Omar Abdullah unveils fiscal reforms to strengthen J-K's economy

Jammu, March 7 (PTI) Jammu and Kashmir Chief Minister Omar Abdullah on Friday announced a series of economic and tax reforms aimed at bolstering revenue generation, infrastructure development and social security while underscoring the need for fiscal prudence.

Presenting the Budget in the Assembly, he highlighted the government's commitment to reduce fiscal deficit through strategic policy measures and central assistance.

"Because of our fiscal reforms and central support, the fiscal deficit will be reduced, bringing us closer to our Fiscal Responsibility and Budget Management (FRBM) target," Abdullah said.

He projected the region's economy to grow at 7.5 per cent in 2024-25, with an estimated Gross State Domestic Product (GSDP) growth of 9.5 per cent in 2025-26.

In a major announcement, Abdullah introduced new levies on non-transport vehicles purchased outside J-K but registered within the region through authorised dealerships. "These vehicles will now be subject to a 12 per cent road and token tax, along with a 3 per cent green cess on top of existing charges," he said.

"This measure aims to mitigate revenue losses and provide a level-playing field for local automobile dealers," he stated.

The chief minister also proposed revisions in fuel taxes to encourage the adoption of cleaner energy sources. The Budget reduces petrol rebates by Re 1 per litre and high-speed diesel rebates by Rs 2 per litre while increasing the tax rate on aviation turbine fuel to 5 per cent.

"We are taking steps to align fuel taxation with environmental goals while ensuring that J&K remains competitive compared to neighbouring states like Punjab, Haryana and Himachal Pradesh," Abdullah said.

The chief minister acknowledged J-K's financial constraints, attributing them to high committed expenditures and limited revenue streams. He revealed that only 30 per cent of revenue receipts and 25 per cent of budgetary needs are covered by J-K's tax and non-tax revenues.

"Our historical challenges of high expenditure and low revenue generation have led to fiscal stress. However, through improved tax compliance, digital tracking and prudent fiscal management, we are ensuring revenue mobilisation," Abdullah said.

The government has intensified efforts to improve tax realisation, especially through Goods and Services Tax (GST) compliance. He assured that GST tracking for capital works and risk-based e-way bill verifications would be strengthened to curb tax evasion.

"Red-flagged cases will be closely monitored using inputs from the Business Intelligence Unit (BIU) and GST Network (GSTN) to prevent revenue leakages," he said.

The government's focus on digital reforms has yielded positive results, with non-tax revenue reaching Rs 5,824 crore as of January 31, while tax revenue has climbed to Rs 11,650 crore — both figures exceeding last year's collections.

"We are improving billing, metering and digitisation to enhance revenue collection. Our reforms in metering and power billing have led to a reduction in under-recovery from Rs 6,552 crore in 2022-23 to Rs 5,244 crore in 2023-24, with a further target of Rs 4,200 crore in 2024-25," Abdullah said.

Despite these efforts, he acknowledged that J-K's debt burden has risen due to borrowing for power purchases. The public debt has increased from 48 per cent of GSDP in FY 2015-16 to 52 per cent in 2023-24.

"To address this, we are reducing high-cost debt and optimising liabilities for long-term fiscal stability," he said.

The chief minister reiterated the need to tackle J-K's infrastructure deficit, particularly in road connectivity, water supply, tourism and power.

"Addressing these gaps requires significant financial resources and continued central support. Our discussions with the prime minister, Union home minister and finance minister have resulted in special financial assistance for J&K," he said.

He announced that the budget for the J-K Police, previously constituting 11 per cent of the state allocation, has been migrated to the Ministry of Home Affairs (MHA) Budget from 2024-25 onward.

"J&K will also receive an extra Rs 5,000 crore in grants for 2024-25 and 2025-26, which will greatly strengthen our fiscal position," Abdullah said, expressing gratitude to the central government.

"I sincerely thank the prime minister, Union home minister and Union finance minister for their unwavering support in strengthening J&K's fiscal health and realising its vision for growth and prosperity," he said.

The government is also focused on improving fiscal transparency by making all developmental expenditures publicly accessible through the Empowerment and Jan-Bhagidhari portal. Independent officers will verify projects to ensure timely completion and quality execution, he said.

"We are strengthening fiscal discipline by curbing reliance on overdrafts. Improved liquidity management has significantly reduced our dependence on ways and means advances," Abdullah said.

He emphasised the importance of fiscal reforms in steering J-K toward sustained economic growth and financial self-reliance.

"This Budget lays the foundation for a fiscally prudent development path, ensuring that Jammu & Kashmir moves toward a more stable and prosperous future," he said. PTI AB KSS KSS

Source: PTI