JK’s economic recovery has begun, revival to follow: Drabu

Jammu, Jan 17: Minister for Finance, Dr Haseeb Drabu Wednesday said the wide-ranging fiscal and welfare measures announced in the State budget are aimed at setting JK’s sluggish economy on the path of revival and recovery.
“It took this Government three years to restore the rotten fiscal system, put in place a sustainable Public Expenditure Policy and set the State’s economy on the path of steady recovery and revival,” Dr Drabu said while winding up the discussion of the Budget proposals in the Legislative Council today.
Enumerating, the Finance Minister said, that J&K has landed up in a serious fiscal crisis because of various long and short term reasons including protracted political turmoil, 2014 floods, 2016 disturbances, demonetization and GST. “When I talk of fiscal crisis, let me make it clear, I am not talking about the Government finances, but the entire economic system involving every section of the society,” he said and added that the only way to set the State’s economy on the recovery and revival path is to enhance autonomous public expenditure, which is the basic theme of this Budget.
He said the fundamental intent of making it a stakeholders’ Budget is to generate income across various levels of people, pump public money into the system and push economic revival through a sustained effort. “That is why we have announced various measures in this budget so that money keeps continuously flowing and circulating in the system to keep the economy enduring,” Dr Drabu said and added that these measures would facilitate greater flow of cash in the system which would go a long way in the revival the sluggish economy.
Defending his decision of extending various financial benefits to the employees, he said there are 4.5 lakh employees and every employee has a family of at least five persons. “That means that a population of around 25 lakh souls is directly linked to the government. If they spend, the economy improves, if they save money, it also helps,” he said and added that the same dictum is the main reason for amnesties that are a part of the budget. “When we announce some amnesty, we actually write off somebody’s liability and when there is no liability, it automatically becomes income,” he explained.
He said the focus of the renewed fiscal policy is to enlarge constituency of peace, restore dignity of the state and its people and make it relevant for the times that we live in and essentially for the stakeholders. “This is perhaps the first budget that is not about the government departments but the stakeholders encompassing every section of the society including poorest of the poor, marginalized, employees, traders, industrialists, agriculturists, women, girls, students, youth and destitute,” Dr Drabu said and added that he wanted to make this budget relevant for the times and the people of the State and its economy. “And I am contended that I have achieved the objective to a significant extent,” he said and added that with the budgetary edifice in place, now is the time to consolidate the fiscal and budgetary reforms at the departmental level for sustained and self-generating efficiency gains.
Dr Drabu reiterated that the system building started in 2015 has a positive impact, Dr Drabu said the biggest proof is that perhaps for the first time in the budgetary history of J&K, the revised estimates for the current year are much better than the budget estimates that he had presented last year.
Enumerating he said, three numbers stand out: tax revenues were estimated to be Rs 9931 crore. These have been exceeded and in the process, we have crossed the Rs 10000 crore mark of own tax collection. “Second, I had estimated an unfunded resource gap of over Rs 3000 crores. As the year comes to an end, I have a surplus of more than Rs 1300 crore. Third, the fiscal deficit which is regarded to be the single most important indicator of fiscal performance was estimated at around 9.5 percent but has actually turned out to be around 5.7 percent; an improvement of nearly 400 basis points. This is unprecedented,” he said and added that because of a well-run financial setup, the Govt is now able to take decisions that change lives of the people for good, especially for the most vulnerable and marginalized.
The Finance Minister observed that the state imports more from other states than it exports and hence more money goes out of the system. He said to attract more investment in the state, the government need to handhold and incentivise the industry to attract more investments that will help to increase the flow of money in the system. Dr Drabu informed that in 2012-13, out of one rupee, 36 paisa were going out of the state towards imports while it has been gradually brought down up to 30 paisa this year that has helped to retain more money in the state. He said the government has also been able to reduce the GPF liability from Rs 20000 crore to Rs 8000 crore besides reducing the liabilities of power and other concerned agencies.
He said the Government is at the same time trying to bring up a new rural fiscal architecture by linking Panchayats with Rural and Cooperative Banks. “We want to effectively revive the institutions of rural local governance in the State with a sustainable supportive fiscal system side by side,” he said and added that the capital infusion of Rs 250 crore to three Cooperative Banks and the decision to connect these banks with the Panchayats will provide regular fund flow to these banks. He said a parallel financial structure has been initiated for empowering the Panchayats and further boosting the rural economy.
Speaking on the recent initiative taken by the government for construction workers, the Minister said that in the last three years, the funds have been increased for their welfare including insurance cover, overdraft facility and other measures for the construction workers.
Elaborating on the provisions kept in the Budget for Agriculture, sector, Dr Drabu said that the focus of the government is to promote commercial agriculture to transform the rural economy for which the spending is more than 10 times. He further said that Horticulture is a major part of agriculture sector and thrust is on professionalizing these sectors to generate more employment.
The Finance Minister said that the government has recently increased the minimum wages of un-skilled, skilled and highly skilled workers and this move will in turn raise the market wages prevailing in the state thereby increasing the incomes of the poorest. He further said the proposed uniform Labour Code will be a landmark initiative for the welfare of the labourers.
Defending the decision of keeping the Toll Tax regime intact in the GST era, Dr Drabu said it is vital to the policy making in the state. “It is not a matter of revenue as that is too small an amount,” he said. “It is vital to the requirements of the state to know what and how much comes and goes out of the State. It is the only gateway we have and the information is required for the protection of the local industry. Trade balance is something that we must always know and the gap in it is surging.”
Dr Drabu said the toll tax has been there since 1938. Between 2003 and 2010, it increased by half and now it saw a marginal shift and it has suddenly become an issue. “Toll is more important for protection of local industry,” he said.
Responding to the concerns of the Legislators regarding J&K Bank, Dr Drabu assured the House that although he favours complete autonomy in the functioning of the Bank, but as a regulator he will take the requisite measures to address the issues concerning the Bank. “We would look into the issues, if any, in the JK Bank and ensure that its functioning is made more transparent. However, it should not be a reason for getting the issue to the House for a debate because it has costs for the finance institution,” he maintained.