Discrepancies in Jammu and Kashmir’s Financial Management

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Post-2019 Governance Raises Questions on Project Delays and Financial Discipline

NOVEMBER 5: Contrary to government claims that the abrogation of Article 370 in Jammu and Kashmir on August 5, 2019, paved the way for greater transparency and accountability, robust financial system and boosted local economy, government documents point out to just the opposite.

Lieutenant Governor Manoj Sinha frequently points fingers at prior elected governments for project delays and for not ensuring benefits reaching the grassroots. However, since 2019, 203 projects have seen cost overruns and remain unfinished.

A deep dive into the financial records shows that between 2012 and 2019, under various elected governments, only nine projects faced delays with an initial estimated cost of Rs. 72.49 crore. These projects later required an additional Rs. 66.75 crore due to holdups. However, post-2019, within a mere three years, a staggering 378 projects faced delays, needing an extra Rs. 1,001.77 crore on top of the original estimated cost of Rs. 1,446.17 crore.

The decision on August 5, 2019, not only repealed the provisions of Article 370 but also split the state into two union territories – Jammu and Kashmir, and Ladakh. This move, the government had claimed, was intended to improve governance and financial discipline, alongside the claimed eradication of corruption endemic to previous elected governments.

Revenue Deficits/SurplusThe difference between revenue expenditure and revenue receipts is revenue deficit. The UT of Jammu and Kashmir had revenue deficit of ₹30.83 crore during 2021-22.
Fiscal DeficitFiscal deficit is the difference between the Government’s total expenditure and its total receipts excluding borrowings. During the year 2021-22 UT of Jammu and Kashmir had Fiscal Deficit of ₹11,150.61 crore, which was 5.72 per cent of GSDP.
Primary Deficit/SurplusRefers fiscal deficit minus interest payments. During the year 2021-22 there was Primary Deficit (PD) of ₹3,790.30 crore. Primary deficit was 1.94 per cent of GSDP during the year.

However, government papers disclose unfinished works surpassing the rupee value of 397 Capital Works with a combined original cost of Rs. 1,518.66 crore. These projects, undertaken by departments such as the Irrigation and Flood Control Department and Jal Shakti (PHE) Department, were earmarked for completion between 2012-13 to 2021-22. Yet, as of 2021’s end, these remain incomplete, with a cumulative expenditure of ₹1,095.52 crore essentially rendered stagnant.

While 2021-22 saw a 13% increase in revenue receipts compared to 2020-21, it failed to meet budget estimates by a substantial 39%. The government struggled to maintain its fiscal and primary deficits within the budget’s projected figures.

Furthermore, inconsistencies appear in the region’s finances. For the fiscal year 2021-22, there was a recorded revenue deficit of Rs. 30.83 crore in Jammu and Kashmir’s accounts. However, this figure seems to be understated by Rs. 200.29 crore due to various financial discrepancies.

Moreover, the Union Territory’s tax revenues and other non-tax receipts for 2021-22 significantly missed their targets, falling short by 32.42% of the budget estimates.

In the same year, while the Government of the Union Territory of Jammu and Kashmir disbursed loans amounting to Rs. 73.77 crore, they only managed to recover Rs. 1.03 crore.

Shockingly, funds totaling Rs. 5,092.25 crore, intended for 123 developmental schemes across various departments, remained untouched in 2021. Additionally, budgetary procedure reviews for specific departments highlighted significant underspending, indicating potential overestimations in budget projections.

The fiscal year 2021-22 also witnessed an expenditure exceeding 50% of the total annual spend in March 2022 for 25 major heads under 17 grants, indicating potential financial mismanagement.

Highlighting further issues of accountability, as of March 31, 2022, only three out of 40 government companies had submitted their accounts for auditing to the Comptroller and Auditor General (CAG).