Drabu presents budget with Rs 80,000 cr spendings, Rs 100 cr ARM


50 pc budget to be released on Feb 10, no works after May 15
Govt to shut treasuries from Oct 1, re-visit Recruitment Rules
Assets Reconstruction Company being set up in tie up with JKBL

Sanjeev Pargal
JAMMU, Jan 11: Finance Minister Dr Haseeb Drabu today presented general budget for the year 2017-18 in the Legislative Assembly, which would give almost Rs 80,000 crores to the State Government including Rs 31,000 crores on developmental works as he devoted the budget to improving operational efficiency of spending for which he listed series of measures including release of 50 per cent allocations by February 10 i.e. within five days of the conclusion of budget session.
Though there were no major taxes in the budget, Drabu proposed taxes on some items aimed at netting Rs 100 crores as Additional Resource Mobilization (ARM).
He announced implementation of Seventh Pay Commission recommendations for the Government employees from April 1, 2018 and initiated first step towards regularization of 61,000 casual and other workers, who have been on the fringes from 10 to 20 years. He announced closure of all the treasuries from October 1 this year, a recommendation made by the State Vigilance Commission, and substituting them with Pay and Accounts Office (PAO) System.
In his 90 minutes budget speech in the Legislative Assembly in which he also presented separate power budget, Drabu said the Government would have almost Rs 80,000 crores to spend in the year 2017-18. Of this, Rs 31,000 crores would be spent on development while current expenditure will be to the tune of Rs 49,000 crore.
“This level of expenditure will be financed through non debt creating receipts of Rs 58,000 crore and about Rs 18,000 crore of borrowings. We have revenue surplus of Rs 9300 crore. Still, there will be resource gap of Rs 3137 crore for which ways and means will be found,” Drabu said.
Devoting the budget to improving operational efficiency of spending, the Finance Minister said in the new system, internal controls and audit system of the line departments will drive the budget implementation. The ex ante control of unnecessary dependence on the Finance Department in the line departments’ budget management will be done away with. He proposed to reorganize the 29 departmental demands for grant into four major sectoral categories-Administrative, Infrastructure Development, Social Sector and Economic Development.
He announced introduction of computerized budgeting system known as `Budget Estimation, Allocation and Monitoring System’ (BEAMS), which will be an online computerized system to distribute budget and authorize expenditure.
Drabu said principle focus of the Government was to spend money, which should be reflected on ground. “The money should be used efficiently and usefully,” he said, adding the Government was shifting from “administrative budgeting” to “public management approach”.
He announced that SSA and RMSA teachers, NHM employees etc, who were not getting salaries for months together, would get their regular payments as their salary has been delinked from the Central funding.
According to him, the Finance and Planning Departments would release 50 per cent budget of 2017-18 by February 10 and the HoDs would clear the budget by February 20. The tendering process would be done by May 15. After May 15, the work or supply orders will be issued only after obtaining permission of the Finance Department.
Preference will be given to the projects, which will be completed within a span of 3 years, except, the mega projects like hydropower projects or large connectivity projects. The working season would start on April 1 and would continue till December. Earlier, it was seen that 70 to 80 per cent expenditure was incurred in last quarter of the financial year. Now, there will be ceiling of 30 per cent for last quarter. Similarly, 85 per cent expenditure was sometimes done in March only but now there will be ceiling of 15 per cent in the month of March.
Drabu said State Power Development Corporation will have capital base of Rs 3000 crores, which will be another bank for the Government. He added that the Government will clean up balance sheets of all 28 Public Enterprises as none of them was profitable.
Drabu announced implementation of Seventh Pay Commission for over four lakh Government employees from April 1, 2018, which means the employees had to wait for more than a year and a quarter to get the Central scales.
“The revised salary and DA will be paid to the employees from April 30, 2018. The Finance Department will issue modalities in this regard in due course of time,” he said and assured that prior to implementation of the Pay Commission report, he would  set up a Committee under the chairmanship of the Chief Secretary having group of knowledgeable professionals in the services matters to address the issue of pay anomalies.
Referring to 61,000 casual, seasonal, adhoc, temporary, NYCs and various other categories of persons engaged in various departments without authorization, Drabu announced start of process for regularization of the workers, on a contractual basis. Initially, the workers, who have given land to the State Government on the promise of a Government job and have been left out so far, will be regularized on contract basis. However, for rest of the categories, a Committee under the chairmanship of the Chief Secretary is formulating options to deal with the issue. This year, the Government will set out a policy with timelines for absorbing these people. He said the prevalent guidelines for regularization or bringing these workers into a contractual ambit will not be diluted.
Asserting that Recruitment Rules for the Government jobs were laid down in 1960 and were fast becoming irrelevant, the Finance Minister announced that the Government would go for complete revision of all Recruitment Rules within one financial year so as the synchronize job requirements with commensurate educational institutions.
For instance, Drabu said the minimum qualification for some Government posts has been fixed as 10th or 12th while higher qualified candidates were available for these posts. The new Recruitment Rules will be made keeping  this in view, he added.
On Additional Resource Mobilization, Drabu brought body building on trucks, buses and other vehicles and installation/erection of prefabricated structures services under the tax net with a view to enhance tax base and plug tax evasion.
He proposed imposition of five per cent tax on ready to stitch and semi stitched garments.
He proposed extension of CSD canteen benefits on vehicles to the widows of ex-servicemen excluding para-military forces. He proposed to bring since, buns, foot longs and pizza breads in zero per cent tax category. He also proposed that tonics, food supplements, appetizers, dietician foods etc, which were being taxed at 14.5 per cent, should be taxed at 5 per cent at par with all medicines.
Drabu proposed increase in dressed/frozen chicken toll from Rs 80 per quintal to Rs 900 per quintal to bring them at par with toll charge on import of live chicken. He further proposed that toll on the ghee, which is being charged at Rs 80 per quintal, be charged at Rs 235 per quintal at par with edible oil. He also proposed increase in the rate of toll in import of walnuts, almonds, dry apricot and saffron from Rs 80 per quintal to Rs 235 per quintals with a view to promote sale and use of local dry fruits. He proposed to place card board boxes in the category of goods being charged toll at the rate of Rs 175 per quintal. This, he said, is being done to protect the interests of local card board box manufacturing units. He also proposed increase in the toll rate of fish from Rs 80 to Rs 235 per quintal.
He proposed that Jammu and Kashmir Passenger Tax Act, 1963 will henceforth be administered by the Transport Department.
He proposed to waive off token tax and passenger tax for six months from July 1, 2016 to December 31, 2016 in view of Kashmir unrest. He also proposed amnesty for waiving off interest and penalty on arrears of passenger tax up to the year 2015-16 as a relief to the transport sector.
He proposed to extend VAT remission to the local industry, exemption on commodities like paddy, rice, wheat, pulses, flour, atta, maida, suji and besan, Central Sales Tax concession, existing incentives till March 31, 2018 on raw materials to registered industrial units under J&K Levy of Tolls Act and exemption from tax on lodging services provided by Hotels, Lodges and Guest Houses.
He proposed that category of Service Providers be exempted from Sales Tax, which is leviable under J&K GST Act.
The Finance Minister proposed 14.5 per cent tax on tarpaulin cloth, canvas cloth and cotton coated fabric. He proposed to include fresh fruit in the negative list of notification granting toll exemption to industrial raw material. He proposed 40 per cent tax on raw tobacco to take it at par with all tobacco products.
He also proposed that upper limit for turnover tax dealers should be raised from Rs 25 lakh to Rs 50 lakh and the turnover tax calculated on the gross turnover. He proposed amnesty to the dealers registered under J&K VAT Act for waiver of interest and penalty till accounting year 2015-16 on the line given to the dealers registered under J&K GST Act.
Drabu proposed to delete some items from the negative list to make them eligible for remission. The items included spices in all forms, wooden shooks, copper utensils manufactured by mechanized units, roof trusses, corrugation of galvanized sheets, cured skins, roasted peanuts and sheet metal items including trunks, suit cases, paties buckets, cans, bukharies, dustbins, hamams, steel tankers, shovels, karaies and drums.
He proposed to exempt all finished products of industrial units to minimum number of goods that have high risk of diversion into trade, resulting in misuse of exemption. He proposed to take manpower recruitment and supply services from out of the Services tax net to relieve the industry from additional burden.
He proposed increase in the tariff of advertisements in the newspapers and clearing their all liabilities.
Proposing to end the treasury system in the State by closing down all treasuries from October 1 this year, the Finance Minister announced that the treasuries would be replaced by a functionally aligned Pay and Accounts Office (PAO) System. The transition to the new system will be completed by March 31, 2018. It will be a gradual non-disruptive process, he added.
Drabu said as part of financial engineering, the PDD will pay J&K State Power Development Corporation Rs 2400 crore. At the same time, the SPDC will return Rs 4300 crores, which it has taken as loan from the State Government over a period of time. Once these two transactions are done, the Government will infuse Rs 1900 crore-the gap between the two transactions-as equity into the company.
“Fresh valuation of assets is expected to add additional Rs 1000 crores to the equity base of SPDC, which will become a debt free company with an equity base of Rs 3000 crores.. Post these changes, the Government proposed an Initial Public Offering of the company with a strong financial base,” he said.
The Finance Minister proposed to set up Assets Reconstruction Company in partnership with Jammu and Kashmir Bank in which the State Government will be a majority shareholders with J&K Bank will have 49 per cent hold.
“The mandate of the ARC will be to buy impaired assets of state  subjects that are mortgaged to financial institutions apart from some of the assets of commercial banks and financial institutions like State Finance Corporation”.
He announced that the Government would subsidize the premium costs on account of insurance of livestock by the poultry farmers. He said the Government has succeeded in working out comprehensive insurance scheme for nine crops. The Government has made a provision of Rs 75 crores in the budget for the purpose of premium subsidy.
Drabu announced the Government move to insure assets of public importance, which are increasingly becoming vulnerable to arson, civil strife, terror attacks and natural calamities etc. All departments are being asked to submit list of buildings to be insured to the Finance Department by April 30 to facilitate their insurance.
He said 3 lakh construction workers will be entitled to cash credit limit of Rs 10,000 in one year.
As per the budget proposals, Aadhaar car will be mandatory for applying to the Government jobs.
He announced 50 per cent interest subvention for setting up of Modern Walnut Processing Units with cold stores, packaging units etc for a period of 5 years in private sector. A provision of Rs 10 crores has been kept in the budget. He also proposed 50 per cent interest subvention on bank loans to new units to upscale from making wet blue to finished leather for next five years.
He proposed to set up one zoo in Kashmir and Jammu.
The budget proposed to raise the limit from Rs 1 lakh to Rs 2 lakh for transfer of cases to jurisdictional authorities for disposal at Lakhanpur. This has been done for the convenience of the dealers.
Stating that main banks in the State managed demonetization well, Drabu said the note ban did not have any negative effect on the state and instead it helped bring down prices of the real estate which had once gone beyond reach.
“I don’t think that the demonetization has had any effect as it has been managed very well by the principle banks and I would complement J&K Bank for that,” he said.
He said that the people of J&K have got used to certain situation of distress and when the strike is for five months and banks are not open so they stock cash, when there is uncertainty in the overall system then people take measures to keep cash so the transactional demand is very high.
“Also there is a lot of community banking in J&K and the number of people are very small 1.25 crore people, it is not like Bihar and UP and I think we have managed the demonetization part very well as far as personal finance go.”
“I think the principle impact of demonetization on the economy of J&K has been to soften the land rates. I think that is a big thing as you would find that there was an asset price bubble in the system where your assets like the house and land was way out of line with the other assets I think that has soften that and I think that is a good thing that has happened”, he said.
Drabu said the budget proposed creation of Social Security Fund to provide `Universal Basic Income’ to all those living Below Poverty line through a direct beneficiary transfer system. “Not only will it eliminate all the leakages, the cost of delivery will also be reduced dramatically,” he added.
Drabu said all the artifacts, rare manuscripts, paintings and other priceless items in Toshkhana and J&K Academy of Arts, Culture and Languages will also be protected.