Rather Announces Rs 100 Cr Package For ‘bad Pockets’10 March 2011
The Daily Excelsior
Jammu: Finance Minister Abdul Rahim Rather today announced Rs 100 crore package for 'bad pockets' of the State mostly mountainous and far off areas of the district saying this would lead to development of most undeveloped areas of the State. He said the process for regularization of consolidated-adhoc-contractual employees has been set into motion and Voluntary Services Allowance (VSA) benefit has been extended to 16,000 youth so far under Sher-i-Kashmir Employment and Welfare Programme for Youth (SKEWPY). Replying to two and a half days debate on the budget in which 39 MLAs including former Finance Minister and PDP leader Muzaffar Hussain Baig participated, Mr Rather, in his over two hours reply, justified exemption of liquor from tax hike saying the State was already charging highest tax on the liquor as compared to neighbouring States. He added that if the taxes were further increased, this could lead to diversion of the trade as people would start taking some recourse to bring it from neighbouring States. Proposing a debate on prohibition, he said till then the State had to safeguard its revenue from excise. A number of MLAs, cutting across the party affiliations, had called for increasing tax on liquor like cigarettes and tobacco. The Finance Minister had proposed 25 per cent tax on cigarettes, tobacco and tobacco products in the budget presented by him in the Legislative Assembly on March 7 but had exempted liquor. A number of MLAs while taking part in debate on the discussion had welcomed Mr Rather's decision to increase tax on cigarettes and tobacco but wanted a similar hike on liquor. Addressing the concerns of BJP Legislature Party leader Prof Chaman Lal Gupta on high consumption of liquor in Jammu region than Kashmir, Mr Rather said: 'we don't force people in any part of the State to consume liquor. If people don't consume liquor in Kashmir, we can't ask them to do so'. However, he refused to withdraw additional tax imposed on edible oil saying the increase has been effected after seven years. A number of legislators had called for exemption of edible oil from the tax hike in view of inflation. Mr Baig had asked the Finance Minister not to compared tobacco with edible oil. Mr Rather said Additional Resources Mobilisation (ARMs) were also necessitated as they had to explain to the Planning Commission as to what the State was doing to generate its own resources. Referring to the demand of several MLAs from Doda, Kishtwar, Kupwara and other areas of neglect, the Finance Minister announced Rs 100 crore worth exclusive package for 'bad pockets' like Marwah for their development. He said the package would immensely benefit remote areas of the State. Referring to Mr Baig's assertion that pensioners above the age of 90 years for whom the Finance Minister had revised roadmap for payment of arrears on account of Sixth Pay Commission would be found in graveyard or cremation ground, Mr Rather said disputed the claim of former Finance Minister saying there were 5000 pensioners in the age group of 80 to 90 years and 2100 above 90 years. Mr Rather had announced payment of Pay Commission arrears to the pensioners above the age of 90 years in one installment and for those in the age group of 80 to 90 years in two installments. He also announced that the Government has set the process into motion for regularization of adhoc-contractual-consolidated employees. He attributed the delay in regularization of employees to collection of information from the concerned Departments for which the Government even had to issue an ordinance through the Governor to get the initial time of two months extended till January 31 this year. 'Some cases have been cleared for regularization while others would follow shortly. The employees who have not completed seven years of services would be regularized when they complete it', he said. NPP legislator Harshdev Singh and other MLAs had raised the issue of delay in regularization of adhoc-contractual-consolidated employees despite the fact that a bill for their regularization had been passed in the Legislature during budget session last year. On the PDP charges of over Rs 1000 crore worth Master Plan Jammu and ignoring Kashmir, Mr Rather said such a plan was announced for Srinagar last year. He said the State was aiming generation of 4000 mw power by 2020 as against 2500 mw peak hour supply at present. Mr Rather replied the points raised by almost all the MLAs especially Mr Baig, who had spoken for over 100 minutes in the debate and mentioned in detail about the refunding over Over Drafts of J&K Bank and give reasons for increase in non-plan expenditure saying both the times the NC Government had to face the burden of Pay Commission reports. While the NC Government implemented Fifth Pay Commission in 2002, the second was implemented last year. The salary figure of the Government employees stood at Rs 2314 crore during 2001-02, which has gone up to Rs 8114 crore during 2010-11 and was projected at Rs 11,360 crore for 2011-12. If the salary drawn from the plan were also included, it would go up to Rs 12088 crore in 2011-12. Similarly, the pensions accounted for Rs 556 crore during 2001-02 but would cost Rs 2651 crore in 2011-12. The pensions were just Rs 46 crore in 1992-93. 'How can we reduce salary and pensions as we had to give jobs to the youths? The non-plan expenditure would increase with rise in salary and pensions', Mr Rather said. Admitting that fiscal deficit, revenue expenditure and non-plan expenditure were going up, which was a cause of concern, he said the Government was finding the ways to reduce them. On increase in payment of loans and interests on them, the Finance Minister said that at the same time, the plan was also increasing. To get the full plan, some loans had to be raised mandatory, he asserted. The State Government had been able to generate resources and would continue to do so, he added. Refuting criticism on switching over to Ways and Means Advances with the Reserve Bank of India (RBI) after wiping out Rs 2300 crore Over Drafts (ODs) of Jammu and Kashmir Bank, Mr Rather said the OD were just Rs 800 crore when the NC left the Government on October 10, 2002 but they had gone up to Rs 2300 crore when the party resumed the power in January 2009. The permissible limit of ODs was Rs 1700 crore. 'The ODs had become structured deficit and a liability for us. We were not able to draw any ODs. The Finance Commission agreed to give us Rs 1000 crore one-time assistance to wipe out the ODs. We have raised Rs 1300 crore from market borrowings and returned to the Bank. Rs 1000 crore would also be returned shortly', he added. Dispelling apprehensions that the new agreement with the Reserve Bank of India (RBI) for Ways and Means Advances, Mr. Rather said the Cash Management Agreement is a reform measure, which is in the overall interest and benefit of the people, depositors, J&K Bank and the Government. Reiterating that the Government's ties with the Jammu and Kashmir (J&K) Bank are and will remain intact, he said that the outstanding Over Draft (OD) amount of Rs. 2300 crore would be paid to the J&K Bank very soon in totality out of which Rs 1300 crore have already been cleared. Maintaining that the State Government's Ways and Means Advance arrangement with the RBI is a win-win situation for the State Government, J&K Bank, and people of the State, Mr, Rather thanked the 13th Finance Commission for coming to the rescue of the State Government by agreeing to provide one time grant to wipe out OD outstanding which had assumed the shape of structured deficit. Reiterating that the J&K Bank has been the banker to the State Government since long and it will continue to be so in the future also, he said it has also been appointed as Agency Bank appointed by RBI for the State Government for the new arrangements of Ways and Means. He said J&K Bank is a strong financial institution and could use the returned OD of Rs 2300 crore for other banking activities in priority sectors, adding that the State Government has 53 per cent shares in the J&K Bank and the Government will always have investors and depositors interest on the top of its mind.' Mr Rather said the State Government's OD facility with the J&K Bank had reached up to the saturation point, and in fact practically, there was no, OD facility available to the Government now. The OD had become a structured deficit. He charged the successive State Governments after 2002 for not caring about the repayment to the J&K Bank OD amount with the result the OD outstanding continued to rise. When the National Conference demitted office on October 10, 2002, the OD from J&K Bank was only around Rs. 800 crore which reached the figure of Rs. 2300 crore in March 2009 against the permissible limit of Rs. 1700 crore. 'As a result, the RBI would time and again reprimand the J&K Bank for violating the norms of MoU entered by the State Government with the bank,' he added. Talking about the benefits of the new OD arrangement, the Finance Minister said it has four benefits for the people of the State. 'Firstly, the OD liability of Rs. 2300 crore will be wiped out in one go with the help of Union Finance Ministry in accordance with the recommendations of the 13 Finance Commission. Secondly, the OD facility for the State Government would be revived and the Government can avail Ways and Means Advance in the time of need from the through J&K Bank. Thirdly, the State Government will save around Rs. 230 crore annually as earlier it had to pay the amount as interest on the outstanding OD. The amount will be used in the public welfare schemes. Asserting that the plan outlay of Rs 6,600 crore for 2011-12 is a realistic projection, Mr Rather said sustained measures are required to improve the State's burgeoning fiscal deficit. He added that the projection is based on the pattern adopted by the Planning Commission for schemes of financing the current year's annual plan outlay. 'There was a wide-spread criticism over the plan outlay projected by us. The State's next year play out of Rs 6,600 crore is a realistic projection based on the pattern adopted by Planning Commission for schemes of financing the current year's annual plan outlay,' Rather said. He said though our tax revenue has improved considerably by introducing various reformative measures, a lot more is to be done to improve our non tax revenues. The State has even won applauds from the 13th Finance Commission for generating highest ever tax revenue of Rs 3,505 crore during the last year, he said, adding that the State has set a tax revenue target of Rs 4,183 crore during next fiscal marking an increase of around 20 per cent. Mr Rather said next year's non-tax revenue collections have been estimated at Rs 22,987 crore, up by Rs 5,059 crore over the current fiscal year's budget estimates of Rs 17,928 crore. He said the non-plan expenditure on salaries of the Government employees inclusive of the provision for the two DA installments which will become payable during the next fiscal is estimated at Rs 11,360 crore which would be Rs 3,246 crore more than this year's revised estimates of Rs 8,114 crore. The revenue component of the plan outlay works out to Rs 1,178 crore which is primarily on account of salaries of the staff borne on the plan. In addition to this, the estimated requirement of grants-in-aid for the autonomous bodies and institutions has been worked out at Rs 727 crore as against Rs 482 crore estimated in the budgetary estimates of this fiscal, he said. He said the expenditure on payment of interest is estimated at Rs 2,363 crore during the next fiscal as against Rs 2,251 crore worked out in revised estimates of the current fiscal. The expenditure on account of cost of purchase of electrical energy is projected at Rs 2,400 crore as against the current year's budgetary estimates of Rs 2,050 crore and revised estimates of Rs 2,324 crore, Mr Rather said. The Finance Minister said Economic Survey Report mandatory under Fiscal Responsibility and Budget Management Act, is now being regularly placed on the table of the House since last two years. He said he was open to suggestions aimed at decreasing the revenue expenditure. Responding to queries of some members regarding the agriculture sector, he said adequate allocations have been kept for seed replacement, which is below the national average of 25 per cent. To give boost to agriculture and allied sector, he said toll on agriculture implements has been waived off in the budget proposal, he said, adding that sops provided in the last year's budget for these sectors have yielded better dividends. Regarding alleged disparities with backward areas in the field of development, Mr Rather said it was for the first time that Rs 100 crore has been earmarked in the budget to meet the requirements of neglected and bad pockets of the State. Talking about the employment policy, Mr Rather said unlike past the unemployed youth after imparting adequate training in a particular field at J&K Entrepreneurship Development Institute (JKEDI) are provided one-third of the cost of project which is non-refundable. Talking about the employment policy, Rather said unlike past the unemployed youth after imparting adequate training in a particular field at J&K Entrepreneurship Development Institute (JKEDI) are provided one-third of the cost of project which is non-refundable. Besides, the J&K Bank has been in clear terms asked to provide required loan facilities to such entrepreneurs within two months. He said the Government has set a target to establish about 15,000 income generating self-employment units under SKEWPY. Rather said that 91,000 students above matriculates have been brought under the ambit of Voluntary Service Allowance (VSA). He added that about 16,000 educated unemployed youth are getting VSA at present against 23,000 youth registered under the scheme. He said though the State's tax revenue has improved considerably by introducing various reformative measures, a lot more was required to be done to improve the non-tax revenue. He said the State has even won applauds from the Planning Commission for generating highest ever tax revenue of Rs 3643 crore this year, adding that the State has set a tax revenue target of Rs 4,183 crore during next fiscal marking, an increase of around 20 per cent. He said next year's non-tax revenue collections have been estimated at Rs 1620 crore, up by Rs 313 crore over current financial year's budget estimates of Rs 1307 crore. He said the non-plan expenditure on salaries of the Government employees inclusive of the provision for the two DA instalments which will become payable during the next fiscal is estimated at Rs 11,360 crore which would be Rs 3,246 crore more than the current year's revised estimates of Rs 8,114 crore. The revenue component of the plan outlay has been worked out at Rs 1,178 crore, which is primarily on account of salaries of the staff borne on the plan. In addition to this, the estimated requirement of grants-in-aid for the autonomous bodies and institutions has been worked out at Rs 727 crore as against Rs 482 crore estimated in the budgetary estimates of the current fiscal.