We have been keeping track of various centre and state sponsored developmental projects and schemes for the State of Jammu and Kashmir over a period of time. We have been analysing the scope and nature of development that has taken place and the infrastructure that is being raised as a component of development schemes. In the editorials of this paper we have been taking up departments one by one and reflecting on their performance particularly including financial implications not with any intention of adopting a negative attitude towards the departments or project but only as a corrective methodology harkening the departments concerned to be alert about the pitfalls in the practice adopted for implementation of various schemes. In particular, our analysis has been usually based on the reports of house committees or the CAG and other constitutional bodies.
By and large, we have come to the conclusion that there is a big gap in theory and practice as far as implementation of schemes is concerned. Apart from that, even in normal administration as well, there are glaring irregularities and lapses that have not been taken care of. The CAG in its yearly report has not been only placing its finger on the irregularities and lapses but has also been suggesting corrective measures especially in financial matters along with issuing subdued warnings that the State was not keep good fiscal health. Unfortunately the warning note of the CAG has not been heeded to by the departments. The result is that a threadbare warning has come from the same source about the collapsing fiscal health of the State.
The annual fiscal report has been placed on the table in both houses of the Legislative Assembly. It emphatically says on the basis of statistics provided that the State is steadily heading into debt trap if corrective measures are not taken forthwith. Tracing the fiscal downslide in the state since 2011, the report speaks alarmingly of accumulation of liabilities which have gone up to Rs. 48,314 crore, an increase by Rs. 17,042 crore in last five years. At the same time, public debt increased from Rs 19,867 crore in 2010-11 to Rs 28,200 crore in 2014-15, an increase of 42 per cent. The market loans increased from Rs 11,298 crore in 2010-11 to Rs 18,321 crore in 2014-15, an increase of about 62 per cent over the years.
Another discouraging aspect of this sordid story is that while liabilities and loans are swelling, revenues (tax revenues and non-tax revenues) have been dwindling during the same period. In such a situation, fiscal sustainability of the State comes under severe strain. This has happened despite several recommendations of the 13th Finance Commission of how to reduce the downslide in liabilities and the interests paid on the loans. The CAG report pins out that in this scenario, it may become somewhat difficult for the lending agencies to advance further loans to the State. Payment of insurance and general provident fund to the Government employees is a major chunk of liability which has to be met somehow. The CAG has found that the tax and non-tax revenues of the State have declined from Rs 9,143 crore in 2013-14 to Rs 8,312 in 2014-15, a decrease of about 10 per cent.
When analysed in the backdrop of several editorial in this paper over many months in the past in which we had also been anticipating very serious fiscal situation, it has to be said that mismanagement of financial matters of the State has been at the root of all this trouble. If heed had been paid to the recommendations of the CAG and other advisory agencies, State would have been in a position to arrest the downslide.
Now that the CAG has come out openly with the alarming report, we expect the financial authorities in the State to take cognizance of the warning and join heads to find a solution to the problem. The administration shall have to take stringent means of increasing revenue through taxation and at the same time reduce liabilities to the limits possible. Wastage has to be arrested and unprofitable schemes and projects have to be curtailed. Means of production have to be increased and expenditures reduced. Departments have to be instructed to spend judiciously and avoid unproductive schemes. Austerity campaign has to be launched and steps taken in that direction need to be monitored.
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