All-inclusive Budget aims at ending corruption

Ehsan Fazili

Tribune News Service

Srinagar, May 30

Finance Minister Haseeb Drabu presented an all-inclusive Budget of Rs 61,681 crore in the Assembly here today, saying it was aimed at eliminating corruption. He said it was an important tool of governance that was based on “Mufti model of governance”.

“This Budget, the first of this new PDP-BJP government, has been formulated as a tribute to Mufti Mohammad Sayeed. Having had the privilege of being his Finance Minister, I have in this Budget attempted to put the ‘Mufti model of governance’ into a framework,” he said in his opening remarks.

He said the Budget contained total receipts of Rs 61,681 crore with revenue receipts of Rs 51,460 crore, of which own tax revenue was estimated at Rs 9,220 crore.

He said the share of Central taxes was Rs 9,500 crore, an increase over the figure of Rs 8,088 crore in the revised estimates for 2015-16.

The annual Budget contained revenue deficit grants of Rs 10,831 crore compared to Rs 9,892 crore in 2015-16 with capital receipts of 10,221 crore.

This was the second Budget of the PDP-BJP government since it entered into a coalition under the leadership of late Chief Minister Mufti Mohammad Sayeed in March last year.

The Budget, usually presented during the session in the winter capital, could not be presented earlier due to Governor’s rule.

The State came under Governor’s rule from January 8 following the death of Mufti Mohammad Sayeed. Mehbooba Mufti took charge on April 4.

“Given these receipts, the total expenditure is estimated to be Rs 64,669 crore during 2016-17. Of this, capital expenditure will be Rs 19,694 crore and revenue expenditure Rs 44,975 crore,” the Finance Minister stated.

“We have made a good beginning in this Budget. But the road ahead is difficult as salaries and pensions alone account for more than Rs 23,000 crore, which is more than the total development expenditure in the year,” he said. The Finance Minister said one of the challenges was to spend the budgeted money well. “We are budgeting to spend about Rs. 180 crore a day,” he said.

“Apart from the much-spoken-about limited working season, our institutional capacity to spend is limited. Be it the time taken to do documentation or tendering or the installed and available capacity of the private sector, the actual execution of work takes inordinately long to start and even longer to end,” he stated.

Budget highlights

Total receipts 

Rs 61,681 cr

Revenue receipts

Rs 51,460 cr

Capital Receipts 

Rs 10,221 cr

Total expenditure 

Rs 64,669 cr

Revenue expenditure 

Rs 44,975 cr

Capital expenditure  

Rs 19,694 cr

Centrally Sponsored Scheme

Rs 8,876 cr

PM’s Development Programme

Rs 6,000 cr

General
Total receipts — Rs 61,681 cr

• Revenue receipts — Rs 51,460 crore, of which own tax revenue estimated at Rs 9,220 crore. Share of Central taxes up at Rs 9,500 crore as against figure of Rs 8,088 crore in Revised Estimates 2015-16. Revenue deficit grants of Rs 10,831 crore as against Rs 9,892 crore in 2015-16
• Capital Receipts — Rs 10,221 cr
• Total expenditure — Rs 64,669 cr
• Revenue expenditure (RE), including security-related expenditure (SRE) to touch Rs 44,975 crore
• Capital expenditure (CAPEX) accounts for Rs 19,694 crore, of which Rs 3,370 crore for the state sector schemes and Rs 992-crore allocation for the district sector capital expenditure
• Rs 8,876 crore under the Centrally Sponsored Scheme
• Rs 6,000 crore under Prime Minister’s Development Programme (TAMEIR)
• Rs 810 crore to be devolved to PRIs and ULBs under 14th FC grants
• Earmarked provision of Rs 700 crore for DA to employees and pensioners
• Rs 226 crore provision in 2016-17 for 10% employer’s share under the New Pension Scheme introduced from January, 2010
• Outgo on pension, including leave encashment and NPS, during the year 2016-17 at Rs 4,600 crore
• A provision of Rs 25 crore for meeting cost of VRS/GHS in PSUs
• The Gross State Domestic Product (GSDP) at Rs 1,32,207 crore, which would be equivalent to 7.6 % growth at constant prices over the previous year
• The growth rate at constant prices for the financial year 2015-16 expected to be 7.9 %
• Tax revenue + non-tax revenue at Rs 23,739 crore, higher by Rs 4,208 crore over the revised target of Rs 19,531 crore
• Tax revenue expected to grow by around 15%.

Budget restructuring and reforms

• Overhauling of the Provident Fund Accounting System
• Reformative treatment of wages of the DRWs, casual, seasonal, need-based and other categories of workers. Clean-up of wages under the maintenance head
•  Intent to find a solution for engagement of an estimated 61,000 people engaged in various ways, different forms and at different times with empathy and understanding under the guidance and support of the Chief Minister
• Procurement system to be made not only transparent, but also market friendly
• Budgetary support continued to corporations to cover extra employment burden with condition of competitive business environment in the open market, including government business
• Reclassification and liquidation plan of all existing liabilities. Initiative to clear power liabilities of Rs 7,000 crore in the form of power bonds/UDAY under way. There would be a net saving of about Rs 700 crore on account of reduced interest/surcharge burden

Public expenditure policy

• Normative public expenditure planning to ensure much-needed administrative, financial and technical discipline
• Block grant to universities, aimed at granting financial autonomy to the state’s universities to ensure efficient utilisation of resources
• Idle funds parked in more than 2 lakh govt accounts with various banks to be transferred to government account as required under norms overcoming liquidity crisis and to encourage efficiencies in management of public funds
• Consolidation and rationalization of all government accounts
• Allocation of Rs 1 lakh each in favour of all the 193 police stations of the state as “cost of investigation”
• Release of pending DA instalment of 6 per cent in favour of government employees from January 1, 2016
• Government will consider providing viability gap funding for an effective operationalisation of the PPP model depending on the sector and the service offered
• Under the PMDP, an amount of Rs 1,197 crore has been received for providing of assistance in respect of completely/severely and partially damaged houses. An amount of Rs 957 crore has been disbursed till date
• Uninsured and small traders affected by the floods, who had not received any assistance either from bank or financial institutions were provided help through the Chief Minister’s Flood Relief Fund. A total amount of Rs 101.89 crore has been distributed till date among around 40,000 small traders whose turnover is up to Rs 5 lakh
• Rs 800 crore under PMDP for extending interest subvention support to the trading and manufacturing units whose borrowal accounts have been restructured by banks after the September 2014 floods
• Cash assistance to Jammu province migrants enhanced and brought at par with Kashmiri migrants with effect from November 18, 2015

Industrial policy initiatives

• n Industrial association of the state will be encouraged to develop, on their own or in partnership, private industrial estates/parks on commercial lines
• n Investments in industrial estates or elsewhere in the state to be governed by existing administrative practices, regulatory norms and the Constitution of J&K
• n Industrial estates in the state to be reorganised to function as a corporate entity within the aegis of SIDCO/SICOP. Each estate will have an estate manager as CEO of the industrial estate and management committee
• n Joint venture opportunity to top 10 IT companies (in terms of top line) of the state through J&K E-Governance Agency (JAKEGA) or a SPV. Proposed to earmark Rs 10 crore for capitalisation of the joint venture (JV)
• n Proposed to set up business incubators for sunrise industries in the capital cities of Srinagar and Jammu. Finances, branding, and marketing support to the entrepreneurs. A start-up fund of Rs 5 crore for the purpose

Fiscal initiatives

• Proposed to earmark Rs 40 crore to create a land bank across the state for acquisition and development of the new industrial estates
• Working out modalities to grant relief to sick industries on account of arrears of power surcharge
• Provision of Rs 26 crore for clearing liability as 10 per cent interest subvention for artisans with a borrowing ceiling of Rs 1 lakh recoverable in five years
• Proposed to provide the required funds for 6,000 looms to help the carpet industry improve its weaving efficiency
• Central Government had announced a debt waiver scheme for houseboat owners. Proposed to do a one-time settlement with J&K Bank and the State Bank of India for the total outstanding balance of Rs 49.78 crore, a major financial and emotional relief to all the houseboat owners and taxi drivers who have become defaulters with banks
• Waiver of permission fee for sanctioning “right of way” for laying optic fibre cables, 50 per cent subsidy on bandwidth for connectivity to IT firms, 50 per cent concession on quality certification and patent filing charges to provide fillip to the local IT start-ups
• Rs 2 crore for pashmina testing, certification and labelling laboratory which can certify handmade products on a larger scale
• Rs 50 lakh for a sustained promotional campaign to create mass awareness about certification and labelling of handmade Kashmir crafts
• Rs 1 crore for trainings and skill development to fruit growers in pruning of trees, multiplication of rootstocks, raising of pedigree and quality planting materials, maintenance of bud banks, etc
• Rs 2 crore for creation of a Water Resources Department responsible for planning and management of all the water resources, including lakes and rivers, of the state
• Implementation of the “free drug policy” in the health centres of the state
• Standard food testing laboratory or drug testing laboratory to be set up at Srinagar and Jammu. Mobile testing facility for interior parts of the state, an initial provision of Rs 12 crore proposed
• A sum of Rs 2 crore allocated to ensure adequate number of washrooms in the Police Lines and police stations 
• Budgetary provision to the State Rehabilitation Council doubled to enable it to provide increased support to the families affected by militancy
• Free power up to 30 units and waiver of fixed charges in favour of all metered BPL domestic consumers from January 1, 2017, by which time the state government would have consolidated, verified and authenticated the Aadhar-linked list of BPL customers in the state
• A Journalist Welfare Fund with an initial corpus money of Rs 2 crore for the welfare of working and accredited journalists of the state
• Rs  5 crore to set up a heritage conservation fund for heritage buildings in the state

Tax proposals

• n Exemption on essential commodities, local industry from payment of Value Added Tax, concession on Central Sales Tax to industrial units, toll on raw material and finished products of industrial units, lodging services provided by hotels, lodges and guest houses extended till March 31, 2017
• n Tax rate levied on items listed in the Schedule D-1 enhanced from 13.5 per cent to 14.5 per cent. Items placed under schedule D-1 includes lassi, butter milk, separated milk, flavoured milk packed, rusks of all kinds, multi-functional devices, printers, room fresheners, air fresheners, naphthalene balls, mobile phones, tablets, I-Pads and their accessories, imitation jewellery, readymade garments and hosiery goods and all types of packed, frozen food, juices, ready to serve foods
• n Transformers falling under Schedule C proposed to be placed in the Schedule D-1
• n All types of cotton and silk yarn, local handmade and handloom carpets, LED lights, lamps and tubes brought in the zero-rated tax category
• n Tax exemption on plant growth promoters and regulators, rodenticides and herbicides
• n Exemption from VAT for agricultural implements, like threshers, tillers and harvesters
• n Exemption to health clubs, gymnasiums, fitness, wellness centres, slimming centres from the tax
• n All medical services provided by the hospitals and nursing homes exempted from service tax
• n VAT on medical imaging equipment, X-ray machines, scanners, X-ray films and plates reduced from 13.5 per cent to 5 per cent tax rate category
• n Handmade cups, plates made of leaves and papers exempted from VAT
• n Exempting EOT cranes, forklifts, pallet trucks, chain blocks used for material handling from entry tax
• n Fresh cooked food sold by hotels, restaurants, eateries and dhabas in the category of 5 per cent tax
• n VAT on containers, utensils made of precious metals reduced from 13.5 per cent to 5 per cent
• n Automobiles sold by CSD canteens to members of the armed forces having canteen smart cards brought to 5 per cent rate of tax instead of 13.5 per cent
• n Paneer and cottage cheese in packed form to be taxed at the rate of 5 per cent
• n VAT on parts of bicycles, tricycles and tyres and tubes of cycle rickshaws to be reduced from 13.5 per cent to 5 per cent
• n Shawls, stoles and towels under 5 per cent tax rate category
• n Toddy, neera and arak falling in entry No 43 of Schedule-A to be deleted from zero-rated category being intoxicating drinks
• n Dhupkathi and dhupbati presently taxed at the rate of 5 per cent to be exempted
• n Misri, batasa, makhana and phullian exempted from VAT
• n Free export/import of goods/items based on self-certification by promoters of micro and small -scale units
• n Bangles made of imitation gold to be placed in Schedule D-1 at par with other imitation jewellery
• n All capital goods, namely machinery and allied goods, are specifically mentioned in Schedule D-1. Words capital goods listed in 5 per cent tax schedule be deleted to avoid misinterpretation and misclassification
• n Hose pipes and fittings to be deleted from 5 per cent rate category as another similar entry “pipes of all varieties” exists in Schedule D-1
• n Hot mix plants, cutting and grinding of glass; itching, silvering bevelling, frosting and designing of glass under negative list
• n Tax rate on aviation turbine fuel enhanced from 20 to 25 per cent
• n Increase in goods and basic toll on vehicles between 8 and 15 per cent over the prevailing rates
• n Entertainment duty on satellite and cable TV operators of Rs 50 per connection per month
• n The threshold limit in the services provided by Chartered Accountant and cost and works accountants to be enhanced from 5 lakh to 10 lakh

Power sector reforms

• n The time limit for availing benefits under the Power Amnesty Scheme is enhanced to domestic consumers up to December 31, 2016
• n Proposed to build in and provide direct subsidy of Rs 1728.37 crore to the customers through the JKPDD to insulate vulnerable and marginal consumers from sudden impact of tariff hikes from time to time
• n The government will provide 5 LED lamps of 9W each to every registered consumer at a highly subsidised rate of Rs 20 per lamp to conserve energy
• n A provision of Rs 64 crore earmarked for the same
• n Streetlights in two Municipal Corporations of Jammu and Srinagar and other municipalities across the state to be replaced in a phased manner with energy-efficient smart LED lights
• n Energy audit of government offices and use of energy-efficient LED lighting in all government buildings to be undertaken
• n 100 per cent metering for reduction in commercial losses targeted towards bringing AT & C losses to 15% from 59 % by 2019-20

(Compiled by Amit Khajuria)