Annual budget 2012-13

Finance Minister Abdul Rahim presented the budget for the financial year 2012-13 in the Legislative Assembly. Some new minor taxes have been proposed and some concessions have also been given. Many items remain static. In many items the levy on VAT has been withdrawn and exemption from service tax on some services like medical treatment has been announced. Modification in existing rate of structure on stamp duty and exemption from Entry Tax on all IT Institutes, IT coaching centres and IT educational institutions is a welcome step.

The Finance Minister announced Rs. 33,853 crore worth budget for 2012-13 up from Rs. 31,022 crore of current financial year (2011-12). This year’s budget was to the tune of Rs. 31,212 crore but the revised estimates have put it at Rs. 31,022 crore. He projected State’s annual plan for next financial year at Rs. 7300 crore, an increase of 10 per cent from Rs. 6600 crore of the current year and Prime Minister’s Re-construction Plan (PMRP) at Rs. 700 crore down from Rs. 1200 crore of the current year. It will be noted that Daily Excelsior had earlier exclusively reported that the State’s budget would be around Rs. 35,000 crore…

Significantly, the budget shows State’s increasing dependence on the Centre as 53 per cent funds were coming out of Central grants and 13 per cent from the share of Central taxes. Rest of the income included 16 per cent from own taxes, six per cent from non tax revenue and 12 per cent from capital receipts. This shows that the State is still far away from self sufficiency in terms of raising revenues. The State is spending 46 per cent on salaries and pensions of Government employees, eight per cent on payment of interest on account of Central debts, 9 per cent on power purchase, two per cent on security and 26 per cent on development. It spent 9 per cent on other resources including the Government’s own expenses. That only 26 per cent of revenue is available for development of the State is not a happy picture and shows that our progress will be very slow. Voicing concern over increasing revenue expenditure, Mr. Rather said the State would have to incur a whopping amount of Rs. 16,140 crore on salaries, pensions and retirement benefits to the Government employees in the next financial year. The Finance Minister projected economy to grow at the rate of 7.5 per cent in 2012-13 as against 6.8 percent during the current fiscal year. He said the State had surpassed the target of 6.6 per cent growth rate for the current year. However, he admitted that the State lagged behind Per Capita Income, which was Rs. 28,932 in 2011-12 as against national PCI of Rs. 38005.

In an overestimate, we find that out of Rs. 33,853 crore worth budget, the Government has proposed Rs. 24,990 crore as revenue expenditure, which included expenditure of the Government, and Rs. 8863 crore as capital expenditure including the development works.

The Finance Minister said the State would be spending Rs. 3100 crore for purchasing power in 2012-13 as against Rs. 3000 crore this year. The purchase bill was put at Rs. 2400 crore this year initially. Revenue was expected around ` 1200 crore as against Rs. 1415 crore target this year. Next financial year’s target has been fixed at Rs. 1732 crore… He said the State’s tax revenue was expected to go up to Rs. 4800 crore during current financial year as against Rs. 3500 crore in the last fiscal year. Referring to relation between peace in the state and the process of development, the Finance minister said that owing to increase in State’s tax base and peace prevailing in the State, we want to percolate peace dividends among the people, which was the main reason for extending VAT exemptions, extension of benefits to industry and tourism sector, complete lifting of VAT on cooking gas and other items. Pointing out that housewives have been weary of rising prices and keep on complaining that their home budget is going out of hands, FM announced complete removal of VAT on domestic cooking gas. He said the move would also ease pressure on Power Development Department and demand for more energy supply will get reduced. With lifting of VAT, the price of LPG cylinder was expected to be reduced from Rs. 428.50 to Rs. 406.50. However, there would be no reduction on 13.5 per cent VAT on LPG used for commercial purposes. The new rates would come into effect from April 1 this year. He proposed to continue VAT exemption on atta, maida, suji, besan, paddy and rice etc till March 31, 2013. The VAT exemption on these items, announced in the last budget for one year, was due to expire on March 31, 2012.

He announced continuation of existing tax concession to the industrial units till March 31. The industrial units registered in the State had been enjoying tax concessions under relevant packages of incentives. Noting that IT gadgets like desktops, laptops, palmtops etc have become popular among the youth but they still carried high price tag, FM proposed full exemption of VAT from computers and IT related items like desktops, laptops, palmtops, pen drives, CDs, memory cards, chips, headphones, computer cleaning kits, electronic diaries and IT peripherals. He also proposed full exemption of VAT on stationery items used by students, which included adhesives, gums, glues, adhesive solutions, gum pastes, lapping compounds, epoxies, resins, tapes, tags, markers, sealing wax, papers envelops, pencils, crayons, highlighters, erasers, sharpeners, pencil boxes and ‘takhti’ etc. Some of these items were being taxed at the rate of 13.5 per cent and others at 5 per cent

He proposed tax exemptions on all types of chemical fertilizers, bio fertilizers and micro nutrients from the levy of VAT. He further proposed to exempt insurance services, which cover agricultural and horticultural crops and all types of cattle wealth including infrastructure of dairy, poultry, sheep, goats, bird units and fish farms from the tax chargeable under the J&K GST Act.

This appears a people friendly budget and one would like to call it “Students’ Budget” because it takes great care of the interests of the school and college going youth. It is a welcome budget in that sense.