Jammu and Kashmir's fiscal deficit rises to 5.5 % of GSDP, Govt looking to cap it at 3 %

Srinagar, March 08: Jammu and Kashmir's fiscal deficit has increased to 5.5 percent of GSDP in the revised budget estimates of 2024-25 and the government is looking to cap it at 3 percent of GSDP in the 2025-26 financial year.

As per the budget estimates related to fiscal policy strategy, the government has disclosed that GSDP of ₹ 2,63,399 crore is adopted for the current financial year (2024-25) showing 7.5% growth over the GSDP figure for UT of J&K for the year 2023-24 (₹2,45,022 crore.) The GSDP for the year 2022- 23 of Jammu and Kashmir was estimated at ₹ 2,27,927 crore.

According to government figures the financial year 2023-24 registered a growth of 7.5% in GSDP over the year 2022-23. “These figures of GSDP form the basis for the purpose of fixing the market borrowing ceiling viz-a-viz fiscal parameters in accordance with FRBM Act-2006,” the government said in its discourse on fiscal management to the Legislative Assembly on Friday.

The government further said that the Jammu and Kashmir FRBM Act, 2006 has been passed by the erstwhile State Government on August 9, 2006 as per the recommendations of 12 th Finance Commission that envisages limits on borrowing under a time bound programme to altogether eliminate revenue deficit and bring down fiscal deficit.

“Due to our fiscal reforms and central assistance, the fiscal deficit will be reduced, bringing us closer to our FRBM target,” Chief Minister, Omar Abdullah, said in his Budget speech Friday.

Due to the “high committed expenditures and limited revenue streams, Jammu & Kashmir has been facing consistent fiscal stress” with UT’s own tax and non-tax revenues covering only 30% of revenue receipts and 25% of budgetary needs.

As per budget estimates the government's fiscal stress was on account of high committed expenditures with salaries and pensions alone accounting for nearly 60% of revenue expenditure. Additionally, high AT&C losses and power sector under-recoveries have further strained the finances, the budget estimates reveal.

Official estimates further reveal that high AT&C losses have resulted in huge outstanding liabilities for power purchase, for which ₹28,000 crore were borrowed in the last few years, raising public debt from 48% of GSDP in FY 2015-16 to 52% in 2023-24. “To mitigate this, we are reducing high-cost debt, optimising liabilities, and calibrating the repayment schedules for long-term fiscal stability,” the Chief Minister asserted in his Budget speech.