Economy Projected To Grow At Over 7 Pc Next Fiscal Year

Economy Projected To Grow At Over 7 Pc Next Fiscal Year

6 March 2011
The Daily Excelsior
Sanjeev Pargal

Jammu: Finance Minister Abdul Rather would present third successive budget of National Conference-Congress coalition Government in the Legislative Assembly tomorrow taking into account the highest ever annual plan of Rs 6600 crore for the State for the financial year of 2011-12 and Rs 1200 crore under the Prime Minister's Re-construction Plan (PMRP). The overall budget expenditure, which was Rs 25,900 crore during current financial year of 2010-11, could go up to around Rs 30,000 crore for next year's budget, official sources said. The State's economy, which was growing at 6.61 per cent during current financial year as against 6.48 in 2009-10, was projected to grow at over 7 per cent in the next fiscal year mainly due to some major investments expected by the India Inc in the State as a part of Confidence Building Measures (CBMs) to generate employment. The growth rate remained below the national average where economy is growing at about 8 per cent. The less growth rate is mainly attributed to disturbed conditions in the State for the past two decades. Mr Rather would be presenting his 11th budget, the first being in 1983. In addition, he has also presented two Votes on Account. For the first time in the history of the State, the budget will be telecast live across 159 countries in the globe by Doordarshan's Kashir channel. Sources said the Finance Minister could opt for Additional Resources Mobilisation (ARMs) on some items. However, the State has been suffering huge losses on account of power and water and there is a proposal before the Government to increase charges of both. Whether the proposal is included in the budget or not would be watched keenly by the financial experts. As against Rs 2800 crore worth power purchase bill this year, the revenue was hardly expected to touch Rs 1000 crore leaving Rs 1800 crore defict. 'Though the State Government has no control over inflation, which is rising due to sky-rocketing prices of essential commodities, it, like other State Government, was unlikely to reduce excise duties or take other measures to reduce the prices. Excise duty or VAT on few items could go up slightly, sources said pointing out that even Governor NN Vohra had written to the Finance Minister to consider raising tax on cigarettes and tobacco to curb or, at least minimize, its use. The Governor had written after receiving a request twice from a NGO. Sources said the Own Tax Revenue (OTR) of the State would this year stand at all time high at Rs 3600 crore comprising the taxes generated from VAT, Excise, Sales Tax, Entertainment, Passenger and Service Tax. However, the Government was facing problem on account of ever rising salary bill of over 4.5 lakh Government employees, which has touched Rs 12,000 crore as against Rs 3300 crore just a decade ago. The salary bill besides the militancy and now, new form of summer protests, has made the State more dependent on the Centre. Sources said Planning Commission is reported to have given a nod to the Finance Ministry to plan the budget for 2011-12 taking a 10 per cent hike in the annual plan of this year into account and an equal amount for the PMRP for next year as was given during current fiscal. Though Mr Rather declined to take any query related to the budget on the ground of its secrecy till presented in the Legislature, he confirmed to the Excelsior that the Planning Commission was likely to accede to the demand of the State Government for 10 per cent hike in annual plan for next financial year over the current fiscal year. This year, the State had been allocated Rs 6000 crore worth annual plan and Rs 1207 crore under PMRP totaling Rs 7207 crore. Going by 10 per cent step up in the plan, the State's annual plan would stand around Rs 6600 crore. There could be Rs 100 crore less or more but it would be around the same figure. The State has also been assured an equal amount of Rs 1200 crore like current year under PMRP by the Planning Commission and the Central Government for next year. The annual plan and the PMRP, clubbed together, would stand around Rs 7800 crore, an all time high amount for development works for next fiscal year. Sources said the higher plan was in view of near full expenditure of Rs 6000 crore worth plan of the State during this financial year. The part of plan for the current year, which was blocked by the Centre earlier, has started pouring in and the Government was confident that it would be spend in full by the end of current financial year on March 31. The crisis in the treasuries has also been nearly controlled, sources said. They added that the Finance Minister could make some announcements to assuage the sulking Government employees over prolonged roadmap on the payment of Sixth Pay Commission arrears. An announcement on payment of pending installment of 10 per cent Dearness Allowance from July 1, 2010, and provision of DA for next installment, due from January 1 this year, was expected in the budget. However, the Government has ruled out any change in the roadmap for payment of 50 per cent arrears to the employees, spanning over four to five years, citing limited resources. For remaining 50 per cent arrears, the Government has expressed its helplessness until the Central Government intervened and made some resources available particularly for this purpose. Sources said the unemployment, agriculture, horticulture, health, education and rural development remained priority areas of the Government and it could reflect in the budget. They added that in view of 'limited resources' the Finance Minister's hands were also tied and it wouldn't be possible for him to appease many sections of the society, who had sought concessions during pre-budget meetings with Mr Rather. The austerity measures, initiated by the Finance Minister, have saved the Government nearly Rs 100 crore and the amount could further go up. However, the Government was itself of the view that most of its Ministers besides some bureaucrats were not strictly adhering to the austerity measures leading to burden on the State exchequer much more than anticipated. The Finance Minister has already approved a roadmap for wiping out nearly Rs 2300 crore worth Overdrafts with the Jammu and Kashmir bank and switch over to new loan pattern from the Reserve Bank of India. Out of Rs 2300 crore, Rs 1000 crore have been earmarked by the 13th Finance Commission award while the rest would be generated by the State through loans from the Centre. This will help the State get ODs from the RBI, whose limit with the J&K Bank had reached the point of saturation. Sources admitted that presentation of zero deficit budget has now become a meaningless phrase. The Government had to match the revenue and expenditure at all cost and present zero deficit budget. Last several budgets of the State were zero deficit.


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