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J&K’s economic recovery has begun, revival to follow: Drabu

KT NEWS SERVICE. Dated: 1/18/2018 3:34:00 PM

JAMMU, Jan 17: Minister for Finance, Dr Haseeb Drabu today said the wide-ranging fiscal and welfare measures announced in the state budget were aimed at setting J&K’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,” Drabu said while winding up the discussion of the Budget proposals in the Legislative Council today.
Enumerating, the Finance Minister said, that J&K 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 was to enhance autonomous public expenditure, which is the basic theme of this budget.
He said the fundamental intent of making it a stakeholders’ budget was 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,” 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. He said that with the budgetary edifice in place, now was the time to consolidate the fiscal and budgetary reforms at the departmental level for sustained and self-generating efficiency gains.
Drabu reiterated that the system building started in 2015 had a positive impact. He said the biggest proof was 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.
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
would 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 had been gradually brought down up to 30 paisa this year that helped to retain more money in the state. He said the government had also been able to reduce the GPF liability from Rs 20000 Cr to Rs 8000 Cr besides reducing the liabilities of power and other concerned agencies.
He said the government was at the same time trying to bring up a new rural fiscal architecture by linking Panchayats with Rural and Cooperative Banks.
Defending the decision of keeping the Toll Tax regime intact in the GST era, 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 had 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.
Earlier, 28 Legislators participated in the discussion on the budget.