Fiscal Reforms

March 9, 2017 0 Comments EDITORIAL 495 Views
Fiscal Reforms

Jammu and Kashmir government has incurred heavy liabilities due to a number of reasons, primarily owing to heavy expenses on the wage bills and running of offices. State’s funding pattern is heavily skewed and share of developmental budget is significantly lesser than the revenue expenditure that is being footed on annual basis. The liabilities have also piled up due to the massive power bill, which could be attributed to the slack of Power Development Department officials in carrying out the tariff recovery drives. It is the result of the lack of proper policy mechanism that people of the state have to bear with the perennial problem of daily outages and state always tries to portray people as the culprits. Over the years, unfruitful expenditures in the state have only increased as it has spend more on running the office expenses than creation of assets. In order to run the day to day affairs, the state government has also lifted the money from the market by way of loans due to which the liabilities have increased multifold. The government has been unable to meet the daily expenses and had to borrow the money from the Reserve Bank of India (RBI) to fund the expenses in the state. The state of economy has turned from bad to worse as the liabilities in comparison to the gross state domestic product (GSDP) have only increased. The state is under heavy debts and the grants and devolution are only used to meet the anticipated expenditures as the state doesn’t have a surplus budget. Generation of revenue from the state’s own taxes has remained stagnant and the government has to depend mainly on the devolution from the Center for meeting the annual expenses. The recovery of non tax revenue mainly due to the power tariff is not in the targeted range due to which liabilities have piled up. A whopping liability of Rs 7,000 crore was incurred by the state in the power sector for which the bonds have been issued by the government to clear the debts towards different power utilities. The fiscal condition of the state is the worst as the deficit has not been checked by the government. There is an urgent need for carrying out fiscal reforms in the state so that the economic condition improves. The economy of the state is already facing a slump due to the unrest which has caused heavy losses to the businessmen, and the government has also failed to induce any sort of optimism through policy initiatives. Output of different sectors has already taken a hit, and the government must take steps to check the growth in the ever bulging debts.

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