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Policy to end overdraft expected as J&K presents budget on Tuesday

In the budget for the remaining three quarters of the current fiscal being presented in the state legislature on Tuesday, Mufti Sayeed led coalition government is expected to make “fundamental policy changes” and abide strictly by the fiscal princ...

Jun 03, 2003, 12.37 AM IST
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SRINAGAR: In the budget for the remaining three quarters of the current fiscal being presented in the state legislature on Tuesday, Mufti Sayeed led coalition government is expected to make “fundamental policy changes� and abide strictly by the fiscal principles. With the help of the central government a scheme is likely to be announced that would lead to the liquidation of the entire Rs 1,200 cr overdraft of the JK Bank.
“If everything goes well then the entire overdraft will get cleared in next three years in at least three installments with the help of the RBI and the Union Finance Ministry�, sources said. The state has been incurring around Rs 120 cr on the servicing of the overdraft every year.
This is going to be the first budget that has least contribution of the state bureaucracy that has been the main policy makers over the years in all the successive regimes.
Informed sources said that while the taxation system is being simplified, the affluent class “may have to face certain additional taxes�. The focus, they said, shall remain on expenditure in thrust areas. Perhaps for the first time, a sum of Rs 300 cr is being kept aside from the Rs 2,500 cr almost-fully funded plan approved by the Planning Commission last week, for the upcoming 450-MW Baglihar power project that remains a top priority.
The recently floated Rs 100 cr Sinking Fund is likely to have the first Rs 10 cr installment from the plan funds to service the guarantees that are maturing in the immediate future. Almost all the guarantees and the bonds raised from the open market over the years are expectedly being reflected for the first time in the budget.
The “paradoxical state of its finances� forced Mufti government to seek vote on account for a total of Rs 2,671 Cr. in March last for the first quarter of 2002-03 instead of regular budget. Finance3 Minister Muzaffar Hussain Beig said the motive was find a fulcrum between mismatching of resources and expenditures. The “compelling factors� included public debt of Rs. 11,676 Cr. by December 31, 2002, overdraft of Rs.1, 200 Cr. and the intimidating pace of surging establishment costs. Other issues included the delayed approval of the plan estimates by Planning Commission and around 30 percent of loans being part of the plan.
“Somehow, we have managed to make certain things better�, said one aide of the Finance Minister. He referred to the plan that was approved by the Planning Commission which, he said, is fully funded for the first time in 15 years. Unlike 30 percent of the plan money being loans, this time it is the lowest at 17 percent. Also, for the first time, the central assistance to the state has been increased by a record 30 per cent from Rs 2,400 Cr. to Rs 3,100 crore. “Against Rs. 180 Cr. of centrally sponsored schemes we are expecting Rs. 300 Cr. now�, a senior person associated with the exercise said.
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