Against projected demand of Rs 46,000 crore, 13th Finance Commission has recom- mended Rs.41928.95 crore grant for Jammu and Kashmir with focus on maintaining fiscal disci- pline and desisting from diverting plan assistance to meet non-plan needs alongwith ensuring clo- sure of non-working PSUs by March 2011.
The report which was tabled by Union Finance Minister Pranab Mukherjee in the Parliament on Feb 25, 2010 has recommended 1.551 per- cent share in central taxes for Jammu and Kashmir.
Commission has thus recom- mended Rs.18993.46 crores for the state from the pool of central taxes. The commission has strongly recommended the state to avoid structural shocks.
It has asked the state not to divert funds for giving arrears to the employees after the state implemented recommen- dations of the 6th pay Commission. The commission has said that while payment of the arrears may fall partial- ly within the projection peri- od, these actually pertain to expenditure for a prior period.
It has added that since it is impossible to assess liability of states on account of arrears on uniform normative basis, arrears have not been includ- ed in non-plan revenue expen- diture of states.
Thus, the commission has left out the provision of arrears for employees from the recommendations made by it. The commission has recommended non-plan revenue deficit grant of Rs. 15, 936 crore alongwith Rs. 1350 crores grant-in-aid for state specific needs. Rs.140 crore has been recommended for maintenance of roads and bridges Rs 44 crore has been recom- mended for 22 districts under district innovation fund for improving district and state statistical systems. Rs. 104.46 crore has been recommended for improving delivery of jus- tice. It includes Rs.5.87 crore for setting up and renovation of heritage court buildings, Rs.32.61 crore for morning/evening courts, Rs.15 crore for state judicial acade- my and Rs.29.89 crore for Alternative Dispute Resolution (ADR) centers alongwith Rs.11.96 crores for court mangers. An incentive grant Rs.5.9 crore at the rate of Rs.100 per capita has also been recom- mended for Unique Identification (UID) pro- gramme of the central govern- ment. Commission has rec- ommended Rs.88 crore grant in aid for water sector to be released to the state over a time span of five years from 2010-2015.
Alongside this, 118.19 crore grant has been recommended for increasing hydroelectric potential and improving mechanism for transmission of electricity which includes reducing the transmission and distribution losses. The commission has recommended an award of Rs. 133.04 crore for forests. Rs. 20 crore has been recommended capacity building of Panchayati Raj Institutions and imparting training to their representa- tives in their core functions.
An amount of Rs. 449 crore grant-in-aid has been recom- mended in pursuance of the goal of universalization of ele- mentary education, under- pinned by the constitutional right of all children, in the age group 6 to 14, to free and com- pulsory schooling. This target- ed grant is designed to help states overcome their resource constraint in funding this sec- tor, while the national charac- ter of the programme is sought to be underscored by ensuring that all states receive a share of this grant.
Rs. 952.93 crores have been recommended under state dis- aster relief fund with Rs.172.46 crore for the cur- rent financial year. Aggregate grant to local bodies includes Rs. 918.30 crore for Panchayati Raj institutions and Rs.204.30 crore for local bodies No special areas grant has been provided to Jammu and Kashmir Jammu and Kashmir has also got the composite share and general performance grant of Rs. 388.6 crore along- with general basic grant of Rs.
734 crore. Maintaining that compared to the centre, states have to pay higher effective rate of interest on the National Small Savings Fund (NSSF) loans taken till 2006- 07, commission has recom- mended that in order to cor- rect this, interest relief on the NSSF loans contracted by the states till 2006-07, with the precondition that the states will have to enact the FRL as outlined in Chapter 9 should be given at the earliest.
The commission has stressed that total relief on this account amounts to Rs. 13,517 crore and added that centre has to compensate this amount to the NSSF. Accordingly, the non-plan revenue expenditure of the centre will increase by an equivalent amount. In case of Jammu and Kashmir, Rs.2869.34 crores NSSF loans are outstanding as on March 31, 2010 with interest of Rs. 1156.45 crores. Commission has recommended Rs. 100.65 crore interest relief to Jammu and Kashmir.
Of all the special category states, Jammu and Kashmir has got the highest non-plan revenue deficit grant. The commis- sion has noted that Jammu and Kashmir has shown consid- erable improvement in own tax revenues. It has further noted that among 11 special category states, only four (Jammu & Kashmir, Mizoram, Nagaland and Uttarakhand) had fiscal deficits exceeding 3 per cent of GSDP in 2007-08, as compared to 10 in 2004-05.
Further, Jammu and Kashmir and Mizoram have even higher levels of base fiscal deficits, at 7.8 per cent and 10.3 per cent of GSDP respectively. It has said that these states require more customized fiscal correction paths, which require reforms at their end, but are achievable, neverthe- less.
The 13th finance commission was headed by Dr Vijay Kelkar. Dr Kelkar had visited all three regions of Jammu and Kashmir from June 30 to July 4 this year and was given presentation by Chief Minister Omar Abdullah, Finance Minister Abdul Rahim Rather and full Cabinet besides top bureaucrats and major political parties of the State.
Jammu and Kashmir government had sought Rs 46,000 crore award from the 13th Finance Commission with major focus on Power and Finance Departments though all other sectors had been covered adequately. It may be mentioned here that the State Government had asked for Rs 12,000 crore from the Finance Department over next five years only to meet enhanced salary requirement of about 4 lakh employ- ees due to implementation of 6th Pay Commission recom- mendations.
Finance Ministry has already made it clear that payment of arrears to 4 lakh Government employees would depend on the Award of the Finance Commission. Finance Minister Abdul Rahim Rather when contacted confirmed that the 13th finance commission rejected the state's plea for giving arrears to it employees. "Overall, recommendations are wel- come steps towards strengthening financial position of state.
But I am disappointed, since we could not get anything for employees from this award," added Rather.
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