POWER PARADOX | J&K to spend 6% of its annual budget on power purchases

Srinagar, Feb 10: Despite being endowed with vast potential to generate hydropower, Jammu and Kashmir continues to devote a sizable portion of its budget to purchasing electricity from outside.

According to recent statistics, J&K spends nearly 6 percent of its annual budget on power purchases even as several hydro projects in J&K remain untapped.

Experts have highlighted that developing these projects could help meet local demand and reduce dependence on costlier electricity imports.

The annual allocation for power purchases in J&K is estimated at Rs 6500 crore.

However, officials from the Finance Department indicate that the actual expenditure surpasses this budgetary projection.

In recent years, the J&K government has disbursed over Rs 15,000 crore to settle outstanding power dues, underscoring the discrepancy between budget estimates and actual spending. The interim budget for the fiscal year 2024-25 outlines the expenditure breakdown planned by the J&K government.

It earmarks 6 percent of the budget for power purchases.

According to the budget document detailing expenditures for the upcoming fiscal year, the majority of funds, 39 percent, will be allocated towards salaries and pensions.

This is followed by capital expenditure at 32 percent, interest payments at 9 percent, power purchases at 6 percent, and other expenses at 7 percent.

Funding sources for the budget include grants constituting 34 percent, borrowings at 18 percent, own taxes at 17 percent, centrally sponsored schemes at 12 percent, own non-taxes at 8 percent, ARM and Asset Monetisation at 9 percent, and Prime Minister's Development Package (PMDP) at 2 percent.

According to the official data, the power purchase bills from external power distribution companies (discoms) reached a cumulative total of Rs 63,000 crore from the fiscal year 2012-13 to 2022-23.

The data indicates that in the financial year 2022-23, the J&K government spent over Rs 8200 crore on purchasing electricity from external sources.

The fiscal year, 2021-22, saw an expenditure of Rs 8197 crore for 16,207 million electricity units, while 2020-21 witnessed the purchase of 14,362 million units costing Rs 7047 crore.

In 2019-20, 13,345 million units were purchased for Rs 6987 crore.

This trend remained the same with power purchases amounting to Rs 6561 crore in 2018-19; Rs 4844 crore in 2017-18; Rs 4752 crore in 2016-17; Rs 4803 crore in 2015-16; Rs 4719 crore in 2014-15; Rs 3959 crore in 2013-14; and Rs 3382 crore in 2012-13.

The data also indicates a consistent rise in expenses for purchasing power from outside J&K over the years.