3.24% returns vs 8.82% interest: CAG questions J&K investments

Raising serious concerns over the quality and efficiency of public investments, a report by the Comptroller and Auditor General (CAG) has highlighted that while the Jammu and Kashmir government invested over Rs 4,000 crore between 2020 and 2025, it realised a return of only 3.24 percent.

“As of March 31, 2025, the UT Government’s total investment in companies, corporations, and other bodies stood at Rs 605.10 crore. This includes investments in government companies (Rs 72.26 crore), cooperative societies (Rs 236.50 crore), statutory corporations (Rs 193.91 crore), and rural banks (Rs 102.43 crore). In addition, an amount of Rs 3,426.75 crore invested by the erstwhile state of J&K remains to be apportioned between the UTs of J&K and Ladakh,” the report stated.

During 2024–25, the return on these investments was Rs 130.78 crore, which translates to just 3.24 percent.

The report further noted that returns on these investments ranged between zero and 3.24 percent over the last five years, whereas the interest rate paid by the government on its borrowings ranged from 6.65 percent to 8.82 percent during the same period. This mismatch resulted in a cumulative financial impact of Rs 1,883.60 crore, indicating poor financial performance of public investments.

“An amount of Rs 4,031.25 crore was invested in 52 state public sector undertakings (SPSUs) up to FY 2024–25. Out of these, only one PSU generated a return during 2024–25. Despite this, the government continued to borrow funds at an average interest rate of 8.82 percent, highlighting that investments are not yielding commensurate returns and are imposing an implicit financial burden,” the report added.

The CAG also flagged the absence of a formal dividend policy in the UT. “A well-defined dividend policy ensures optimal returns from profit-making enterprises and improves financial monitoring. However, J&K has not formulated or enforced such a policy. In the last two years, only J&K Bank has paid dividends, while other PSUs have contributed nothing,” the report observed.

In its response, the concerned department stated in January 2026 that performance targets would be assigned to PSUs and a dividend policy would be formulated.

The report also raised concerns over loans and advances extended by the government. During 2024–25, loans amounting to Rs 15.09 crore were disbursed, while only Rs 0.44 crore was recovered.

“Recoveries from loss-making PSUs remain poor, leading to accumulation of outstanding loans and locking up of government funds in non-performing assets,” the report noted.

Outstanding loans increased from Rs 231.91 crore as of March 31, 2024, to Rs 246.56 crore by March 31, 2025. Additionally, loans worth Rs 1,740.44 crore disbursed by the erstwhile state remain unresolved and are yet to be apportioned between J&K and Ladakh.

The government, in its reply, stated that loan disbursements have been reduced over the past four years and that funds are increasingly being released as loans to ensure greater accountability.