Budget 2018-19: Dr Drabu Rolls Out Rs 80,000 Cr “Game-Changer”

Jammu—With a focus on reaping the harvest of the radical fiscal reforms undertaken by the State Government during the past three budgetary exercises, the Minister of Finance, Dr Haseeb A Drabu, Thursday presented his 4th Budget in the State Assembly terming it a major step towards making Jammu and Kashmir a truly welfare state.

“It will be a potential game-changer budget full of welfare initiatives,” Dr Drabu said while presenting Rs 80000 crore Budget for the fiscal 2018-19 in the House.

“The Budget is a culmination of sustained work in building new systems for public expenditure management over the last three years,” said. “We have made concerted and coordinated efforts to overhaul the style and substance of financial management of the state with macroeconomic stabilisation complemented by structural reforms and followed by systemic changes.”

The Finance Minister said J&K is the first state in the country that is presenting the budget in the first half of the last quarter of the current fiscal while the central budget is taking place a month later.

“We were the first state to move from the archaic Plan-Non Plan Expenditure to Capital and Revenue Expenditure which was followed by other states. All the systematic changes been made so far have started paying off,” he said and added that a new, robust, sustainable and people-friendly financial architecture is taking shape in the State.

Amid thunderous applause from the Treasury benches, the Finance Minister said that it is perhaps for the first time in the budgetary history of J&K that the revised estimates for the current year are much better than the budget estimates presented last year.

“Revenue Estimates envisaged to be Rs 9931 crore, have been exceeded and in the process, we have crossed the Rs 10,000 crore mark of own tax collection,” he said.

“When I took over as the Finance Minister, there were huge departmental liabilities of more than Rs 11000 crores of which Rs 7,000 crore were of power and Rs 4,000 crore across all departments. Today, the departmental liabilities have come down to just Rs 600 crore or so of works done and power purchase liabilities have been reduced to a little more than Rs 3,000 crore,” he said.

The Finance Minister said the State was facing an unfunded resource gap of over Rs 3,000 crore.

“As the year comes to an end, I have a surplus of more than Rs 1300 crore. The fiscal deficit which is regarded to be the single most important indicator of fiscal performance, was estimated at around 9.5 per cent but has actually turned out to be around 5.7 per cent; an improvement of nearly 400 basis points. This is unprecedented,” he said and added it indicates that systems, which were in a state of disarray, have started stabilizing and functioning in a better way now.

“Because of a well-run financial set up, we are able to take decisions that change lives of the people for good, especially of the most vulnerable and marginalised. We hiked the minimum wages of the working class substantially and a new category of highly skilled worker was introduced and Rs 400 was fixed as the minimum wage,” the Finance Minister said.

While announcing a slew of measures for the socially and economically disadvantaged sections of the society, Dr Drabu said the State Government under the leadership of Chief Minister Mehbooba Mufti have woven a social security net around the poorest of the poor, insured their lives, protected them against disability, disease and death, provided for their children’s education and given them access to small credit. “I am sure this will make life simpler and more secure for 3 lakh families; that is 15 lakh people,” Dr Drabu said.

To revive the traditional handicrafts industry of Kashmir, Dr Drabu said the government is setting aside Rs 5 crore each to the Handicraft Development and Handloom Development Corporations for raw material and inventory up gradation. “This will set them on a path of recovery and from there we will clean their balance sheets and restructure their business operations as is underway in the case of J&K HPMC,” he said.

In a major relief for the state employees and pensioners, Dr Drabu said the government will set up a corpus fund of Rs 12,000 crore, which will be used for making timely GPF payments to the Government employees in future. “To express my gratitude to all the employees of the state Government, I am announcing release of 1 per cent Dearness Allowance due to the employees from 1st July, 2017. 

In line with it, being an employee friendly Government, we recently reduced the eligibility for full pension from 28 years of qualifying service to 20 years of qualifying service. This measure alone will benefit more than half of the number of employees on the rolls of the Government, as they were denied full pension for want of qualifying service.

As a major social security initiative for the children who lose their parents, “unmarried daughters” of the employees, who were hitherto not entitled to receive pension, have now been made eligible to receive pension once the employee and his/her spouse is no more. “This is a step towards promoting gender equity as well. Also, the Group Mediclaim Insurance Policy which, unlike in the past covered only gazetted employees, will now also be available to the Government employees including pensioners and accredited journalists. Given the fact that there are 4.5 lakh employees, and about 1.5 lakh pensioners, this insurance cover extends to about 30 lakh people,” he said and added that even the BPL families would be now covered under the insurance.

To cater to the rural areas of the State where the government employees are reluctant to get posted, the Finance Minister said such a practice impacted the service delivery. “In order to incentivise transfers and postings in rural areas, Government shall come out with a scheme to incentivise the postings in the remote areas. Besides having rational framework of allowances, it will also have a built-in incentive for postings in the rural areas, while dis-incentivising “deployment” in urban areas,” he said.

The Finance Minister said the last few years have been very damaging for business in general. “Be it tourism, manufacturing, or household enterprises, all are in one kind of a distress or the other. First the localised factors; floods of 2014, and then the disturbances of 2016, then came the policy shock of demonetisation which was followed by a major tax regime change, the Goods and Services Tax. The short term disruptive influence has been more pronounced on the SMEs all around the country, more so in J&K,” he said.

“Considering the importance of industries for employment generation, I also propose an incentive for SMEs and industrial units to get them listed at SME Exchange and other Stock Exchanges in the country to raise capital through IPOs or other market tools.  I make an initial budgetary provision of Rs. 1.00 crore and will provide additional money, if required,” he said.

To mitigate the losses suffered during the floods of 2014 and the situation in 2016, Dr Drabu said the RBI approved a loan restructuring package for borrowers in the state. “In deference to our Chief Minister, I have decided to rollout a “CM’s Business Interest Relief Scheme”. For all the RBI approved restructured accounts, the Government will contribute one third of the total interest payment of all these borrowers. In other words, one third of the monthly instalment will be paid by the state Government and two thirds will be paid by the borrowers,” he said and added that it is a conscientious and caring budget reaching out to every section of the society.

Power Reforms Get Priority

Jammu and Kashmir finance minister Haseeb Drabu Thursday presented the power budget with a focus on putting in place a roadmap to address purchase liability and make reform the core agenda for the sector.

The second power budget, the first was presented six months ago, put in place a transparent accounting system for the sector as the government in 2016-17 spent Rs 12,000 crore on power purchases and liquidating past liabilities.

Drabu said budgetary provisions have been made for a fully-funded investment plan under the Prime Minister’s Development Plan (PMDP).

“The investments were directed towards making systemic and capacity improvements in the Transmission and Distribution infrastructure in the state, with an aim to supply adequate quality power and make the State Power Development Corporation debt-free with financial restructuring,” he said.

“In 2016-17, we have spent Rs 12,000 crore on power purchases and liquidating past liabilities; which have been accumulated on account of serving power, despite this the power situation on the ground – in winter in Kashmir and in summers in Jammu – hasn’t improved,” he said.

Drabu said till date the government has liquidated more than Rs 4,000 crore of past liability and the balance will be cleared by the end of the financial year.

As stated in the state budget, the power deficit in financial terms is a little more than Rs 2,500 crore after adjusting for the subsidy element and reasonable transmission and distribution losses. “If this deficit is taken care of, we would have no budgetary deficit,” he said.

“Despite the tariff being one of the lowest in the country, our power collections are consistently one third or one fourth of what is budgeted. It is a fact that a vast majority of users don’t pay electricity bills at all or in line with their consumption,” he said.

Drabu said last year not much infrastructure could be created due to the turmoil in the Valley.

The minister said three lakh households in the state have no electricity connection. “(But) we have 20 lakh households consuming electricity. The national average for electricity consumption per household is three units of electricity per day,” he added.

On this basis, J&K should be buying 3,200 MUs to provide electricity to its 20 lakh households. Instead, the state buys 6,400 MUs for the household segment at an average consumption of six units per household after accounting for transmission and distribution losses of 30%, he said.

7th Pay Commission From Apr 2018

Jammu and Kashmir will implement the recommendations of the 7th pay commission from April 2018 to give a massive 23.5 per cent hike to lakhs of government employees and pensioners in the state, Finance Minister Haseeb Drabu said on Wednesday, presenting his third consecutive budget.

Drabu in his budget speech to the state assembly said the hike in salaries and post-retirement payouts will be with retrospective effect from the day when the commission recommendations were implemented by the central government.

The central government announced the measure for its employees in June last year and a majority of the states have also implemented the recommendation of the pay panel fixing the minimum monthly salary for an employee at Rs 18,000 from the earlier Rs 7,000.

The maximum salary, as per the pay panel recommendations, is fixed at Rs 2.5 lakh for the Cabinet Secretary, which is more than double the previous pay of Rs 90,000 a month for the country’s top bureaucrat.

For other officers in the top scale — secretary or equivalent, the monthly salary is now around Rs 225,000. Drabu said his two previous budgets focussed on micro finance and allocation in the industrially backward state while the present budget aimed at operations.

PAOs To Monitor, Control Payments

Finance Minister Dr Haseeb Draboo Thursday proposed a reform in the government’s payment system and announced that treasuries would be replaced by functionally aligned pay and accounts offices (PAO) to monitor and control the purpose and objective of payments, budgetary sanctions and ceilings, proper classification and excess payment issues. For all receipts and disbursements of the government, the PAOs would be departmentally aligned.

“They would deal with those heads of accounts which are related to the functions of their concerned departments. “Instead of receiving the receipts and disbursing the payments of numerous departments in the treasury system, the PAOs would deal with just one department.” He said the new system would do away with the practice of physically carrying bills, challans and invoices to the treasuries for audit and invoice checking at the department level.

“Instead, a computerised integrated financial management system (IFMS) will process all those functions online. The new system will be in vogue from October 1, 2017 and complete the transition by March 31 the next year,” Drabu said.

Token Tax From Transport Waived

Finance Minister Dr Haseeb Draboo Thursday said the state government has decided to waive token tax collected from public transport operators for six months beginning this July. This was being done to mitigate the sufferings of public transport operators due to shutdowns and curfews during the months of unrest in the Kashmir Valley.

He also announced that the services of all casual labourers working in various departments of the state government would be made permanent from next year while steps would immediately be taken to regularise the services of those contractual labourers who had given their lands free of cost for developmental purposes. The budget proposals also provide for making Aadhaar card compulsory for everybody who seeks a government job in the state. He said all government departments would get 50 per cent of their fund allocations by February 10 and this would ensure that various projects get started in right earnest without losing any time in the next fiscal.

Follow this link to join our WhatsApp group: Join Now

MONTHLY	Rs 100
YEARLY	Rs 1000
LIFETIME	Rs 10000

CLICK FOR DETAILS