Drabu swings to populism in ‘give-more-take-less’ budget
Srinagar, Jan 11: Finance Minister Dr Haseeb Drabu, on Thursday, presented the J&K Budget 2018-19 in the Legislative Assembly ensuring to “cover all stakeholders in it”.
In his budget speech spread over several thousand words, Dr Drabu announced a slew of decisions that, seemingly, will have a positive impact on several sections of the society.
Named Budget 2018-19: Turning the Corner, the FM claimed it was “culmination of sustained work in building new systems for public expenditure management.”
“Over the last three years, we have made concerted and coordinated efforts to overhaul the style and substance of financial management of the state,” the FM said in his opening remarks.
He said that for the first time in the budgetary history of J&K, the revised estimates for the current year were much better than the budget estimates that he had presented last year.
Highlighting three different numbers to prove his claim, Drabu said that the tax revenues which were estimated to be Rs. 9,931 crore exceeded and in the process have crossed the Rs.10,000 crore mark of own tax collection.
“I had estimated an unfunded resource gap of over Rs. 3,000 crore. As the year comes to an end, I have a surplus of more than Rs. 1,300 crore,” he said.
The FM added that the fiscal deficit, which was estimated at around 9.5 per cent, has actually turned out to be around 5.7 per cent. An improvement of nearly 400 basis points
“This is unprecedented,” he said.
Later speaking to The Kashmir Monitor, Drabu said how he wanted the budget to cover everyone.
“It is not a departmental budget. It is a budget that focuses on the stakeholders. It covers government employees, youth, business, and I have named other stakeholders as well,” he said.
“For me it is not a budget of numbers, it is a budget of social change. Last year, we built systems and this year we are making those systems deliver. Yes it is a populist budget, but without any extra cost to the exchequer,” Drabu added.
For government employees, the FM, during his speech, said the government was “committed to implement 7th Pay Commission Recommendations from April 1, 2018, which will be effective from 1st January, 2016.”
He also announced that the government has reduced the eligibility for full pension from 28 years of qualifying service to 20 years of qualifying service.
“This measure will benefit more than half of the number of employees on the rolls of the Government, as they were denied full pension for want of qualifying service,” he said.
He added that Government employees will, henceforth, be required to furnish only credit and debit statements for the last five years for their final GP fund withdrawal.
“Once our IT systems and processes improve next year, I will dispense with this also,” he said adding that these measures were taken to get rid of the cumbersome trend wherein retiring employees were asked to produce a certificate relating to withdrawals since their joining of service.
He also announced the release of one per cent dearness allowance (DA) in favour of state government employees due from July 1, 2017.
In another interesting measure, the FM also spoke about the well-being of transgenders, which he said, were one of the most marginalised sections of the society.
“I propose every transgender shall be treated as living under BPL unless indicated otherwise. As such, he/she will be entitled to all such Government amenities and programs that are available for the BPL category like cheap food-grains, LPG, electricity connections, IAY scheme etc,” he said.
He also announced free life and medical insurance cover and a monthly sustenance pension on the pattern of old age pension scheme for all transgender people above the age of 60 who are registered with the Social Welfare Department.
“In all cases where gender re-assignment surgeries can be undertaken, entire cost of treatment would be borne by the state Government. I propose to make an initial provision of Rs. 1.00 crore for their welfare,” he said.
The FM also announced amnesties to several business sections even as he said that amnesties per se make for bad economics but sometimes they are necessary to help the sector make a clean break with the past and move on.
Drabu announced to grant waiver of penalty and interest on arrears of tax in respect of all the dealers registered under the provisions of J&K Value Added Tax, 2005 and J&K General Sales Tax Act, 1962. This amnesty, he said, will also apply to Telecom Operators registered under the provisions of J&K General Sales Tax Act, 1962.
In addition, he also announced to waive off interest and penalty on all the power arrears owed to the Government by the industrialists and hoteliers and tourist resort owners.
“A circular detailing out the exact modalities of the settlement will be issued by the Finance Department,” he said.
The FM said he has also decided to offer power amnesty to all the small scale industrial units of the State.
“Accordingly, I propose to waive off interest and penal charges on the power arrears of these units till 31st December, 2017,” he said adding for all those industrial units that have been declared sick by the department of Industries and Commerce, “I have decided to waive off the penal interest and surcharge on power dues”.
For the transport sector, Drabu announced waiving off the token tax and passenger tax for six months from 1st July, 2016 to 31st December, 2016.
“These measures have not alleviated the pain of the transporters as such, to give them complete relief, I propose to waive off all past arrears of passenger tax up to 31st December, 2017,” he said.
Drabu said the Government was launching an improved and enhanced Group Mediclaim Insurance Policy.
Unlike in the past when only gazetted employees were insured, now all the Government employees including pensioners have been covered along with 5 family members.
“Given the fact that there are 4.5 lakh employees, and about 1.5 lakh pensioners, this insurance cover extends to about 30 lakh people,” he said.
He said the employees of autonomous bodies, PSUs, Local Bodies are free to voluntarily opt for this scheme.
“I am making this scheme applicable to accredited working journalists also,” the FM said.
Drabu said that government had also increased the Personal Accidental Insurance from Rs. 5.00 lakh to Rs. 10.00 lakh.
As a major social security initiative for the children who lose their parents, “unmarried daughters” of the employees, who were hitherto not entitled to receive pension, have now been made eligible to receive pension once the employee and his/her spouse is no more.
“This is a step towards promoting gender equity as well. Also, the Group Mediclaim Insurance Policy which, unlike in the past covered only gazetted employees, will now also be available to the Government employees including pensioners and accredited journalists. Given the fact that there are 4.5 lakh employees, and about 1.5 lakh pensioners, this insurance cover extends to about 30 lakh people,” he said and added that even the BPL families would be now covered under the insurance.
To cater to the rural areas of the State where the government employees are reluctant to get posted, the Finance Minister said such a practice impacted the service delivery. “In order to incentivise transfers and postings in rural areas, Government shall come out with a scheme to incentivise the postings in the remote areas. Besides having rational framework of allowances, it will also have a built-in incentive for postings in the rural areas, while dis-incentivising “deployment” in urban areas,” he said.
The Finance Minister said the last few years have been very damaging for business in general. “Be it tourism, manufacturing, or household enterprises, all are in one kind of a distress or the other. First the localised factors; floods of 2014, and then the disturbances of 2016, then came the policy shock of demonetisation which was followed by a major tax regime change, the Goods and Services Tax. The short term disruptive influence has been more pronounced on the SMEs all around the country, more so in J&K,” he said.
“Considering the importance of industries for employment generation, I also propose an incentive for SMEs and industrial units to get them listed at SME Exchange and other Stock Exchanges in the country to raise capital through IPOs or other market tools. I make an initial budgetary provision of Rs. 1.00 crore and will provide additional money, if required,” he said.
To mitigate the losses suffered during the floods of 2014 and the situation in 2016, Dr Drabu said the RBI approved a loan restructuring package for borrowers in the state. “In deference to our Chief Minister, I have decided to rollout a “CM’s Business Interest Relief Scheme”. For all the RBI approved restructured accounts, the Government will contribute one third of the total interest payment of all these borrowers. In other words, one third of the monthly instalment will be paid by the state Government and two thirds will be paid by the borrowers,” he said and added that it is a conscientious and caring budget reaching out to every section of the society.
In his concluding remarks he said that people may have noted that “this Budget gives much more than it takes”.
“This idea of giving more and taking less doesn’t come naturally to a finance person. This idea of giving more and taking less doesn’t come naturally to a finance person; it has come from the Hon’ble Chief Minister. In my budget approach meeting with her earlier last month, she told me what is best captured by a couplet of Allama Iqbal: Acha hai dil kay saath rahay pasban-e aql, Lekin kabhi kabhi isey tanha bhi choad dey!” he said.