Salaries, pensions, power purchases, interest swallow bulk of J&K budget
Srinagar, Feb 8: Salaries, pensions, interest payments, and power purchases together consume a commanding share of the Jammu and Kashmir governmentís finances, sharply limiting fiscal flexibility in the 2026-27 budget and intensifying concerns over rising debt and long-term sustainability.
Official budget figures show that of the total outlay of Rs 1.13 lakh crore for 2026-27, expenditure on salaries alone stands at Rs 24,683 crore, followed by pension payments of Rs 15,777 crore.
Interest payments on debt have been estimated at Rs 12,283 crore, while power purchase costs are pegged at Rs 9300 crore.
Together, these four non-discretionary heads account for Rs 62,043 crore, or nearly 55 percent of the total budget, indicating that more than half of the governmentís spending is locked into committed expenditure even before allocations for development and welfare are made.
Officials acknowledge that J&K's fiscal stress largely stems from this heavy burden of fixed costs, particularly salaries, pensions, and debt servicing, which continue to crowd out resources for capital investment, infrastructure creation, and employment-oriented spending.
The pressure is further aggravated by the rising liabilities of J&K.
According to official finance data, the total liabilities of J&K have risen steadily over the past decade, reaching Rs 1,37,067 crore in 2024-25 (pre-actual).
The debt burden is estimated at 52 percent of the Gross State Domestic Product (GSDP).
Liabilities have increased sharply from Rs 44,662 crore in 2013-14 to Rs 1.25 lakh crore in 2023-24 and further to Rs 1.37 lakh crore in 2024-25.
Over the same period, GSDP at current prices expanded from Rs 95,621 crore to Rs 2,62,358 crore, which helped moderate the liabilities-to-GSDP ratio despite the steep rise in absolute debt.
In 2024-25, internal debt amounts to Rs 93,681 crore, forming the largest component of total liabilities.
Loans and advances from the Centre have declined significantly to Rs 589 crore, taking the total public debt to Rs 94,270 crore. Other liabilities include insurance and pension fund liabilities of Rs 1400 crore, provident fund liabilities of Rs 26,430 crore, and other obligations amounting to Rs 14,967 crore.
The liabilities-to-GSDP ratio, which remained below 50 percent between 2013-14 and 2018-19, rose to a peak of 59 percent in 2020-21 before easing to 52 percent in 2024-25, suggesting some stabilisation in recent years.
However, analysts caution that with internal debt now accounting for nearly 68 percent of total liabilities and central loans forming less than 1 percent, the fiscal headroom for future budgets remains limited. Without structural reforms to rationalise the salary and pension bill, curb power sector losses, and strengthen revenue mobilisation, the scope for development-led spending in J&K is expected to remain constrained in the coming years.
