Govt rolls out populist Budget, Highlights

  • Finance Minister terms it a potential game-changer I Rs80,213 cr to be spent in next fiscal
  • Non-commercial vehicles not to pay toll at Lakhanpur, 
  • Tax on commodities up by 25%; 12 specific items exempted

In its first post-GST Budget, the PDP-BJP government today focused on populism and rolled out several welfare measures “to change the lives of people, especially of the most vulnerable and marginalised”.
Finance Minister Haseeb Drabu, while presenting his fourth Budget in the Mehbooba Mufti-led government, termed it a ‘Budget of conscience’ and ‘potential game-changer’ in the direction of building new systems for public expenditure management. Drabu said the Budget was aimed at giving the benefits of ‘successful sustained structural reforms of past three years’ to the people of J&K.
Unlike the past three Budgets, which focused on fiscal reforms, Drabu, in his 90-minute speech in the Legislative Assembly, said the government had proposed to spend Rs 80,213 crore in the next fiscal year.
“Nearly Rs 29,128 crore is going to be capital spending, so far the highest capital spending in the economy of J&K,” he claimed.
Wooing industrialists and traders, who were demanding debt relief due to losses suffered in the 2014 floods and the 2016 unrest, the Finance Minister announced the rollout of the CM’s Business Interest Relief Scheme for all RBI-approved restructured accounts.
“This scheme will be operative for two calendar years starting January 1, 2018, to December 31, 2020, with an initial provision of Rs 200 crore for the purpose. The government will contribute one third of the total interest payment of all borrowers,” he said.
The minister said the government had made a commitment to mitigate the loss of competitiveness of the industries as a result of the GST implementation in the state.
“The government will consider providing suitable incentive in lieu of CST exemption to the industrial units in the state and the state will provide freight subsidy to the industrial units located in J&K and transporting their manufactured goods beyond 1,000 km outside the state,” he said.
“The government has decided to waive interest and penalty on all power arrears owed to it by the industrialists, hoteliers and tourist resort owners,” he said.
Drabu said the government will set up a corpus fund of Rs 12,000 crore, which will be used for making timely GPF payments to the government employees in future.
The FMannounced the release of 1 per cent DA allowance due to the employees from July 1, 2017, and implementation of the 7th Pay Commission recommendations from April 1, 2018, to be made effective from January 1, 2016.
“The government has also decided to reduce the eligibility for full pension from 28 years of qualifying service to 20 years of qualifying service while the unmarried daughters of government employees will now be entitled to receive pension in case of death of an employee,” Drabu said.
“This is a step towards promoting gender equity as well. The government is launching an improved and enhanced Group Mediclaim Insurance Policy and has increased the personal accidental insurance from Rs 5 lakh to Rs 10 lakh.”
He also announced an Assured Career Progression Scheme for all gazetted cadres of the engineering departments.
Drabu said the government would soon frame a uniform employment code for the state containing all labour laws in force till now. The government has woven a social security net around the poorest of the poor and insured their lives and provided them access to small credit
“The proposed code will set the framework for terms of employment and service of all workers except domestic workers and agricultural labour and a strong, independent and separate labour judiciary,” he said, adding, “Under the Amnesty Scheme for the transport sector, I am waiving interest and penalty on past arrears of token and passenger tax from July 1, 2016, to March 31, 2017.”
“The highest-ever capital outlay in the Budget is the proof of my government’s developmental promise. Based on the feedback from my public-outreach programmes, Rs 200 crore has been earmarked for drinking water supply in the state, besides Rs 50 crore for 1,000 ongoing schemes. ” – Mehbooba Mufti, chief minister
“The fiscal deficit, which is regarded as the most important indicator of fiscal performance, was estimated at 9.5% but has actually turned out to be around 5.7%. An improvement of nearly 400 basis points is unprecedented.” — – Haseeb Drabu, finance minister
“We were hopeful of abolition of toll on goods but the Finance Minister has abolished it only on a few items and has increased the rate on other items from Rs 80 per quintal to Rs 100 per quintal. This will gradually increase the prices of essentials in the state.” — –Neeraj Anand, president, chamber of traders’ federation

Putting additional burden on consumers, the J&K Government has increased the toll slab on commodities by 25 per cent in the state Budget 2018-19, presented by Finance Minister Haseeb Drabu on Thursday.
The Finance Minster has, however, abolished the toll for non-commercial vehicles at Lakhanpur and Lower Munda — the gateway of Jammu and the Kashmir Valley, respectively. It has also abolished the toll on 12 specific items.
There has been a lot of debate in the state, particularly among the trade and business community, regarding the continuance of the toll as it defies the basic theory of the GST i.e. ‘One Nation, One Tax’.
“The imposition of toll is well within the legislative competence of the state government and while the entry tax and octroi have been subsumed in the GST, the toll has been kept outside its scope. There are many states in the country, which continue to levy toll outside the framework of the GST. I hope this clarification will finally help in laying all questions surrounding the issue at rest,” Drabu said.
“At the same time, I am also obliged to take adequate measures to protect the local industry from the onslaught of the competing demands from outside the state. To protect the local industry and encourage manufacturers, I have decided to raise the toll from the existing slab of Rs 80 per quintal to Rs 100 per quintal. I also propose to include wheat bran in the slab,” he added.
He said after careful consideration, it had been decided to do away with toll on vegetables, medicines, sugar, salt, tea, soaps/detergents, sanitary items, water coconut, wheat seeds, tree spray oil, newsprint, jaggery (gur) and all fruit products produced in the state. On all other products manufactured by the local industry, the toll will continue to be levied, Drabu added.
Extending relief to commuters and tourists visiting the state on their own vehicles, the government has proposed the abolition of the basic toll on all non-commercial and private light motor vehicles. Earlier, a toll of Rs 80 per light motor vehicle was being charged at the entry and exit of Lower Munda and Lakhanpur.

Tax collection crosses Rs 10k cr
Crediting the PDP-BJP coalition government with successful fiscal management, Finance Minister Haseeb Drabu revealed that for the first time in the budgetary history of J&K, the revised estimates for the current year were much better than the Budget estimates. The Finance Minister said: “Tax revenues were estimated to be Rs 9,931 crore but we have crossed the Rs 10,000-crore mark of own tax collection. It was estimated that an unfunded resource gap was over Rs 3,000 crore. As the year comes to an end, the state has a surplus of more than Rs 1,300 crore.” “The fiscal deficit, which is regarded as the most important indicator of fiscal performance, was estimated at 9.5 per cent but has actually turned out to be around 5.7 per cent. An improvement of nearly 400 basis points is unprecedented,” he said.
Incentive for staff in rural areas
The state government will introduce an incentive scheme for employees who volunteer to work in rural areas of the state. The move will be aimed at streamlining the administrative functioning in far-flung areas. The Finance Minister, Haseeb Drabu, said the government wants to ‘incentivise transfers and postings in rural areas” and the department will notify the scheme before March 31. “Every government employee today seeks a posting in the twin cities of Jammu and Srinagar. Sadly, nobody wants to serve in the remote areas of the state. This has impacted the service delivery adversely in remote areas,” said the Finance Minister. Over the next two years, around Rs 500 crore is expected to be invested for the creation of new housing facilities for the government employees.
Power liabilities see a dip
Although the Jammu and Kashmir Government has done away with the annual exercise of presenting a separate power Budget, Finance Minister Haseeb Drabu presented a rosy picture of the government’s ability to lower the liabilities in the sector. “We were burdened with a liability of Rs 11,000 crore of which Rs 7,000 crore was of the power department alone. These have been successfully managed. The departmental liabilities have come down to just Rs 600 crore and the power purchase liabilities have reduced to a little more than Rs 3,000 crore,” the Finance Minister said in the Legislative Assembly. Accepting that all is not well in the power sector, Drabu said the liabilities were covered by power bonds to defray power liabilities.


    • Revenue expenditure, including security-related expenditure, to touch Rs 51,185 crore
    • Capital expenditure Rs 29,128 crore: Rs 5,500 crore for state schemes and Rs 10,423 crore for Central schemes
    • Rs 8,300 crore under the Prime Minister’s Development Programme
    • Rs 1,077 crore for the Panchayati Raj Institutions and urban local bodies
    • Outgo on pension, including leave encashment and NPS, Rs 5,100 crore
    • The gross state domestic product at Rs 1,57,384 crore
    • Tax revenue + non-tax revenue at Rs 16,955 crore
    • Tax revenue expected to grow by 10.43%
    • Fiscal deficit around 5.7%

for Employees

    • 1% dearness allowance due from July 1, 2017
    • Implementation of the 7th Pay Commission recommendations from April 1, 2018, effective from January 1, 2016
    • Eligibility for full pension reduced from 28 years to 20 years of qualifying service
    • Unmarried daughters of the employees now eligible for pension once the employee and his/her spouse is no more
    • Deposit-linked insurance of GP fund
    • subscribers enhanced to Rs 50 lakh
    • All government employees, including pensioners, along with five family members, will be covered under improved Group Mediclaim Insurance Policy
    • Personal accidental insurance increased to Rs 10 lakh
    • Assured Career Progression Scheme for all gazetted cadres of the engineering departments. Its benefit to reach technical cadres like agriculture, horticulture, animal and sheep husbandry departments

Sops for businesses

    • Alternate incentive in lieu of Central sales tax to the industrial units in the state
    • Freight subsidy to the industrial units in the state and transporting their manufactured goods beyond 1,000 km outside the state
    • Refund of SGST to all industrial units, which were hitherto eligible for VAT exemption
    • Hotels and resorts to pay same power tariff as industries
    • Rollout of ‘CM’s Business Interest Relief Scheme’. For all RBI-approved restructured accounts, the government will contribute one third of the total interest payment of all borrowers
    • One-time waiver of Rs 147.23 lakh on soft loans provided under the erstwhile PM’s package to 19 houseboat owners who had taken such loans from banks other than J&K Bank and SBI
    • Waiver of penalty and interest on arrears of tax to all dealers registered under the J&K Value Added Tax, 2005, and J&K General Sales Tax Act, 1962
    • To waive interest and penalty on all power arrears owed to the government by the industrialists, hoteliers and tourist resort owners
    • Under the Amnesty Scheme for the transport sector, waiving interest and penalty on past arrears of token and passenger tax from July 1, 2016, to March 31, 2017
    • A common facility centre for the cricket bat industry at Sethar, Anantnag, in public-private partnership mode

PSUs get a boost

    • Rs 5 crore for meeting cost of VRS/GHS in PSUs
    • Revamp of the corporate governance structure of the JKSPDC. To compete with J&K Bank for the top profitable company owned by the state government
    • The J&K State Finance Corporation has issued a share buyback offer and has got a good response
    • Initiated the process of financial engineering in public enterprises
    • Rs 5 crore each to the Handicraft Development and Handloom Development

Corporations for raw material and inventory upgrade

    • The State Road Transport Corporation being given focused attention to strengthen it so as to clear its liabilities before showcasing it for public-private partnership
    • Setting up of a J&K Renewal Energy Corporation to catalyse the development of renewable energy resources
    • Capital infusion of Rs 255 crore in Anantnag Central Cooperative Bank, Baramulla Central Cooperative Bank and Jammu Central Cooperative Bank

Toll abolished

    • No toll on vegetables, medicines, sugar, salt, tea, soaps, detergents, sanitary items, coconut water, wheat seeds, tree spray oil, newsprint and jaggery
    • Proposed abolition of basic toll on all non-commercial, private light motor vehicles
    • Tax abolition on export of all fruits produced within the state
    • Relief to the commuters and transporters as tax to be abolished at Lower Munda and Heerpur toll posts

Welfare of youth

    • Students can now repay education loans taken from banks after the completion of their course
    • Class VIII as qualification for more trades, both under the norms of National Council for Vocational Training and State Council for Vocational Training

Insurance for poor, transgender

  • Minimum wages of unskilled workers raised to Rs 225 and for skilled labour to Rs 350. A new category of highly skilled workers introduced and Rs 400 fixed as their minimum wages
  • Insurance for construction workers and protection against disability, disease and death. To get access to small credit
    • Transgender shall be treated as living under the BPL unless indicated otherwise
    • Free life and medical insurance cover and a monthly sustenance pension on the pattern of the old-age pension scheme for all transgender above the age of 60 years, who are registered with the Social Welfare Department

Push to horticulture

    • Setting up of walnut processing units in the private sector
    • Rs 5 crore for setting up of a community-based marketing network to encourage saffron growers to go back to the traditional system of cultivation
    • Rs 25 crore for orchard replantation and high-density plantation
    • A scheme for the hiring of CA stores in the areas adjacent to the NCR by the Horticulture Department for the use of apple growers of the state

Uniform employment code

    • A uniform employment code for the state, containing state’s all labour laws. The code shall set out the framework for terms of employment and service
    • To constitute a State Finance Commission in terms of the Jammu and Kashmir State Finance Commission for the Panchayats and Municipalities Act, 2011
    • A committee of officers and professionals in the area of taxation and industry to work out the framework for bringing the real estate sector, electricity, alcohol and petroleum under the state goods and services tax
    • Disaster mitigation fund with an initial corpus of Rs 10 crore

Scheme for scribesn Finance Minister Haseeb Drabu announced that the accredited journalists of Jammu and Kashmir will be covered under the Mediclaim Group Insurance Scheme