.
Revenue Enhancement: One of the key achievements of the reform program was the substantial increase in J&K’s own revenues. The state’s revenues surged to over ₹20,362 crore in 2023-24. This improvement was largely driven by enhanced GST compliance, increased dealer registrations, and transparent excise auctions. Additionally, non-tax revenues saw a boost from ₹5,148 crore in 2022-23 to ₹6,500 crore in 2023-24. The growth in revenue was supported by an increase in Central Sponsored Schemes (CSS) funds, which rose from ₹6,400 crore in 2022-23 to ₹10,300 crore in 2023-24.
Fiscal Discipline And Borrowing Limits: The J&K government imposed strict borrowing limits and reduced reliance on overdrafts and Hundis. This proactive approach, coupled with stringent monitoring of public debt, enabled a reduction in off-budget borrowings. Austerity measures and biometric verification of beneficiaries helped curtail non-priority expenditures. Notably, J&K made its first contribution to the contingency funds managed by the Reserve Bank of India (RBI) in 77 years, marking a significant step towards fiscal discipline.
Central Govt Support And Special Financial Package: Recognizing the financial strains and the reforms undertaken by J&K, the Central Government approved a special financial package of ₹17,000 crore. This package is designed to reduce J&K’s fiscal deficit to GDP ratio to 3.0% for the fiscal year 2024-25. The Central Government’s support includes:
Coverage Of Police Costs: ₹12,000 crore has been allocated for the salary, pension, and other costs associated with the Jammu and Kashmir Police. This funding will enhance the capacity of the police force, supporting investments in modern equipment, housing, and infrastructure.
Special Grant: A special grant of ₹5,000 crore will further bolster J&K’s financial stability, enabling the state to address developmental needs and other priority areas.
Repayment Commitments: As part of the special package, the J&K government has committed to timely repayment of its dues to J&K Bank. With approximately ₹4,600 crore already repaid, this commitment is expected to alleviate fiscal stress, providing additional fiscal space for development projects and other critical initiatives.
Impact Of Fiscal Reforms: The fiscal reforms implemented under the leadership of Lieutenant Governor Manoj Sinha, Chief Secretary Atal Dulloo, and Principal Secretary Finance Santosh Vaidya have had a transformative impact on J&K’s financial landscape. Key meetings held in June and July 2024 with the Ministry of Home Affairs and the Ministry of Finance emphasized the effectiveness of these reforms, with both Union Ministers assessing J&K’s fiscal management positively. The increase in budget allocation and the special financial package are expected to address the pressing challenges faced by J&K, including the power sector’s financial strains and the need for infrastructure development. The enhanced funding will facilitate investments in modernizing police infrastructure, improving public services, and supporting economic growth.
Major Allocations: The Jammu & Kashmir (J&K) budget for 2024-25 encompasses significant investments across various sectors to drive development and address key challenges. Key allocations include:
Energy Sector: ₹9,400 crore is allocated for subsidies and support related to power purchases from the national grid and agreements with power companies, ensuring a reliable energy supply.
Infrastructure Development: ₹3,983 crore is designated for the construction of roads and bridges under schemes like PMGSY, CRIF, NABARD loans, and the Bridge scheme, enhancing regional connectivity.
Education: ₹1,875 crore is allocated to upgrade school infrastructure, including support for the Samagra Shiksha Abhiyan (SSA), career counseling, and the establishment of modern schools under the PM SHRI scheme.
Decentralized Governance: ₹1,808 crore is set aside for local development works for Panchayati Raj Institutions (PRIs), Urban Local Bodies (ULBs), Block Development Councils (BDCs), and District Development Councils (DDCs).
Water Supply: ₹1,714 crore is provided to improve tap-water connectivity in rural areas through the Jal Jeevan Mission.
Smart City And Flood Recovery Projects: ₹1,484 crore is allocated for completing Smart City projects in Srinagar and Jammu, and infrastructure projects under the Jhelum Tawi Flood Recovery Project (JTFRP).
Social Security: ₹1,430 crore supports assistance schemes for the elderly, widows, disabled individuals, and women empowerment initiatives like Ladli Beti and Marriage Assistance.
Healthcare: ₹1,317 crore is allocated for strengthening health infrastructure and services under the National Health Mission, including improving healthcare delivery.
Housing: ₹1,104 crore is designated for constructing homes for the houseless under the PM Awas Yojana-Grameen scheme.
Kashmiri Migrants: ₹1,068 crore is allocated for various provisions including salaries, food grains, and transit accommodation for migrant employees.
Agriculture: ₹1,021 crore is allocated through the Holistic Agriculture Development Programme (HADP) for initiatives like the J&K Comprehensive Investment Plan (JKCIP), cold storage, and high-density plantations.
Industrial Development: ₹923 crore is designated for upgrading industrial estates, providing GST refund incentives, and promoting trade through events organized by JKTPO.
Hydroelectric Projects: ₹776 crore is provided in equity support for hydroelectric projects at Ratle, Kwar, and Kiru.
Universal Health Insurance: ₹586 crore is allocated for universal health insurance coverage for all families in J&K. Renewable Energy: ₹150 crore is allocated for installing solar rooftops and solar pumps.
Tourism: ₹518 crore supports tourism development, including new destinations, ropeways, and festivals.
Sanitation: ₹445 crore is allocated for improving sanitation and achieving ODF+ status in rural areas.
Flood Management: ₹390 crore is allocated for flood management projects on the Jhelum River.
Employment And Self-Employment: ₹405 crore supports self-employment schemes, startups, and seed capital funds.
Security Infrastructure: ₹179 crore is designated for police housing colonies, border bunkers, and CCTV installations.
Sports And Culture: ₹335 crore supports sports infrastructure, heritage preservation, festival promotion, and tribal welfare.
Bank Revitalization: ₹100 crore is allocated for revitalizing Regional Rural Banks (RRBs) and Cooperative Banks.
Environmental Conservation: ₹401 crore is designated for the development of Dal Lake, afforestation, wildlife management, and protected area preservation.
Agricultural Improvement: USD 100 million loan from IFAD for the Competitiveness Improvement of Agriculture and Allied Sectors Project (JKCIP) and a ₹5,013 crore investment under HADP.
Horticultural Tourism: Development of a Chrysanthemum theme park and establishment of 60,000 backyard poultry units.
Employment Generation: Formation of 12,000 Self Help Groups (SHGs) and construction of 80,000 houses under PMAY-G.
Tourism And Heritage: Introduction of 12 new tourist destinations and restoration of 75 heritage sites.
Health Initiatives: Operationalization of two cancer institutes, creation of ABHA IDs, and enhancement of health facilities.
Education Enhancements: Establishment of new ICT labs, sports equipment for schools, and introduction of vocational education.
Infrastructure Projects: Construction of 5,000 kilometers of road, installation of 200 e-buses, and development of sewerage networks for houseboats.
“The approval of the 2024-25 budget and the special financial package represents a pivotal moment for Jammu & Kashmir. The strategic increase in funding, coupled with fiscal reforms and Central Government support, lays a strong foundation for addressing financial challenges and driving progress. As J&K moves forward, sustained efforts in fiscal management, infrastructure development, and economic diversification will be key to realizing the region’s full potential and achieving long-term prosperity.”
Experts Speak:
Dr. Aisha Mehra, Economic Analyst: “The budget for Jammu & Kashmir in 2024-25 represents a masterstroke of strategic planning and fiscal foresight. The substantial allocations for infrastructure and social sectors will undoubtedly catalyze transformative growth in the region. This is not just a budget; it’s a roadmap to prosperity.”
Rajiv Sharma, Senior Policy Advisor:”With its focus on decentralization and empowerment at the grassroots level, the J&K budget is a beacon of progressive governance. The investment in local bodies and decentralized governance structures will strengthen democracy and local development like never before.”
Dr. Neelam Verma, Head of Regional Development Studies: “The unprecedented commitment to improving education and healthcare in J&K underscores a profound dedication to human capital development. This budget will enhance educational facilities and health services, laying the foundation for a brighter future for the people of Jammu & Kashmir.”
Javid Ahmad Khan, Infrastructure Specialist: “The allocations for infrastructure, particularly the road and bridge projects, are commendable. This budget not only addresses current connectivity issues but also sets the stage for long-term economic integration and growth. J&K is poised to experience a renaissance in infrastructure development.”
Sanjay Patel, Renewable Energy Expert In Jammu: He says the significant funding for renewable energy projects, including solar rooftops and solar pumps, marks a pivotal shift towards sustainability. This budget reflects a forward-thinking approach to energy security and environmental stewardship.”
Mushtaq Ahmad Mir, Tourism Development Consultant: He emphasis on tourism development, including new destinations and cultural preservation, is a game-changer. This budget will boost the tourism sector, creating jobs and highlighting J&K’s rich heritage and natural beauty.”
Amit Rathi, Social Policy Expert At Katra: He said that the robust provisions for social security and empowerment schemes demonstrate a deep commitment to inclusivity and social welfare. This budget will significantly enhance the quality of life for the most vulnerable segments of society.” “The focus on agricultural development and the introduction of cutting-edge storage facilities are impressive. This budget not only aims to boost productivity but also to ensure that the benefits of agricultural growth are sustainable and far-reaching, Rathi said.
Maya Gupta, Urban Planning Specialist: “Investments in Smart City projects and flood recovery are indicative of a strategic approach to urban planning and disaster management. The budget reflects a comprehensive vision for transforming urban infrastructure and resilience.”
Rajesh Iyer, Security And Safety Analyst At Indian Army: He said that allocation for security infrastructure and technology upgrades is a testament to the commitment to ensuring safety and modernizing law enforcement. This budget lays a strong foundation for enhanced security and community well-being,” he said.
Kashmir Horizon View: The successful implementation of the 2024-25 budget and the special financial package will play a crucial role in shaping J&K’s future. Key areas of focus moving forward include: Ensuring that the increased budgetary allocation translates into tangible improvements in infrastructure, public services, and economic development is essential. Continued focus on sustainable development practices will be crucial in addressing legacy issues and fostering long-term growth. Maintaining fiscal discipline and adhering to borrowing limits will be critical in managing J&K’s financial health. The government’s commitment to reducing off-budget borrowings and enhancing revenue streams should be sustained to ensure ongoing financial stability. The allocation of funds for modernizing police infrastructure and investing in public services will have a significant impact on the region’s development. Prioritizing infrastructure projects and ensuring their timely completion will support economic growth and improve the quality of life for residents. J&K’s economic strategy should focus on diversifying its economic base to reduce dependence on specific sectors. Promoting investment in emerging sectors such as technology and renewable energy will be crucial in driving sustained economic growth.
Transparency And Efficiency: Enhancing transparency and efficiency in the implementation of budgetary allocations and special grants will be vital. Continued efforts in e-governance and digital transformation will contribute to more effective and accountable financial management. The approval of the 2024-25 budget and the special financial package represents a pivotal moment for Jammu & Kashmir. The strategic increase in funding, coupled with fiscal reforms and Central Government support, lays a strong foundation for addressing financial challenges and driving progress. As J&K moves forward, sustained efforts in fiscal management, infrastructure development, and economic diversification will be key to realizing the region’s full potential and achieving long-term prosperity.
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