Hon’ble Speaker,
Sir,
I rise to present the Annual Financial
Statement for the year 2012-13 before this August
House. While the financial year which is about to
close has been very rewarding as well as
challenging, the ensuing year too is going to be very
significant in many respects.
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2. The current financial year has been witness
to the consolidation of peace and order in our state.
The number of tourists, who visited Kashmir Valley
and Ladakh region and pilgrims to Shri Mata
Vaishno Devi Shrine and Shri Amaranth Ji Yatra
has surpassed all the previous records. These
numbers signify the growing confidence of the
visitors in the persistent efforts and capability of the
government in restoring peace and order. A new era
of peace and prosperity for our people has truly
begun. The improved environment has also helped
us in a more effective implementation of our plan
schemes and budgetary programmes of socio-
economic development.
3. The Eleventh Five Year Plan is concluding
on 31st March 2012. The next financial year shall be
the first year of the Twelfth Five Year Plan. The
Planning Commission of India is engaged in the
process of finalizing its Twelfth Five Year Plan
document and so are we. It is being hoped that this
document shall significantly depart from the current
Five Year Plan in its economic strategies. Emphasis
on “Faster, Sustainable and More Inclusive Growth”
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has been clearly spelt out in the Approach Paper,
unfolded by the Planning Commission. The
contours of our successive annual plans shall
become clear only after the Twelfth Five Year Plan
document takes its final shape. Nevertheless, we
hope that the finalization of the next year’s annual
plan for our state shall be taken up by the Planning
Commission of India in the coming few months.
4. At the national level, there has been a
setback in the process of economic revival due to
deterioration in the global economic scenario. It will
cast its shadow on the national approach to the plan
process. We may also be affected indirectly.
However, in our State, we start with the advantage
of the consolidation of peace and economic growth.
Building further on this consolidation, we intend to
incorporate new strategies in our next year’s plan of
action. We are hopeful that our suggestions shall
receive due attention of the Planning Commission at
the time of finalizing our plan.
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5. We have maintained our journey on the path
of structural reforms and sound management of
State finances through the last three years. These
are yielding results now. We are determined to
continue our march towards a better future with
renewed vigour.
6. Sir, I would like to submit here that the three
previous budgets presented by me before this
August House, were much more than mere
statistical statements of income and expenditure.
They were reflective of a pre-meditated and
progressive plan of action to trigger, stimulate and
sustain socio-economic growth and ensure the
welfare of the people of our state. All these action
plans were conceived, formulated and executed by
the government under the able, determined and
courageous guidance of our young, energetic and
dynamic Chief Minister Janab Omar Abdullah
Saheb.
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7. Through my next year’s budgetary
proposals, I have tried to accelerate the momentum
generated so far in the process of the socio-
economic development and welfare of our people.
My ultimate aim is to bring the major indices of
development of our State at par with the All India
averages and then try to take them farther.
8. The next year’s budget is also significant in
its purely chronological context. It is going to be the
fourth consecutive budget of the present coalition
government after it has, successfully, completed
half of its popularly mandated tenure under the
dynamic leadership of Janab Omar Abdullah Saheb,
marked by his exemplary courage, vision and
statesmanship.
Economic Overview:
9. I have laid the Economic Survey Report on
the Table of this August House a few days back. It
may be noted with satisfaction that our GSDP has
been continuously on the rise. In terms of the latest
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available figures, the GSDP of our State for the year
2008-09 was ì 42,315 crore at current prices. It
rose to ì 48,197 crore during the year 2009-10.
During the year 2010-11, the GSDP further rose to
` 54,731 crore. The current year’s Advance
Estimate has projected the GSDP figure at ` 62,365
crore. All these figures are based on the revised
para-meters of the Central Statistical Office (CSO),
adopted by it at the national level. At constant prices
(base 2004-05), the corresponding GSDP figures
work out at ì 34,664 crore for the year 2008-09,
ì 36, 329 crore for the year 2009-10, ì 38,739 crore
for the year 2010-11 and ìììì 41, 367 crore for the
current financial year.
10. The Thirteenth Finance Commission had
given us a target of achieving fiscal deficit of 5.3%
for the year 2010-11. On the basis of our GSDP
figures, the actual fiscal deficit for the last year
comes to 4.3%. This is a considerable improvement
over the target assigned to us.
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11. The hon’ble members of this August House
are already aware of yet another wave of global
meltdown, which showed itself during the current
financial year causing unprecedented fall in the
value of our rupee in comparison to all major world
currencies. Industrial production and exports at the
national level have also slowed down. These
onslaughts on our national economy are bound to
reduce the national GDP growth rate. The current
year’s Union Budget had assumed a growth rate of
8.5%. This figure is now estimated to come down to
6.9%, as per the latest reports. In comparison, the
growth rate of our GSDP at constant prices for the
current financial year works out at 6.8% in
comparison to 6.6%, estimated in last March at the
time of the presentation of the current year’s Budget
by me before this August House.
12. In an environment full of global uncertainties,
it is hazardous to forecast economic growth rate.
Nevertheless, in consideration of all relevant
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factors, I am venturing to peg my next year’s target
of GSDP growth at 7.5%.
Per Capita Income:
13. At current prices, our per capita income
figures were ì 30,212 for the year 2008-09, ì 33,665
for the year 2009-10, ì 37,496 for the year 2010-11
and are estimated at ìììì 41,833 for the current
financial year. The per capita income figure for our
State at constant prices (base 2004-05) rose to
` 26, 344 in the year 2009-10 in comparison to
` 25,641 for the previous year. The per capita
income further grew to ì 27,607 during the year
2010-11. The Advance Estimate places this figure
at ` ` ` ` 28282828,,,,999933332222 for the current financial year.
14. The figures mentioned by me do reflect a
steady growth in the per capita income of our
people. However, as stated by me before this
August House last year also, we continue to lag far
behind the All India Per Capita Income figure of
ì 38,005 for the current financial year. It is evident
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that a lot more must be done by us in the shortest
possible time to catch up with the All India figures.
Sectoral Status:
15. As per Advance Estimate, the contribution of
the Primary Sector, comprising Agriculture and
Allied activities, to our current fiscal’s GSDP is
estimated at 19.83%. The contribution of the
Secondary Sector, comprising industrial production,
manufacturing and mining is estimated to reach
25.93%. The contribution of the Tertiary Sector,
comprising all types of services, is now estimated to
jump to 54.24%.
16. It may be noted that the share of the Primary
Sector continues to slide down, even in comparison
to the originally projected share of 21.10% for the
current fiscal. While various budgetary initiatives in
support of this sector, which were announced by me
before this August House during the last two years,
have helped in boosting some of the agricultural
operations, much more will have to be done at the
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policy and delivery level. It will continue to be my
endeavour to join in any other additional initiatives
which can strengthen this basic sector of our
economy.
Development of Communication & Energy
infrastructure:
17. A fast and reliable communication network
and ample energy form the backbone of any
economy. As such, I have been taking stock of key
communication and energy projects from time to
time. The completion of these projects will positively
impact the trade, industrialization and tourism in our
state in a big way and reshape our future budgetary
structure. I proceed to cover progress in some of
the big ticket infrastructure projects.
Udhampur-Qazigund rail-link:
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18. Civil works on the railway connection
between Udhampur and Qazigund are going on
smoothly without any reported bottleneck. The
project is scheduled to be completed by the year
2017. Recently, the Central Government approved
its revised cost at ` 19,000 crore.
National Highway 1A:
19. As per the latest available reports, the work
of four laning and upgrading National Highway 1A is
progressing in four out of six segments between
Nagrota and Srinagar. The remaining two segments
are going through a process of re-bidding. The
delay is a cause of concern. We have requested the
Central Government to get the allotment of works
on these two segments expedited or to authorize
their execution in EPC mode.
Mughal Road:
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20. The Mughal Road has already been opened
to vehicular traffic for summer months. The
cumulative expenditure on this project is expected
to reach ì 535 crore in the current financial year as
against its approved cost of ` 640 crore. The
remaining ` 105 crore are proposed to be allocated
during the next year for completing the ongoing
road works and bridges.
Airports:
21. We have requested the Union Government
to fully equip the Srinagar International Airport and
operationalise it for international flights, and also to
expedite the work of expansion of the Jammu
Airport. We hope that early steps shall be taken by
the Centre on both these important projects.
Toll Plaza:
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22. Work on the new Toll Plaza at Lakhanpur
has been almost completed at a cost of over ì 32
crore. We are hoping for the early transfer of 108
kanals of railway land to us for developing it into an
additional parking area. Work on the additional
import side bridge over river Ravi is also likely to be
completed by the Central Government authorities in
the near future.
Power Sector:
23. Under the New Hydel Policy, all hydel
projects of upto 10 megawatt capacity have been
reserved for execution by the permanent residents
of the State. Offers have been invited for the
construction of 10 Mini Hydel Projects in Kashmir
and Jammu regions with a total identified capacity
of 172 megawatts, involving investment of nearly
` 1,200 crore. Offers from 61 prospective
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entrepreneurs have been received and are
presently under scrutiny.
24. Pakal Dul HEP with 1000 MW capacity has
been tendered out by the joint venture company of
the J&K State Power Development Corporation.
The Corporation is also going ahead with the
execution of 450 MW Baglihar HEP – Stage II.
Additionally, Ganderbal HEP, Parnai HEP, Lower
Kalnai, Pahalgam Stage III, Mini Hydel Projects at
Dah and Hanu in Ladakh region and Machil HEP
have also been put through the tendering process.
The Pahalgam III & Machil HEPs are expected to be
completed next year. The combined installed
capacity of these HEPs shall be around 200 MWs.
Revised Estimates 2011-12:
25. Now I come to the Revised Estimates of the
current financial year. The total budgetary receipts
are placed at ì 31,022 crore in the Revised
Estimates in comparison to the Budget Estimates of
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ì 31,212 crore. The total receipts consist of
ì 25,513 crore as revenue receipts and ì 5,509
crore as capital receipts.
Tax receipts:
26. The State’s own tax receipts were reflected
in the Budget Estimates at ì 4,183 crore. I am
happy to report that the same are now expected to
touch ìììì 4,800 crore. In comparison to the last year’s
achievement of ì 3,483 crore, this figure indicates
an improvement of ì ì ì ì 1,1,1,1,333317171717 crore. The growth rate
over the last year’s realizations works out to around
38%. Out of the total tax receipts, the receipts of the
Commercial Taxes Department alone amount to
ì 3,561 crore in comparison to the collection of
ì 2,504 crore made during the last financial year.
Thus, out of a total increase of ì 1,317 crore in the
tax revenue, the receipts of the Commercial Taxes
Department alone exceed the last year’s collection
by ìììì 1,057 crore, indicating an improvement of 42%,
which is a record.
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27. During my last budget speech, I had
indicated the need of taking new initiatives by the
government for improving the administration of the
Stamp Act and the registration of instruments of
exchange. This August House approved wide
ranging amendments in the relevant laws. These
government initiatives have resulted into a
phenomenal growth in the collection of Registration
Fee and Stamp Duties. In comparison to the last
year’s collection of ì 79 crore, we are hoping to
reach the level of ì ì ì ì 133 crore in the current
financial year. These figures indicate an increase
of about ì 5ì 5ì 5ì 54444 crore or 68% improvement over the
last year’s collections.
Other tax receipts:
28. Among other tax receipts, the major items
are as follows:
Taxes on Goods and Passengers: ìììì 439
crore in Revised Estimates in comparison to ì 337
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crore realized last year showing an increase of ìììì 102
crore or over 30% improvement;
State Excise Duties: ìììì 383 crore in
comparison to ì 337 crore realized last year,
indicating an increase of ìììì 46 crore or 14%
improvement over the last year’s achievement.
Non-tax receipts:
29. The total non-tax receipts were estimated
earlier at ì 1,620 crore in BE. This figure has been
re-worked in the Revised Estimates at ì 1,851 crore,
mainly due to a higher revenue collection target
given to the Power Development Department.
Besides, receipts mainly on account of dividend
from the J&K Bank have risen to ìììì 67 crore in
comparison to the BE of ì 30 crore.
30. Other major contributors to the non-tax
receipts, as reflected in the Revised Estimates are:
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Forestry and Wildlife receipts: ì 56 crore.
Mines & Minerals receipts: ì 43 crore.
Water Supply & Sanitation receipts: ì 35
crore.
Main items of expenditure:
31. Out of the total expenditure reflected in the
Revised Estimates, a sum of ì 22,854 crore is now
classified as revenue expenditure in comparison to
the Budget Estimates of ì 22,752 crore. Out of the
total revenue expenditure, the plan revenue
expenditure is estimated at ì 1,108 crore in
comparison to the Budget Estimates of ì 1,205
crore. The non-plan revenue expenditure is now
estimated at ì 21,746 crore in comparison to the
Budget Estimates of ì 21,547 crore.
32. The total capital expenditure in the current
year is now estimated at ì 8,168 crore. Out of the
total capital expenditure, the Revised Estimates for
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capital expenditure on plan account are placed at
ì 6,617 crore as compared to the Budget Estimates
of ì 7,020 crore. The non-plan capital expenditure
is estimated to increase to ì 1,551 crore in
comparison to the Budget Estimates of ì 1,440
crore.
Salary expenditure:
33. During the course of the current financial
year, three DA installments have been released in
favour of the government employees and
pensioners, including one installment which had
become payable last year. The government has
also decided to pay 100% of the arrears of pay and
pension revision following the adoption of the Sixth
Central Pay Commission Award. These arrears
shall be paid in five equal annual installments. After
taking these factors into account, the total salary bill
is expected to rise to ì 11,654 crore, inclusive of the
plan component of ì 327 crore and grants-in-aid
amount of ì 644 crore which is mainly utilized by the
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autonomous organizations for the payment of salary
to their employees.
34. The expenditure on pension and other
retirement benefits was earlier estimated at ` 2,651
crore for the current fiscal. The same is now
estimated to reach ` 2,780 crore, as per the
Revised Estimates.
35. The expenditure on account of the purchase
of electrical energy from the Central Public Sector
Undertakings and J&K SPDC was originally
estimated at ` 2,400 crore. In the Revised
Estimates, the figure has been proposed at `̀̀̀ 3,000
crore to take care of the increase in the purchase
price of energy, purchase of additional energy and
the cost of running the gas turbines.
Budget Estimates 2012-13:
36. The next year’s total receipts and
expenditure are estimated at ` 33,853 crore each.
The total revenue receipts are estimated at ` 29,948
crore based on the anticipated scheme of financing
of the plan. These figures may undergo some
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variation when our plan outlay and its Scheme
of Financing are finalized by the Planning
Commission. The share of central taxes is indicated
at the level of ` 4,245 crore, as against the RE
figure of ` 3,691 crore in the current financial year.
The total non-plan grants from the centre have been
placed at ` 4,496 crore, against the RE figure of
` 4,858 crore in the current financial year, inclusive
of the non-plan revenue gap grant under the Award
of the Thirteenth Finance Commission.
State’s own Tax Revenue:
37. Tax revenue, which is likely to touch ` 4,800
crore in the current financial year, is expected to
further grow to `̀̀̀ 5,419 crore in the next financial
year. This would mean a targeted growth of over
29.5 percent in comparison to the current year’s
Budget Estimates of ì 4,183 crore.
VAT Collections:
38. The VAT and GST collections by the
Commercial Taxes Department have been targeted
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at ` 3,940 crore as against the current financial
year’s BE target of ` 3,025 crore, aiming at BE on
BE increase of ` 915 crore, working out to a growth
rate of about 30 percent.
Other Tax Collections:
39. Taxes on Goods & Passengers are
estimated to rise to ` 461 crore, as against the
current financial year’s Budget Estimates of ` 382
crore. Collection of Excise Duties has been
projected at ` 404 crore, as against the current
year’s Budget Estimates of ` 333 crore. Collections
on account of Stamp Duty & Registration Fee have
been projected at ` 152 crore. The target for
Electricity Duty has been kept at ` 306 crore,
corresponding to the revenue target of ì 1,732 crore
given to the Power Development Department.
Non-Tax Revenue:
40. The total non-tax revenue targets are ì 2,118
crore. A revenue target of ` 1,732 crore is proposed
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to be assigned to the Power Development
Department, against their revised target of ` 1,486
crore in the current financial year. Other major
targets of non-tax revenue are Forestry & Wildlife
` 65 crore, Mines and Minerals ` 45 crore, Water
Supply & Sanitation ` 37 crore and expected
Dividend, mainly from the J&K Bank, ` 70 crore.
Expenditure:
41. The total expenditure is tentatively classified
between ` 24,990 crore, as revenue expenditure
and ` 8,863 crore as capital expenditure. The
capital expenditure comprises ` 7,028 crore on
account of the plan and ` 1,835 crore on account of
non-plan. Out of the total revenue expenditure,
` 23,548 crore is classified as non-plan revenue
expenditure, while as ` 1,442 crore is expected to
be incurred as plan revenue expenditure.
Salaries & Pensions:
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42. Out of the total revenue expenditure,
salaries of the government employees account for
the biggest chunk, estimated to reach ` 13,115
crore, inclusive of the provision of ì 700 crore for
fresh DA installments, a plan salary component of
ì 369 crore and grants-in-aid of ì 658 crore.
43. The expenditure on pensions including other
retirement benefits, is estimated at ` 3,025 crore.
The total expenditure on salaries & pensions will,
therefore, rise to ì 16,140 crore during the next
financial year.
44. A provision of ` 3,100 crore is proposed in
the next year’s Budget Estimates for the purchase
of energy, as against the current year’s RE figure
of ` 3,000 crore.
45. The expenditure on account of interest
payment against loans has been estimated at
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` 2,663 crore in comparison to the RE figure of
` 2,538 crore in the current financial year.
46. Grants-in-aid to the Local Bodies,
Autonomous Organizations and other institutions
account for ` 658 crore. The Maintenance and
Repairs of assets is expected to involve an
expenditure of ` 289 crore. A sum of ` 116 crore
has been proposed on account of honorarium to
SPOs and VDCs.
Annual Plan 2012-13:
47. The Planning Commission of India has yet to
formally determine the size of the Twelfth Five Year
Plan, which, when finalized, will also give us a firm
idea about the likely size of our successive annual
plans for the coming five years. However, the
expectation of around 10% step up in the next
year’s plan size will be reasonable. As such, the
state government has worked out its plan proposal
based on a total outlay of ` 7,300 crore for the next
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financial year. We have requested the Planning
Commission to continue the Prime Minister’s
Reconstruction Plan till we complete the ongoing
projects taken up under PMRP. Accordingly, we are
projecting a requirement of ` 700 crore under
PMRP during the next financial year, over and
above the annual plan outlay. The main schemes,
included in the PMRP, to be funded out of the
proposed allocation are Power Transmission,
Mughal Road, Counterpart Funds for the World
Bank funded schemes under ERA, completion of
TRTs for Kashmiri Migrants and Rehabilitation of
Dal dwellers. A provision of about ì 1,000 crore, out
of the total outlay, is being kept as the State Share
under various Centrally Sponsored Schemes to
enable us to access around ì 2,500 crore from the
various Ministries of the Central Government, over
and above the State Plan.
48. In the annual plan, we have proposed a
provision of ` 541 crore for the schemes to be
covered under the Agriculture and Rural
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Development sector. Under the Social Services
Sector, including Health, Education, Water
Supply and Social Welfare, we have proposed an
allocation of ` 2,532 crore to take care of the
ongoing schemes as well as the expansion
programmes. Irrigation & Flood Control gets a
share of ì 447 crore. The Energy Sector accounts
for ì 455 crore. The Transport sector, including
R&B, accounts for ì 832 crore. General Economic
Services, including Tourism and the Special Area
Development Programme, are to receive ì 1,231
crore. Industries & Minerals get ì 153 crore and
General Services are proposed to be given a share
of ì 706 crore. Under Special Area Programmes,
ì 396 crore are proposed to be spent.
49. I proceed to share the salient features of the
proposed development programmes for the next
fiscal with the Hon’ble Members of this August
House.
School Education:
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50. As I had stated last year, one of the main
challenges, confronting us, was to reduce the
gender gap in education and literacy. A major
government initiative, announced by me during the
last budget session, was the scheme ‘BETI
ANMOL’, designed to popularize higher school
education amongst girls. Under this scheme, a cash
incentive of ` 5,000 in the shape of a Fixed Deposit
Receipt is payable to all girl students from BPL
families, inhabiting 97 identified Educationally
Backward Blocks of the State, who successfully
seek admission in the 11th class.
51. I am happy to report that, in the current year,
about 6000 eligible girl students have been
identified to be covered under this scheme. The
impact of the scheme is expected to be much more
next year after the results of the next matriculation
examinations are announced in the coming months.
We expect this number to increase to 10,000 during
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the next financial year, involving an expenditure of
ì 500 lakh.
52. The scheme of ‘SAAKSHAR BHARAT
MISSION’ has been launched at the national level.
All the twenty districts, which had literacy
percentage below 50%, as per the census of 2001,
are being covered under the total literacy campaign
of ‘Saakshar Bharat Mission’.
53. A sum of ` 530 crore is targeted to be
incurred as the State share under the ‘SARVA
SHIKSHA ABHIYAN (SSA)’ and ‘RASHTRIYA
MADHYAMIC SHIKHA ABHIYAN (RMSA)’.
Higher and Technical Education:
54. The construction of 11 new degree colleges
under the state sector and 11 Model Degree
Colleges under the 50:50 Centrally Sponsored
Schemes is in progress. Besides, the construction
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of 10 degree colleges under PMRP is also
underway. An expenditure of ` 191 crore is
proposed under the Plan, inclusive of ì 145 crore on
the capital component. 55. Eighteen new Polytechnics are being
established and 27 ITIs are under upgradation. For
the next fiscal, a sum of ` 20 crore is proposed to
be kept for the ongoing and new works to be taken
up for skill impartation and up-gradation.
Irrigation:
56. A sum of ` 321 crore is proposed to be
spent as the State plan component on various
irrigation schemes. Additionally, ì 400 crore are
expected to come under AIBP and NABARD
funding.
Public Health Engineering:
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57. The PHE Department has completed 1,208
Water Supply Schemes at a cost of ` 1,187 crore
under the mega flagship scheme ‘National Rural
Drinking Water Programme (NRDWP)’ and other
schemes. The number of additional habitations,
likely to be covered by potable drinking water supply
in the current financial year, is 805, for which the
current year’s expected expenditure under NRDWP
is ` 837 crore. For the next year, the targeted
expenditure under this programme is ` 562 crore to
cover a further 1,414 habitations.
Roads and Bridges:
58. During the current fiscal 799 kms of roads
have been completed till January, 2012. The
Department has also completed 45 bridges in the
current financial year by January, 2012. Next year,
the proposed outlay for the R&B Sector is ì 682
crore.
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Agriculture and Rural Development:
59. For the next financial year, the total
proposed plan investment in the Agriculture Sector
is ì 343 crore. For the Rural Development sector,
the proposed allocation is ` 198 crore. Additionally,
funds shall also be available under the Centrally
Sponsored Schemes like ‘RKVY’, ‘Technology
Mission’ and other schemes from the Ministry of
Agriculture and the Ministry of Rural Development
of the Central Government. The focus of the
department is on the improvement of the Seed
Replacement Rate, timely and adequate supply of
agriculture inputs, farm mechanization, post harvest
facilities and marketing in all the key sub-sectors,
including Horticulture, Sericulture, Vegetables and
Commercial Floriculture.
Health:
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60. For the Super Specialty Hospital at Jammu,
819 posts have been created with a view to make it
fully functional. Additionally, 483 posts have been
created for the Emergency Block and Paediatric
Hospital at Jammu. For the Institute of
Traumatology and the Nursing College at Srinagar,
1040 posts have been created. Additional
expenditure on the salaries for these posts would be
around ì 100 crore per annum. A total expenditure
of ` 366 crore is proposed to be incurred in the
H&ME sector during the next financial year,
exclusive of the funds available under the Centrally
Sponsored Schemes like ‘NRHM’.
61. Under the ‘National Rural Health Mission
(NRHM)’, cumulative expenditure of ` 680 crore is
expected by the end of the current fiscal. An
expenditure of ` 150 crore is expected during the
next fiscal.
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62. The approved number of ASHAs has risen to
90,000. The State has made considerable
improvements in health parameters like the Infant
Mortality Rate, Maternal Mortality Rate, Total
Fertility Rate and the percentage of institutional and
safe deliveries.
63. The state government has finalized a drug
policy to promote the common man’s access to
safe, effective, quality and reasonably priced
medicines and to ensure the adoption of good
prescription practices among the doctors.
Other sectors: 64. The next year’s allocation under the Housing
and Urban Development sector has been proposed
at ` 311 crore, excluding the funds which would
be available under the ‘JNNURM’. An additional
provision of ì 369 crore shall be available for ‘ERA’.
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` 124 crore are proposed for the Tourism Sector.
The Industrial Sector accounts for ` 153 crore.
65. In the Forest and Environmental sector, a
sum of ` 42 crore has been proposed, exclusive of
the allocations available under the Thirteenth
Finance Commission Award. A total of ì 212 crore of
plan grants would be available under the Award for
various development activities.
Employment Generation and ‘SKEWPY’:
66. As the Hon’ble members are fully aware,
‘SKEWPY’ is an integrated programme, which helps
us in keeping the burning issue of educated
unemployment in focus. As of now, the Seed
Capital Scheme of ‘SKEWPY’ has resulted into
approval to about 1600 DPRs, involving project
costs of ì 118 crore. Seed capital of ì 26 crore has
been released in favour of 800 entrepreneurs. The
next year’s target of utilization of the Seed Capital
36
Fund is ` 50 crore, involving a targeted 3,000
entrepreneurs and including off-bank financing of
unemployed youth under the newly launched ‘Youth
Start-up Loan Scheme’.
67. About 32,000 unemployed educated youth
have been brought under the purview of the
Voluntary Service Allowance. An expenditure of
` 40 crore has been anticipated under the ‘VSA’
scheme during the next financial year.
68. The programme of skill development for the
youth has been taken up in a Mission Mode to
prepare our youth to get skilled and highly skilled
jobs in the growing, but highly competitive, job
markets.
69. The skill up-gradation programme is being
supplemented through ‘Rural Self-employment
Training Institutes (RSETIs)’, which are being
operationalised by the J&K Bank and State Bank
37
of India, for all the districts of the state. The
training centres, run by the Directorates of
Industries and Commerce, Handicrafts and
Handlooms and a host of other government and
non-government organizations, and their syllabi,
are proposed to be standardized under the Skill
Development Mission.
70. The State Self-employment Scheme has a
target of setting up over 9,000 enterprises in the
current financial year. The Prime Minister’s initiative
in training 8,000 unemployed youth of the state
annually in centres of excellence outside the State
for a period of five years is already under
implementation.
71. The report on employment generation in
Jammu and Kashmir, prepared by the Expert
Group, headed by Dr. C Rangarajan, Chairman of
the Economic Advisory Council of the Prime
Minister, envisages an action programme, involving
38
an expenditure of ` 761 crore, aimed at facilitating
the absorption of educated youth of the state in the
job market. The programme has been rolled out
already through schemes like ‘HIMAYAT’, ‘UDAAN’
and others.
72. The government has also fast tracked the
recruitment process against the vacancies, arising
in various government departments from time to
time. During the last three years, selection of over
39,000 educated youth has been made by the
PSC, J&K SSB and the Police Recruitment Board.
This figure excludes a very large number of
educated youth, engaged under ‘NRHM’, ‘Rehbar-e-
Talim’ and other schemes, which are outside the
purview of our recruitment agencies, meant for
making selections for regular appointments under
the State government.
39
73. Additionally, recruitment to a large number of
Class-IV posts has been going on through the
Departmental Committees.
Inclusive Development:
74. Socio-economic development for all is the
hallmark of the coalition government, headed by our
visionary leader Janab Omar Abdullah Saheb,
as also of the Central leadership of Prime Minister,
Dr. Manmohan Singh Ji and the UPA Chairperson
Smt. Sonia Gandhi Ji. Accordingly, it has been my
constant endeavour to make the budgetary exercise
inclusive of all regions of the State and all sections
of our society.
75. One of the historical achievements of the
present coalition government is the highly
successful holding of panchayat elections in the
current financial year marked with very enthusiastic
and popular participation of the people to the extent
40
of 80% of the registered electorate. Janab Omar
Abdullah Saheb had promised to transfer functions,
functionaries and funds to the elected panchayats
with a view to empowering the people at the grass
roots level. A comprehensive exercise has been
concluded by the government in this behalf and
orders have been issued in respect of 14
Government Departments/ Ministries to transfer a
large number of listed activities, alongwith their
other connected functions to the Panchayats, Block
Development Councils and the District Planning &
Development Boards. Devolution of about ì 1,531
crore is expected to reach the elected bodies in the
next financial year, inclusive of funds flowing under
schemes like ‘MG-NREGA’ and other schemes,
which shall devolve directly on the elected
Panchayats. If the Panchayats can make proper
schemes for utilization of ‘MG-NREGA’ funds and
also develop their absorption capacity, they can
increase their claims to around ì 2,500 crore under
this one scheme alone.
41
76. A plan provision of ì 148 crore is proposed
for the next year for Kargil and Leh districts. A sum
of ì 125 crore is proposed to be spent exclusively in
the Border Blocks under the Border Area
Development Programme (BADP). A provision of
ì 194 crore is being made for the Constituency
Development Fund.
77. The next year’s plan outlay includes a sum
of ì 40 crore under the Tribal Sub-Plan, a sum of
ì 18 crore for the welfare of Gujjars & Bakerwals, a
sum of ì 16 crore for the welfare of Pahari Speaking
People, a sum of ìììì 21 crore for Scheduled Castes
and OBCs and a sum of ì 49 crore under the
‘Rashtriya Shram Vikas Yojana’. Additionally, a
provision of ì 139 crore has been made for the two
Directorates of Social Welfare for executing Women
and Child Development Schemes.
78. Separate outlays are also being proposed
under various programmes exclusively aimed at the
42
welfare and empowerment of women through the
schemes being implemented by the Department of
the Health and Medical Education Department, the
Department of Social Welfare, the J&K Commission
for Women and the J&K Women Development
Corporation etc through the process of gender-
budgeting.
79. Last year, I had referred to a provision of
ì 100 crore under the ‘Border Area Development
Programme (BADP)’. It is a matter of satisfaction
that under the ‘BADP’, an amount of ì 125 crore has
been authorized during the current year. I had also
referred to a special package to address the unique
development needs of other backward areas and
bad pockets. During the current financial year, we
have made a beginning by releasing an additionality
of ì 11.64 crore for taking up developmental projects
in the identified areas. I propose to carry forward
this process during the ensuing year and announce
a special provision of ì 50 crore for such areas over
and above the likely BADP allocation of ì 125 crore
43
and the ‘Backward Region Grant Fund (BRGF)’
allocation of ì 52 crore.
Welfare of Migrants:
80. Out of the 5,242 two-room tenements, meant
for the Kashmiri migrants, 4,876 flats have been
completed and the remaining units shall be
completed in the current financial year at a total
estimated cost of ì 484 crore. A sum of ì 140 crore
was kept as the provision for meeting the salary
expenditure of the migrant employees. I propose to
increase it to ì 189 crore in the current year to
provide for the payment of one installment of the
arrears of pay revision. For the BE (2012-13), the
proposed figure is ì 171 crore. Additionally, an
expenditure of ì 104 crore is proposed to meet the
requirement on cash assistance for the Kashmiri
migrant families. Further, ì 76 crore are expected to
be incurred on the scheme of the return and
rehabilitation of the migrants in the current financial
year. The next year’s provision has been kept at
ì 130 crore.
44
81. A medical insurance scheme for the
Kashmiri migrants was announced by me earlier in
this August House. Hoping that the scheme will
finally take off after the prospective beneficiaries
feel persuaded to take its benefits and come
forward to join this scheme aimed at mitigating their
sufferings due to ailments, I propose to repeat a
provision of ì 8 crore in the next year’s budget for
this purpose.
Financial Restructuring:
82. Last year, I had apprised this August House
about the details of the government’s decision to
switch-over to the ‘ways and means’ system of the
Reserve Bank of India in place of the traditional
‘memorandum of understanding’ which had been
operational for many years between the government
and the Jammu and Kashmir Bank. As anticipated
by me, and elaborated before this August House
last year, the new system has been working very
satisfactorily to the mutual advantage of the State
Government and the Jammu and Kashmir Bank.
45
We have saved interest expenditure of around ì 200
crore so far in the current financial year through the
new arrangement.
83. On the other hand, the J&K Bank made
record profits and declared an all time high dividend
of 260% to its shareholders. The amount of dividend
disbursed, included a sum of ì 67 crore paid to the
State Government as its majority share-holder. The
Bank continues to move towards still higher
business and profit targets in the current financial
year.
84. I am very sure that the fears expressed last
year by my friends, sitting on the other side of this
August House, have been adequately allayed by
this time. I assure the Hon’ble Members of this
August House that other reforms, initiated by me,
and those which may be initiated in future, shall
always be guided by the principles of public benefit
and shall continue to be advantageous to the
financial management of the State.
46
State Financial Corporation:
85. Continuing my efforts to revive the glorious
past of this institution and resurrect its role in the
rapid industrialization and promotion of economic
activities in the State, the government has
sanctioned a sum of ì 22 crore as additional share
capital in favour of the J&K State Financial
Corporation in the current financial year.
Additionally, a sum of ì 14 crore, reflected as the
unpaid dividend amount to the State government,
accrued under the statute, has also been converted
into paid up share capital of the Corporation. We
hope to contribute an additional capital of ì 25 crore
towards the authorized share capital of the
Corporation in order to clear all its past liabilities
towards SIDBI. These measures will strengthen the
Corporation’s claims on funds to the extent of ì 150
crore for the revival of its activities, as
recommended by the Prime Minister’s Task Force
on MSME, and, subsequently, also supported by
the Prime Minister’s Expert Group on the generation
47
of employment for the youth in Jammu and
Kashmir.
86. The Corporation has already cleared the
backlog of its audited balance sheets upto the year
2008-09. I am very hopeful of its audited accounts
becoming upto date in the next few months’ time.
Computerization of VAT Administration:
87. The Government is continuing its efforts in
making extended use of Information Technology
for improving its public interface and for
enhancing the transparency and efficiency of the
government departments. I am happy to report
that an IT-enabled system has been rolled out in the
Commercial Taxes Department. Facilities of
downloading forms, e-filing of returns and
e-payment are being made available. I appeal to the
registered dealers to come forward and make full
use of these facilities.
Outsourcing of services:
48
88. Fast expansion of the Services Sector is a
global phenomenon. In our own State, we are
witness to regular and rapid increase in the share of
the Service Sector in our GSDP. This Sector has
tremendous scope for providing vast employment
opportunities to our unemployed youth.
89. The requirements of peripheral services by
the government departments for their own use have
also increased manifold over the years. As such,
the government has decided to adopt a systematic
process of outsourcing of non-core, peripheral and
auxiliary activities in the identified fields by all
the government departments, thereby creating
additional opportunities of employment for our youth
and also encouraging the growth of expertise in the
private sector in such areas. These services are
proposed to be outsourced to the private sector
under a comprehensive set of guidelines and also
under the PPP mode, wherever it is found more
feasible.
49
Re-structuring of public sector enterprises:
90. Our public sector has played a historic role
in the field of economic development of the State by
promoting, supporting, actively participating as also
indulging in the direct production of goods and
services for the benefit of the society. Over the
years, the private sector has grown as a sound and
healthy competitor and has now come of age. This
development has resulted into the redundancy of
some of the functions performed by our public
sector. Many of their manufacturing activities have
already closed down over the years and several
other activities have been scaled down.
91. The government has embarked upon a
comprehensive exercise of re-structuring of the
existing Public Sector activities to make them more
aptly suited to the present business environment.
A High Level Committee of Officers and experts has
been given the task of preparing well considered
and detailed recommendations in this behalf.
50
92. In the meanwhile, I propose a sum of ì 75
crore as budgetary support for the Public Sector
Enterprises in the Budget Estimates for the next
financial year. This provision includes a sum of ì 26
crore to take care of claims under VRS/GHS.
Arrears of pay revision and other benefits to the government employees:
93. Last year, I had reported before this August
House that the government had decided to pay off
50% of the arrears to the government employees
and pensioners on account of the revision of pay
and pensions, as per the recommendations made
by the Sixth Central Pay Commission.
94. Continuing the employees’-friendly policy of
the coalition government, headed by Jenab Omar
Abdullah Saheb, the government has settled all
their pending pay related issues through mutual
understanding and it has been decided to pay off
100% arrears in five equal annual installments. The
current year’s liabilities on this account have almost
51
doubled to about ì 917 crore in the Revised
Estimates.
95. The House Rent Allowance (HRA) has been
brought at par with the Central Government
employees by increasing the highest rate applicable
to Srinagar and Jammu cities to 20% with effect
from first July 2011, from its previous rate of 17.5%
of pay. This measure has necessitated an additional
outgo of around ì 70 crore in the current financial
year and will involve additional expenditure of about
ì 110 crore during the next financial year.
96. The Hardship Allowance, sanctioned by the
government in favour of the police personnel, is
expected to cost ì 122 crore in the current financial
year. A provision of ì 129 crore has been included
in the Budget Estimates for the next financial year
for this purpose.
97. As a further gesture of its employees’
friendly policy, the government enhanced Move TA
of moving employees from ì 6,000 to ì 10,000 for all
52
categories and also enhanced the rate of
Temporary Move Allowance from ì 650 per month to
ì 1,500 per month.
Part - B
98. I now come to the last part of my speech
before this August House.
Continuing with Fiscal Initiatives:
VAT on food grains:
53
99. I had apprised the Hon’ble Members last
year that several states are charging VAT at rates,
ranging from 4% to 5%, on atta, maida, suji, besan,
paddy and rice etc. In consideration of last year’s
rising food inflation as an All India phenomenon, I
had deferred my proposal to bring these items
under the VAT net and announced the continuation
of exemption from the levy of VAT on these
commodities upto 31st March, 2012.
100. Food inflation has, considerably, eased in
the recent months. I am tempted to bring these
items under the tax net from the next financial year.
However, I feel that it will be prudent to wait till
the economy stabilizes sufficiently. Accordingly,
I announce continuation of these exemptions upto
31st March, 2013. I will have to forego revenue of
over a couple of hundred crore of rupees on this
account.
VAT on Industrial units:
54
101. I had mentioned last year that the industrial
units, registered in the state, have been enjoying tax
concessions under the relevant packages of
incentives, announced by the government from time
to time. With the switch over to the VAT regime,
these concessions were supposed to have come to
an end but were continued in a modified manner.
Serious discussions have been taking place at the
national level through the Empowered Committee of
State Finance Ministers and other national level
workshops to switch over to a uniform national level
Goods and Services Tax (GST) regime in the
interest of bringing in further transparency, simplicity
and efficiency in tax administration and removal of
the cascading effect of the tax burden on the
consumers. The proposed date of implementation of
GST has been deferred from time to time because
of a lack of unanimity among the States.
102. Tax concessions to the industry cost nearly
ì 500 crore annually. I had announced extension of
the benefit of this tax concession to the industry for
55
a further period of one year or till adoption of the
proposed GST regime by our state, whichever
happens to be earlier. The period of concession
expires on 31-3-2012. On the aforementioned
considerations, which are still valid, I announce
continuation of the existing tax concession to the
industrial units for a further period of one year upto
31st March, 2013, or till adoption of the new GST
regime by our State, whichever happens earlier.
Tax on Hotels:
103. The Tourism Sector is highly beneficial to
our people and to the State’s economy, but it
contributes very little to the revenues of the State,
despite the fact that it puts heavy pressure on the
resources of the State and its infrastructure.
104. In view of the fluctuating arrival of tourists in
the State, I had announced several concessions
and exemptions favouring the Tourism sector.
These concessions have been extended by me on
56
yearly basis, first upto 31st March, 2011, and then
upto 31st March, 2012.
105. The current financial year has been a boon
for the Tourism sector of the State. I would be
amply justified in asking this sector to start making
some revenue collections from the visitors by way of
taxes and fees under the existing laws for
contributing to the exchequer of the State. However,
as a gesture of high goodwill of the government in
favour of this sector, I announce no change in the
status-quo for a further period of one year,
commencing from the first April, 2012.
Additional benefits for the farming community:
VAT on fertilizers:
106. A smiling farmer is the most prominent
symbol of economic strength. The present
government is determined to broaden his smile by
continuing to support the agriculture sector through
all possible means.
57
107. Chemical fertilizers, bio-fertilizers and micro-
nutrients are extensively used for improving farm
productivity. As a sequel to the earlier tax
concessions, announced by me for my brothers
engaged in agriculture, I propose to fully exempt all
types of chemical fertilizers, bio-fertilizers and
micro-nutrients from the levy of VAT.
VAT on fungicides:
108. I have already exempted pesticides,
weedicides and insecticides from the levy of VAT.
The use of fungicides is equally important for the
protection of crops and improvement in productivity.
Presently, fungicides attract VAT at 13.5%. I, now,
propose to exempt all types of fungicides from the
levy of VAT.
Service Tax on Crop Insurance and Cattle
Insurance:
58
109. A Central Government supported scheme of
crop insurance is under operation in the state also.
However, the National Agriculture Insurance
Company has not provided the desired level of
coverage to the farmers so far. Similarly, another
scheme of cattle insurance is in operation through
private sector insurance companies. These private
sector insurance companies are reluctant in coming
forward to extend insurance cover to cattle, sheep,
goats and poultry units as they apprehend high risks
and low profits in this type of insurance activity.
110. All insurance services attract levy of service
tax under the provisions of the J&K General Sales
Tax Act. As such, in order to attain the dual
objectives of making this vital insurance programme
popular among the farmers and more attractive for
the insurance companies, I propose to exempt the
insurance services, which cover agricultural and
horticultural crops and all types of cattle wealth,
including infrastructure of dairy, poultry, sheep,
59
goats, bird units and fish farms, from the tax,
chargeable under the J&K GST Act.
Incentives for the Tourism sector:
111. Next to Agriculture, the Tourism sector has
always proved to be an important vehicle of
economic growth and employment generation in our
State. This sector has gone through tough times
during the last over two decades. We are expecting
a turnaround in this sector now because of the very
encouraging experience of the last summer. The
Government has, accordingly, revisited the existing
package of incentives for ‘Tourism Units’, which
term includes hotels, motels, houseboats, paying
guest houses, cafeterias, swimming pools,
conference centres, amusement parks, recreation
centres, cable cars, adventure activities and tourist
coaches etc. I am happy to announce the following
60
new package of incentives to benefit the ‘Tourism
Units’:-
(i) The list of areas and locations, where the
‘Tourism Units’ shall be eligible to get
incentives as per the new package, is
being considerably liberalized and
expanded.
(ii) A Capital Outright Investment Subsidy of
30% shall be given by the government on
fixed assets, created by new investments,
subject to a limit of rupees 30 lakh.
(iii) The limit on the amount of Capital Subsidy
shall be increased to rupees 100 lakh in
the case of Prestigious Units, which invest
rupees 25 crore or more.
(iv) The Capital Subsidy shall also be available
on substantial expansion by the existing
Units, which make at least one third
addition to their existing bed capacity.
61
(v) The cost of preparation of Detailed Project
Reports shall be reimbursed by the
Government in full.
(vi) Remission of Stamp Duty on mortgages to
be allowed to the extent of rupees fifty
thousand.
(vii) The cost of Insurance Cover shall be
subsidized up to 60%.
(viii) The cost of DG Sets shall be subsidized up
to 75%.
(ix) Capital Subsidy in case of Paying Guest
Houses shall be 40%.
(x) Subsidy up to 50% shall be admissible on
equipment for adventure tourism, kitchen &
related appliances, tourist coaches, air
conditioning, office automation, etc.
(xi) The cost of training of managerial
personnel shall be reimbursed to the extent
of 50%.
62
112. Details of the expanded list of locations,
where these incentives shall be available, the
conditions of eligibility and the procedure for
sanction of these incentives, along with other
details, shall be notified by the Government
separately.
Lessening the burden on housewives:
113. Housewives have been weary of rising
prices and keep on complaining that their home
budget is going out of hand. With a view to
improving their home budget, I am inclined to
transfer a part of their burden to my budget.
Accordingly, I announce complete removal of Value
Added Tax on domestic cooking gas. I do hope that
with this measure, not only will the budgetary deficit
of their homes get somewhat mitigated, the
pressure on our Power Development Department
for more and more energy supply shall also get
reduced.
63
114. At this juncture, I have two more
announcements to make in pursuance of my gender
budgeting approach in budget formulation.
115. Under the ‘Beti Anmol Scheme’, the
Government has decided to incentivize admissions
to the 11th Class, taken by girl students, belonging
to BPL families and living in Educationally Backward
Blocks. I further propose to fully exempt such girl
students from making any contributions to the
authorized Local Funds of the concerned
Government Higher Secondary Schools. This
measure shall provide to them, an additional
financial relief, varying between rupees 600 to
rupees 900.
116. Every year, thousands of girls, belonging to
BPL families, compete for Government jobs through
the J&K Public Service Commission, the J&K
Services Selection Board and the J&K Police
Recruitment Board. They are required to pay the
prescribed Application Fee and a fee for appearing
64
at the competitive examinations. I propose to
exempt them from making such payments. The
losses, caused to the Revolving Funds of the
examining bodies, shall be compensated by the
Government, wherever necessary.
Considerations for our Youth and Students:
117. Information Technology, particularly the use
of IT gadgets like desktops, laptops, palmtops etc
has become very popular among our youth.
Unfortunately, the high price tag of these items has
kept them out of the reach of the less affluent
sections of our society. Nevertheless, the use of
computer peripherals like pen-drives, CDs, memory
cards, chips, headphones, computer cleaning kits,
electronic diaries and other IT peripherals has
become very common, even among the youth who
do not own computers themselves. With a view to
further boosting the use of Information Technology
among the youth, I propose to wholly exempt
computers and all the aforementioned IT related
items from the levy of VAT.
65
118. Some stationery items are being taxed at the
rate of 13.5%. Another group of stationery items
comes under the 5% category. Items like adhesives,
gums, glues, adhesive solutions, gum pastes,
lapping compounds, epoxies, resins, tapes, tags,
markers, sealing wax, paper envelopes, pencils,
crayons, highlighters, erasers, sharpeners, pencil
boxes, ‘takhti’ etc are extensively used by our
school going children. These young groups
constitute our future. I feel that we owe it to them to
contribute to the building of their future. As a token
of my contribution, I propose to fully exempt all the
aforementioned stationery items from the levy of
VAT.
Exemption to mini hydel projects from certain
taxes:
119. The J&K State Hydroelectric Projects
Development Policy, 2011, seeks to accelerate the
construction of Mini Hydel Projects by the private
sector under the IPP Mode. This sunrise, clean and
66
green industry needs some initial support from the
government for improving the financial viability of
Mini Hydel Projects and keeping their cost of
generation low. I, accordingly, propose to exempt all
power generation and transmission equipment,
building material and construction equipment for the
hydel projects, awarded under this policy, from the
levy of tax under the J&K Entry Tax Act. As a further
incentive to such hydel projects in the private
sector, the new policy also provides for exemption
from the levy under the J&K Water Resources
(Regulation and Management) Act, 2010, for a
period of 10 years.
Some more exemptions from VAT/ GST:
Service Tax on IT Institutes:
120. All coaching centres, teaching institutes and
educational institutions in the private sector are
subjected to the levy of tax under the J&K GST Act.
IT education is also covered by this tax.
67
121. The Government has been encouraging the
establishment of IT centres and institutes in the
private sector with a view to promoting computer
literacy, IT awareness and IT applications within the
State. In support of this objective, I propose to
exempt all IT Institutes, IT coaching centres and IT
educational institutions from the levy of tax under
the J&K GST Act.
Service Tax on Medical Treatment:
122. Medical services in the private sector had
been brought under the ambit of tax, chargeable
under the J&K GST Act. Private hospitals, nursing
homes, diagnostic centres, pathological laboratories
etc have to pay service tax at the rate of 10.5%. It
has been pleaded before me that medical services
are provided to the sick in conditions of distress. It is
widely believed that tax on medical services is the
only tax which is to be paid by people, going
through conditions of misery, regardless of their
financial status.
68
123. I have thought over the issue and feel
inclined to agree with this view. I, therefore, propose
to remove all types of medical, diagnostic and
curative services for humans, as well as the
veterinary sector, from the levy of tax under the J&K
GST Act. I trust that the benefit of this exemption
shall be passed on to the patients. I shall be
constrained to withdraw this concession if this does
not come about.
VAT on electric blankets:
124. The use of electric blankets in homes,
hospitals and tourism establishments is gaining
popularity. Presently, it attracts VAT at 13.5%.
I propose to exempt this item from the levy of VAT
in the interest of popularizing its use and helping in
the promotion of local industry.
Levy of tax on job works:
125. Execution of ‘job works’ by a registered
industrial unit, on behalf of another registered
industrial unit, attracts the levy of tax under the J&K
69
GST Act. Several industrial organizations have
contended that this levy of tax would take away all
the benefits of industrial clusters, which are to be
established as part of the current industrial policy
followed by the Ministry of MSME, as this policy
involves undertaking of lot of ‘job works’, by way of
specialized services, to be rendered by the
industrial units.
126. With a view to resolving this issue, I
announce 100% exemption from the levy of tax
under the J&K GST Act in favour of registered
industrial units in respect of ‘job works’, done by
them on behalf of any other industrial unit.
Entry Tax on items for scientific research:
127. Scientific research is essential for any
economy to grow. The institutes, engaged in the
conduct of such research in our State, are
dependent on costly scientific equipment, critical
chemicals and reagents, which are to be procured
70
from outside the State. Presently, such goods are
liable to Entry Tax. In order to facilitate and
encourage scientific research, I propose to exempt
scientific equipment, critical chemicals and
reagents, used by the Research and Development
Institutes of the Central and the State Governments,
functioning within the State, from the levy of Entry
Tax.
Stamp Duty rates on certain transactions/deeds:
128. I have apprised the Hon’ble Members of this
August House about the tremendous improvement
in tax collections from Stamp Duty and registration
fees. It has come to my notice that the raising of
loans from commercial banks and the registration of
hypothecation deeds against such loans has
become costly. I have examined the issue and
propose the following modifications in the existing
rate structure:
71
(i) Stamp Duty on deeds of hypothecation shall
be reduced from its current level of 0.5% to
0.25% and shall be subject to a minimum of
` 1,000 and a maximum limit of ì 50,000
in place of the present limit of ` 5 lakh.
(ii) The Stamp Duty on equitable mortgage shall
continue to be 0.25%, but will be subject to a
minimum limit of ` 1,000 and a maximum
limit of ` 50,000 in place of the existing
upper limit of ` 5 lakh.
Strengthening the collection mechanism of
GST:
129. The amount collected through the
government departments, making deduction of tax
at source under the provisions of the J&K GST Act,
forms a sizeable chunk of revenue. In order to
strengthen this mechanism, I propose to make
timely and proper deduction of this tax and its timely
deposit into the government treasuries mandatory.
72
Once this is done, the large number of contractors,
who have, practically, no direct responsibility of
depositing this tax into the treasury, can be saved
from unnecessary procedural hassles. I further
propose to take the following measures to simplify
the procedure in this behalf:-
(i) The tax clearance certificate, which is
required to be obtained afresh by the
contractors for each NIT, shall remain valid
for the whole financial year.
(ii) Security, which is equivalent to 10% of the
expected annual turnover, shall be waived
off.
(iii) The registration renewal fee shall also be
waived off.
Special Amnesty Scheme from SFC for less
privileged classes:
130. The J&K State Financial Corporation had
extended soft loans to beneficiaries from the
73
Scheduled Castes, Scheduled Tribes and Physically
Challenged groups. As of now, over 100 cases,
belonging to SC and ST and a couple of cases,
belonging to Physically Challenged groups, are
pending settlement, despite the lapse of nearly two
decades. I propose to settle all these long pending
disputed cases through a Special Amnesty Scheme,
which will be worked out by the J&K SFC, keeping
in view the indigent circumstances of these
beneficiaries.
131. Having announced all these relief measures
and financial incentives, I deserve to be
compensated for the loss of revenue involved in
these measures. For this purpose, I propose to
touch only a few areas.
Anti- tobacco measures:
132. As a part of the health protection measures,
I had announced a couple of tax measures to
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curb the menace of smoking and other forms of
tobacco consumption. I had announced an
increase in Toll on the import of raw tobacco
from ì 150 per quintal to ì 250 per quintal. I had
also announced increase in VAT from 13.5% to
25% on the sales of cigarettes and other related
products.
133. The monitoring of imports and sales of raw
tobacco and cigarettes during the current financial
year, up to the third quarter, has revealed that the
actual imports have not increased so far, even
though they do not show any declining trend over
the previous year’s import figures. I propose to
continue with my anti tobacco campaign, which I
had started last year, and announce a further
increase in the rate of VAT from 25% to 30%.
134. Last year, I had announced a contribution of
rupees one crore to the corpus of the Cancer
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Treatment and Management Fund. Government
employees have also contributed in large numbers
to the Fund, which I highly commend. The Fund has
done an appreciable job by extending financial
help of over rupees one crore and twenty two lakh
to 444 needy and poor patients. I announce a
further contribution of rupees two crore to this
Fund during the next fiscal. Simultaneously, I repeat
my appeal to all the Government employees to
donate generously to this Fund as they did the last
time.
GST on sale of liquor:
135. Smoking and drinking are harmful and
equally undesirable. If I increase tax on cigarettes
and leave out drinking, it may be considered
discriminatory. Sales of IMFL, beer etc carry a sales
tax tag of 25%. I propose to enhance this rate to
30% under the J&K GST Act.
Tax on Services under GST Act:
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136. I have been reviewing the list of Services,
covered by the J&K GST Act, from time to
time. Last year, I had added six more services to
the list. I now propose to add the following three
more services to the list to be brought under the
tax net:-
(i) Security and Placement Services,
(ii) Pandal and Shamiana Services,
(iii) Annual Maintenance Contracts.
Revision of Toll rate:
137. As the Honorable Members of this August
House are aware, Toll is not an ad valorem tax. As
the cost of collection of toll keeps on rising, it is
prudent to keep on adjusting the rate of Toll. In
consideration of this factor, I propose a modest
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increase of five paisa per kilogram in the existing
rate of Toll.
138. Taxation law is continuously evolving. Its
administration, sometimes, leads to conflicting
interpretations and requires a conciliatory effort on
the part of the tax administrators and the registered
dealers to resolve such issues, as they arise.
Complicated procedural issues may, sometimes,
necessitate changes in the prescribed procedure.
With a view to creating an institutional mechanism
for this purpose, I propose to constitute a Grievance
Redressal Committee, comprising all the concerned
senior Government functionaries and representative
of trade bodies, to undertake such redress
exercises periodically.
Financial relief in identified sectors:
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139. The Government has been continuing with
its employee friendly policy, as has been amply
exhibited so far. We shall continue to do so in future
as well.
140. The present rate of remuneration, payable to
the teachers, engaged under the ‘Rehbar-e-Talim
scheme’, is rupees 1,500 per month. After the
expiry of two years, they are paid rupees 2,000 per
month. These teachers are rendering valuable
services to the society in the field of education. In
recognition of their valuable services, I propose to
enhance their remuneration to a uniform level of
rupees 3,000 per month from the next financial
year.
141. ‘Nambardars’ and ‘Chowkidars’ are being
paid a monthly remuneration of ì 501 per month and
ì 500 per month, respectively. These rates have
been in operation since 1.4.2007. In recognition of
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the services, which they have been rendering to the
society, I propose to increase their remuneration to
ì 751 and ì 750 per month, respectively, from the
next financial year.
Conclusion:
142. Consolidation of peace always opens up
ways to progress and prosperity for the people. The
current year has amply proved this. Now is the time
for the people of the state to reap the dividends of
peace, as has been stated by our honourable Chief
Minister, Janab Omar Abdullah Saheb. It is our duty
to nurture the present climate of peace and
momentum towards growth. Let us join together in
this effort, regardless of our political ideology and
irrespective of our assigned roles in this August
House.
143. With these submissions, I commend the
Annual Budget 2012-13 to this August House.
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