Hon’ble Speaker,

Sir,

I rise to present the Annual Financial

Statement for the year 2012-13 before this August

House. While the financial year which is about to

close has been very rewarding as well as

challenging, the ensuing year too is going to be very

significant in many respects.

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2. The current financial year has been witness

to the consolidation of peace and order in our state.

The number of tourists, who visited Kashmir Valley

and Ladakh region and pilgrims to Shri Mata

Vaishno Devi Shrine and Shri Amaranth Ji Yatra

has surpassed all the previous records. These

numbers signify the growing confidence of the

visitors in the persistent efforts and capability of the

government in restoring peace and order. A new era

of peace and prosperity for our people has truly

begun. The improved environment has also helped

us in a more effective implementation of our plan

schemes and budgetary programmes of socio-

economic development.

3. The Eleventh Five Year Plan is concluding

on 31st March 2012. The next financial year shall be

the first year of the Twelfth Five Year Plan. The

Planning Commission of India is engaged in the

process of finalizing its Twelfth Five Year Plan

document and so are we. It is being hoped that this

document shall significantly depart from the current

Five Year Plan in its economic strategies. Emphasis

on “Faster, Sustainable and More Inclusive Growth”

3

has been clearly spelt out in the Approach Paper,

unfolded by the Planning Commission. The

contours of our successive annual plans shall

become clear only after the Twelfth Five Year Plan

document takes its final shape. Nevertheless, we

hope that the finalization of the next year’s annual

plan for our state shall be taken up by the Planning

Commission of India in the coming few months.

4. At the national level, there has been a

setback in the process of economic revival due to

deterioration in the global economic scenario. It will

cast its shadow on the national approach to the plan

process. We may also be affected indirectly.

However, in our State, we start with the advantage

of the consolidation of peace and economic growth.

Building further on this consolidation, we intend to

incorporate new strategies in our next year’s plan of

action. We are hopeful that our suggestions shall

receive due attention of the Planning Commission at

the time of finalizing our plan.

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5. We have maintained our journey on the path

of structural reforms and sound management of

State finances through the last three years. These

are yielding results now. We are determined to

continue our march towards a better future with

renewed vigour.

6. Sir, I would like to submit here that the three

previous budgets presented by me before this

August House, were much more than mere

statistical statements of income and expenditure.

They were reflective of a pre-meditated and

progressive plan of action to trigger, stimulate and

sustain socio-economic growth and ensure the

welfare of the people of our state. All these action

plans were conceived, formulated and executed by

the government under the able, determined and

courageous guidance of our young, energetic and

dynamic Chief Minister Janab Omar Abdullah

Saheb.

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7. Through my next year’s budgetary

proposals, I have tried to accelerate the momentum

generated so far in the process of the socio-

economic development and welfare of our people.

My ultimate aim is to bring the major indices of

development of our State at par with the All India

averages and then try to take them farther.

8. The next year’s budget is also significant in

its purely chronological context. It is going to be the

fourth consecutive budget of the present coalition

government after it has, successfully, completed

half of its popularly mandated tenure under the

dynamic leadership of Janab Omar Abdullah Saheb,

marked by his exemplary courage, vision and

statesmanship.

Economic Overview:

9. I have laid the Economic Survey Report on

the Table of this August House a few days back. It

may be noted with satisfaction that our GSDP has

been continuously on the rise. In terms of the latest

6

available figures, the GSDP of our State for the year

2008-09 was ì 42,315 crore at current prices. It

rose to ì 48,197 crore during the year 2009-10.

During the year 2010-11, the GSDP further rose to

` 54,731 crore. The current year’s Advance

Estimate has projected the GSDP figure at ` 62,365

crore. All these figures are based on the revised

para-meters of the Central Statistical Office (CSO),

adopted by it at the national level. At constant prices

(base 2004-05), the corresponding GSDP figures

work out at ì 34,664 crore for the year 2008-09,

ì 36, 329 crore for the year 2009-10, ì 38,739 crore

for the year 2010-11 and ìììì 41, 367 crore for the

current financial year.

10. The Thirteenth Finance Commission had

given us a target of achieving fiscal deficit of 5.3%

for the year 2010-11. On the basis of our GSDP

figures, the actual fiscal deficit for the last year

comes to 4.3%. This is a considerable improvement

over the target assigned to us.

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11. The hon’ble members of this August House

are already aware of yet another wave of global

meltdown, which showed itself during the current

financial year causing unprecedented fall in the

value of our rupee in comparison to all major world

currencies. Industrial production and exports at the

national level have also slowed down. These

onslaughts on our national economy are bound to

reduce the national GDP growth rate. The current

year’s Union Budget had assumed a growth rate of

8.5%. This figure is now estimated to come down to

6.9%, as per the latest reports. In comparison, the

growth rate of our GSDP at constant prices for the

current financial year works out at 6.8% in

comparison to 6.6%, estimated in last March at the

time of the presentation of the current year’s Budget

by me before this August House.

12. In an environment full of global uncertainties,

it is hazardous to forecast economic growth rate.

Nevertheless, in consideration of all relevant

8

factors, I am venturing to peg my next year’s target

of GSDP growth at 7.5%.

Per Capita Income:

13. At current prices, our per capita income

figures were ì 30,212 for the year 2008-09, ì 33,665

for the year 2009-10, ì 37,496 for the year 2010-11

and are estimated at ìììì 41,833 for the current

financial year. The per capita income figure for our

State at constant prices (base 2004-05) rose to

` 26, 344 in the year 2009-10 in comparison to

` 25,641 for the previous year. The per capita

income further grew to ì 27,607 during the year

2010-11. The Advance Estimate places this figure

at ` ` ` ` 28282828,,,,999933332222 for the current financial year.

14. The figures mentioned by me do reflect a

steady growth in the per capita income of our

people. However, as stated by me before this

August House last year also, we continue to lag far

behind the All India Per Capita Income figure of

ì 38,005 for the current financial year. It is evident

9

that a lot more must be done by us in the shortest

possible time to catch up with the All India figures.

Sectoral Status:

15. As per Advance Estimate, the contribution of

the Primary Sector, comprising Agriculture and

Allied activities, to our current fiscal’s GSDP is

estimated at 19.83%. The contribution of the

Secondary Sector, comprising industrial production,

manufacturing and mining is estimated to reach

25.93%. The contribution of the Tertiary Sector,

comprising all types of services, is now estimated to

jump to 54.24%.

16. It may be noted that the share of the Primary

Sector continues to slide down, even in comparison

to the originally projected share of 21.10% for the

current fiscal. While various budgetary initiatives in

support of this sector, which were announced by me

before this August House during the last two years,

have helped in boosting some of the agricultural

operations, much more will have to be done at the

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policy and delivery level. It will continue to be my

endeavour to join in any other additional initiatives

which can strengthen this basic sector of our

economy.

Development of Communication & Energy

infrastructure:

17. A fast and reliable communication network

and ample energy form the backbone of any

economy. As such, I have been taking stock of key

communication and energy projects from time to

time. The completion of these projects will positively

impact the trade, industrialization and tourism in our

state in a big way and reshape our future budgetary

structure. I proceed to cover progress in some of

the big ticket infrastructure projects.

Udhampur-Qazigund rail-link:

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18. Civil works on the railway connection

between Udhampur and Qazigund are going on

smoothly without any reported bottleneck. The

project is scheduled to be completed by the year

2017. Recently, the Central Government approved

its revised cost at ` 19,000 crore.

National Highway 1A:

19. As per the latest available reports, the work

of four laning and upgrading National Highway 1A is

progressing in four out of six segments between

Nagrota and Srinagar. The remaining two segments

are going through a process of re-bidding. The

delay is a cause of concern. We have requested the

Central Government to get the allotment of works

on these two segments expedited or to authorize

their execution in EPC mode.

Mughal Road:

12

20. The Mughal Road has already been opened

to vehicular traffic for summer months. The

cumulative expenditure on this project is expected

to reach ì 535 crore in the current financial year as

against its approved cost of ` 640 crore. The

remaining ` 105 crore are proposed to be allocated

during the next year for completing the ongoing

road works and bridges.

Airports:

21. We have requested the Union Government

to fully equip the Srinagar International Airport and

operationalise it for international flights, and also to

expedite the work of expansion of the Jammu

Airport. We hope that early steps shall be taken by

the Centre on both these important projects.

Toll Plaza:

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22. Work on the new Toll Plaza at Lakhanpur

has been almost completed at a cost of over ì 32

crore. We are hoping for the early transfer of 108

kanals of railway land to us for developing it into an

additional parking area. Work on the additional

import side bridge over river Ravi is also likely to be

completed by the Central Government authorities in

the near future.

Power Sector:

23. Under the New Hydel Policy, all hydel

projects of upto 10 megawatt capacity have been

reserved for execution by the permanent residents

of the State. Offers have been invited for the

construction of 10 Mini Hydel Projects in Kashmir

and Jammu regions with a total identified capacity

of 172 megawatts, involving investment of nearly

` 1,200 crore. Offers from 61 prospective

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entrepreneurs have been received and are

presently under scrutiny.

24. Pakal Dul HEP with 1000 MW capacity has

been tendered out by the joint venture company of

the J&K State Power Development Corporation.

The Corporation is also going ahead with the

execution of 450 MW Baglihar HEP – Stage II.

Additionally, Ganderbal HEP, Parnai HEP, Lower

Kalnai, Pahalgam Stage III, Mini Hydel Projects at

Dah and Hanu in Ladakh region and Machil HEP

have also been put through the tendering process.

The Pahalgam III & Machil HEPs are expected to be

completed next year. The combined installed

capacity of these HEPs shall be around 200 MWs.

Revised Estimates 2011-12:

25. Now I come to the Revised Estimates of the

current financial year. The total budgetary receipts

are placed at ì 31,022 crore in the Revised

Estimates in comparison to the Budget Estimates of

15

ì 31,212 crore. The total receipts consist of

ì 25,513 crore as revenue receipts and ì 5,509

crore as capital receipts.

Tax receipts:

26. The State’s own tax receipts were reflected

in the Budget Estimates at ì 4,183 crore. I am

happy to report that the same are now expected to

touch ìììì 4,800 crore. In comparison to the last year’s

achievement of ì 3,483 crore, this figure indicates

an improvement of ì ì ì ì 1,1,1,1,333317171717 crore. The growth rate

over the last year’s realizations works out to around

38%. Out of the total tax receipts, the receipts of the

Commercial Taxes Department alone amount to

ì 3,561 crore in comparison to the collection of

ì 2,504 crore made during the last financial year.

Thus, out of a total increase of ì 1,317 crore in the

tax revenue, the receipts of the Commercial Taxes

Department alone exceed the last year’s collection

by ìììì 1,057 crore, indicating an improvement of 42%,

which is a record.

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27. During my last budget speech, I had

indicated the need of taking new initiatives by the

government for improving the administration of the

Stamp Act and the registration of instruments of

exchange. This August House approved wide

ranging amendments in the relevant laws. These

government initiatives have resulted into a

phenomenal growth in the collection of Registration

Fee and Stamp Duties. In comparison to the last

year’s collection of ì 79 crore, we are hoping to

reach the level of ì ì ì ì 133 crore in the current

financial year. These figures indicate an increase

of about ì 5ì 5ì 5ì 54444 crore or 68% improvement over the

last year’s collections.

Other tax receipts:

28. Among other tax receipts, the major items

are as follows:

Taxes on Goods and Passengers: ìììì 439

crore in Revised Estimates in comparison to ì 337

17

crore realized last year showing an increase of ìììì 102

crore or over 30% improvement;

State Excise Duties: ìììì 383 crore in

comparison to ì 337 crore realized last year,

indicating an increase of ìììì 46 crore or 14%

improvement over the last year’s achievement.

Non-tax receipts:

29. The total non-tax receipts were estimated

earlier at ì 1,620 crore in BE. This figure has been

re-worked in the Revised Estimates at ì 1,851 crore,

mainly due to a higher revenue collection target

given to the Power Development Department.

Besides, receipts mainly on account of dividend

from the J&K Bank have risen to ìììì 67 crore in

comparison to the BE of ì 30 crore.

30. Other major contributors to the non-tax

receipts, as reflected in the Revised Estimates are:

18

Forestry and Wildlife receipts: ì 56 crore.

Mines & Minerals receipts: ì 43 crore.

Water Supply & Sanitation receipts: ì 35

crore.

Main items of expenditure:

31. Out of the total expenditure reflected in the

Revised Estimates, a sum of ì 22,854 crore is now

classified as revenue expenditure in comparison to

the Budget Estimates of ì 22,752 crore. Out of the

total revenue expenditure, the plan revenue

expenditure is estimated at ì 1,108 crore in

comparison to the Budget Estimates of ì 1,205

crore. The non-plan revenue expenditure is now

estimated at ì 21,746 crore in comparison to the

Budget Estimates of ì 21,547 crore.

32. The total capital expenditure in the current

year is now estimated at ì 8,168 crore. Out of the

total capital expenditure, the Revised Estimates for

19

capital expenditure on plan account are placed at

ì 6,617 crore as compared to the Budget Estimates

of ì 7,020 crore. The non-plan capital expenditure

is estimated to increase to ì 1,551 crore in

comparison to the Budget Estimates of ì 1,440

crore.

Salary expenditure:

33. During the course of the current financial

year, three DA installments have been released in

favour of the government employees and

pensioners, including one installment which had

become payable last year. The government has

also decided to pay 100% of the arrears of pay and

pension revision following the adoption of the Sixth

Central Pay Commission Award. These arrears

shall be paid in five equal annual installments. After

taking these factors into account, the total salary bill

is expected to rise to ì 11,654 crore, inclusive of the

plan component of ì 327 crore and grants-in-aid

amount of ì 644 crore which is mainly utilized by the

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autonomous organizations for the payment of salary

to their employees.

34. The expenditure on pension and other

retirement benefits was earlier estimated at ` 2,651

crore for the current fiscal. The same is now

estimated to reach ` 2,780 crore, as per the

Revised Estimates.

35. The expenditure on account of the purchase

of electrical energy from the Central Public Sector

Undertakings and J&K SPDC was originally

estimated at ` 2,400 crore. In the Revised

Estimates, the figure has been proposed at `̀̀̀ 3,000

crore to take care of the increase in the purchase

price of energy, purchase of additional energy and

the cost of running the gas turbines.

Budget Estimates 2012-13:

36. The next year’s total receipts and

expenditure are estimated at ` 33,853 crore each.

The total revenue receipts are estimated at ` 29,948

crore based on the anticipated scheme of financing

of the plan. These figures may undergo some

21

variation when our plan outlay and its Scheme

of Financing are finalized by the Planning

Commission. The share of central taxes is indicated

at the level of ` 4,245 crore, as against the RE

figure of ` 3,691 crore in the current financial year.

The total non-plan grants from the centre have been

placed at ` 4,496 crore, against the RE figure of

` 4,858 crore in the current financial year, inclusive

of the non-plan revenue gap grant under the Award

of the Thirteenth Finance Commission.

State’s own Tax Revenue:

37. Tax revenue, which is likely to touch ` 4,800

crore in the current financial year, is expected to

further grow to `̀̀̀ 5,419 crore in the next financial

year. This would mean a targeted growth of over

29.5 percent in comparison to the current year’s

Budget Estimates of ì 4,183 crore.

VAT Collections:

38. The VAT and GST collections by the

Commercial Taxes Department have been targeted

22

at ` 3,940 crore as against the current financial

year’s BE target of ` 3,025 crore, aiming at BE on

BE increase of ` 915 crore, working out to a growth

rate of about 30 percent.

Other Tax Collections:

39. Taxes on Goods & Passengers are

estimated to rise to ` 461 crore, as against the

current financial year’s Budget Estimates of ` 382

crore. Collection of Excise Duties has been

projected at ` 404 crore, as against the current

year’s Budget Estimates of ` 333 crore. Collections

on account of Stamp Duty & Registration Fee have

been projected at ` 152 crore. The target for

Electricity Duty has been kept at ` 306 crore,

corresponding to the revenue target of ì 1,732 crore

given to the Power Development Department.

Non-Tax Revenue:

40. The total non-tax revenue targets are ì 2,118

crore. A revenue target of ` 1,732 crore is proposed

23

to be assigned to the Power Development

Department, against their revised target of ` 1,486

crore in the current financial year. Other major

targets of non-tax revenue are Forestry & Wildlife

` 65 crore, Mines and Minerals ` 45 crore, Water

Supply & Sanitation ` 37 crore and expected

Dividend, mainly from the J&K Bank, ` 70 crore.

Expenditure:

41. The total expenditure is tentatively classified

between ` 24,990 crore, as revenue expenditure

and ` 8,863 crore as capital expenditure. The

capital expenditure comprises ` 7,028 crore on

account of the plan and ` 1,835 crore on account of

non-plan. Out of the total revenue expenditure,

` 23,548 crore is classified as non-plan revenue

expenditure, while as ` 1,442 crore is expected to

be incurred as plan revenue expenditure.

Salaries & Pensions:

24

42. Out of the total revenue expenditure,

salaries of the government employees account for

the biggest chunk, estimated to reach ` 13,115

crore, inclusive of the provision of ì 700 crore for

fresh DA installments, a plan salary component of

ì 369 crore and grants-in-aid of ì 658 crore.

43. The expenditure on pensions including other

retirement benefits, is estimated at ` 3,025 crore.

The total expenditure on salaries & pensions will,

therefore, rise to ì 16,140 crore during the next

financial year.

44. A provision of ` 3,100 crore is proposed in

the next year’s Budget Estimates for the purchase

of energy, as against the current year’s RE figure

of ` 3,000 crore.

45. The expenditure on account of interest

payment against loans has been estimated at

25

` 2,663 crore in comparison to the RE figure of

` 2,538 crore in the current financial year.

46. Grants-in-aid to the Local Bodies,

Autonomous Organizations and other institutions

account for ` 658 crore. The Maintenance and

Repairs of assets is expected to involve an

expenditure of ` 289 crore. A sum of ` 116 crore

has been proposed on account of honorarium to

SPOs and VDCs.

Annual Plan 2012-13:

47. The Planning Commission of India has yet to

formally determine the size of the Twelfth Five Year

Plan, which, when finalized, will also give us a firm

idea about the likely size of our successive annual

plans for the coming five years. However, the

expectation of around 10% step up in the next

year’s plan size will be reasonable. As such, the

state government has worked out its plan proposal

based on a total outlay of ` 7,300 crore for the next

26

financial year. We have requested the Planning

Commission to continue the Prime Minister’s

Reconstruction Plan till we complete the ongoing

projects taken up under PMRP. Accordingly, we are

projecting a requirement of ` 700 crore under

PMRP during the next financial year, over and

above the annual plan outlay. The main schemes,

included in the PMRP, to be funded out of the

proposed allocation are Power Transmission,

Mughal Road, Counterpart Funds for the World

Bank funded schemes under ERA, completion of

TRTs for Kashmiri Migrants and Rehabilitation of

Dal dwellers. A provision of about ì 1,000 crore, out

of the total outlay, is being kept as the State Share

under various Centrally Sponsored Schemes to

enable us to access around ì 2,500 crore from the

various Ministries of the Central Government, over

and above the State Plan.

48. In the annual plan, we have proposed a

provision of ` 541 crore for the schemes to be

covered under the Agriculture and Rural

27

Development sector. Under the Social Services

Sector, including Health, Education, Water

Supply and Social Welfare, we have proposed an

allocation of ` 2,532 crore to take care of the

ongoing schemes as well as the expansion

programmes. Irrigation & Flood Control gets a

share of ì 447 crore. The Energy Sector accounts

for ì 455 crore. The Transport sector, including

R&B, accounts for ì 832 crore. General Economic

Services, including Tourism and the Special Area

Development Programme, are to receive ì 1,231

crore. Industries & Minerals get ì 153 crore and

General Services are proposed to be given a share

of ì 706 crore. Under Special Area Programmes,

ì 396 crore are proposed to be spent.

49. I proceed to share the salient features of the

proposed development programmes for the next

fiscal with the Hon’ble Members of this August

House.

School Education:

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50. As I had stated last year, one of the main

challenges, confronting us, was to reduce the

gender gap in education and literacy. A major

government initiative, announced by me during the

last budget session, was the scheme ‘BETI

ANMOL’, designed to popularize higher school

education amongst girls. Under this scheme, a cash

incentive of ` 5,000 in the shape of a Fixed Deposit

Receipt is payable to all girl students from BPL

families, inhabiting 97 identified Educationally

Backward Blocks of the State, who successfully

seek admission in the 11th class.

51. I am happy to report that, in the current year,

about 6000 eligible girl students have been

identified to be covered under this scheme. The

impact of the scheme is expected to be much more

next year after the results of the next matriculation

examinations are announced in the coming months.

We expect this number to increase to 10,000 during

29

the next financial year, involving an expenditure of

ì 500 lakh.

52. The scheme of ‘SAAKSHAR BHARAT

MISSION’ has been launched at the national level.

All the twenty districts, which had literacy

percentage below 50%, as per the census of 2001,

are being covered under the total literacy campaign

of ‘Saakshar Bharat Mission’.

53. A sum of ` 530 crore is targeted to be

incurred as the State share under the ‘SARVA

SHIKSHA ABHIYAN (SSA)’ and ‘RASHTRIYA

MADHYAMIC SHIKHA ABHIYAN (RMSA)’.

Higher and Technical Education:

54. The construction of 11 new degree colleges

under the state sector and 11 Model Degree

Colleges under the 50:50 Centrally Sponsored

Schemes is in progress. Besides, the construction

30

of 10 degree colleges under PMRP is also

underway. An expenditure of ` 191 crore is

proposed under the Plan, inclusive of ì 145 crore on

the capital component. 55. Eighteen new Polytechnics are being

established and 27 ITIs are under upgradation. For

the next fiscal, a sum of ` 20 crore is proposed to

be kept for the ongoing and new works to be taken

up for skill impartation and up-gradation.

Irrigation:

56. A sum of ` 321 crore is proposed to be

spent as the State plan component on various

irrigation schemes. Additionally, ì 400 crore are

expected to come under AIBP and NABARD

funding.

Public Health Engineering:

31

57. The PHE Department has completed 1,208

Water Supply Schemes at a cost of ` 1,187 crore

under the mega flagship scheme ‘National Rural

Drinking Water Programme (NRDWP)’ and other

schemes. The number of additional habitations,

likely to be covered by potable drinking water supply

in the current financial year, is 805, for which the

current year’s expected expenditure under NRDWP

is ` 837 crore. For the next year, the targeted

expenditure under this programme is ` 562 crore to

cover a further 1,414 habitations.

Roads and Bridges:

58. During the current fiscal 799 kms of roads

have been completed till January, 2012. The

Department has also completed 45 bridges in the

current financial year by January, 2012. Next year,

the proposed outlay for the R&B Sector is ì 682

crore.

32

Agriculture and Rural Development:

59. For the next financial year, the total

proposed plan investment in the Agriculture Sector

is ì 343 crore. For the Rural Development sector,

the proposed allocation is ` 198 crore. Additionally,

funds shall also be available under the Centrally

Sponsored Schemes like ‘RKVY’, ‘Technology

Mission’ and other schemes from the Ministry of

Agriculture and the Ministry of Rural Development

of the Central Government. The focus of the

department is on the improvement of the Seed

Replacement Rate, timely and adequate supply of

agriculture inputs, farm mechanization, post harvest

facilities and marketing in all the key sub-sectors,

including Horticulture, Sericulture, Vegetables and

Commercial Floriculture.

Health:

33

60. For the Super Specialty Hospital at Jammu,

819 posts have been created with a view to make it

fully functional. Additionally, 483 posts have been

created for the Emergency Block and Paediatric

Hospital at Jammu. For the Institute of

Traumatology and the Nursing College at Srinagar,

1040 posts have been created. Additional

expenditure on the salaries for these posts would be

around ì 100 crore per annum. A total expenditure

of ` 366 crore is proposed to be incurred in the

H&ME sector during the next financial year,

exclusive of the funds available under the Centrally

Sponsored Schemes like ‘NRHM’.

61. Under the ‘National Rural Health Mission

(NRHM)’, cumulative expenditure of ` 680 crore is

expected by the end of the current fiscal. An

expenditure of ` 150 crore is expected during the

next fiscal.

34

62. The approved number of ASHAs has risen to

90,000. The State has made considerable

improvements in health parameters like the Infant

Mortality Rate, Maternal Mortality Rate, Total

Fertility Rate and the percentage of institutional and

safe deliveries.

63. The state government has finalized a drug

policy to promote the common man’s access to

safe, effective, quality and reasonably priced

medicines and to ensure the adoption of good

prescription practices among the doctors.

Other sectors: 64. The next year’s allocation under the Housing

and Urban Development sector has been proposed

at ` 311 crore, excluding the funds which would

be available under the ‘JNNURM’. An additional

provision of ì 369 crore shall be available for ‘ERA’.

35

` 124 crore are proposed for the Tourism Sector.

The Industrial Sector accounts for ` 153 crore.

65. In the Forest and Environmental sector, a

sum of ` 42 crore has been proposed, exclusive of

the allocations available under the Thirteenth

Finance Commission Award. A total of ì 212 crore of

plan grants would be available under the Award for

various development activities.

Employment Generation and ‘SKEWPY’:

66. As the Hon’ble members are fully aware,

‘SKEWPY’ is an integrated programme, which helps

us in keeping the burning issue of educated

unemployment in focus. As of now, the Seed

Capital Scheme of ‘SKEWPY’ has resulted into

approval to about 1600 DPRs, involving project

costs of ì 118 crore. Seed capital of ì 26 crore has

been released in favour of 800 entrepreneurs. The

next year’s target of utilization of the Seed Capital

36

Fund is ` 50 crore, involving a targeted 3,000

entrepreneurs and including off-bank financing of

unemployed youth under the newly launched ‘Youth

Start-up Loan Scheme’.

67. About 32,000 unemployed educated youth

have been brought under the purview of the

Voluntary Service Allowance. An expenditure of

` 40 crore has been anticipated under the ‘VSA’

scheme during the next financial year.

68. The programme of skill development for the

youth has been taken up in a Mission Mode to

prepare our youth to get skilled and highly skilled

jobs in the growing, but highly competitive, job

markets.

69. The skill up-gradation programme is being

supplemented through ‘Rural Self-employment

Training Institutes (RSETIs)’, which are being

operationalised by the J&K Bank and State Bank

37

of India, for all the districts of the state. The

training centres, run by the Directorates of

Industries and Commerce, Handicrafts and

Handlooms and a host of other government and

non-government organizations, and their syllabi,

are proposed to be standardized under the Skill

Development Mission.

70. The State Self-employment Scheme has a

target of setting up over 9,000 enterprises in the

current financial year. The Prime Minister’s initiative

in training 8,000 unemployed youth of the state

annually in centres of excellence outside the State

for a period of five years is already under

implementation.

71. The report on employment generation in

Jammu and Kashmir, prepared by the Expert

Group, headed by Dr. C Rangarajan, Chairman of

the Economic Advisory Council of the Prime

Minister, envisages an action programme, involving

38

an expenditure of ` 761 crore, aimed at facilitating

the absorption of educated youth of the state in the

job market. The programme has been rolled out

already through schemes like ‘HIMAYAT’, ‘UDAAN’

and others.

72. The government has also fast tracked the

recruitment process against the vacancies, arising

in various government departments from time to

time. During the last three years, selection of over

39,000 educated youth has been made by the

PSC, J&K SSB and the Police Recruitment Board.

This figure excludes a very large number of

educated youth, engaged under ‘NRHM’, ‘Rehbar-e-

Talim’ and other schemes, which are outside the

purview of our recruitment agencies, meant for

making selections for regular appointments under

the State government.

39

73. Additionally, recruitment to a large number of

Class-IV posts has been going on through the

Departmental Committees.

Inclusive Development:

74. Socio-economic development for all is the

hallmark of the coalition government, headed by our

visionary leader Janab Omar Abdullah Saheb,

as also of the Central leadership of Prime Minister,

Dr. Manmohan Singh Ji and the UPA Chairperson

Smt. Sonia Gandhi Ji. Accordingly, it has been my

constant endeavour to make the budgetary exercise

inclusive of all regions of the State and all sections

of our society.

75. One of the historical achievements of the

present coalition government is the highly

successful holding of panchayat elections in the

current financial year marked with very enthusiastic

and popular participation of the people to the extent

40

of 80% of the registered electorate. Janab Omar

Abdullah Saheb had promised to transfer functions,

functionaries and funds to the elected panchayats

with a view to empowering the people at the grass

roots level. A comprehensive exercise has been

concluded by the government in this behalf and

orders have been issued in respect of 14

Government Departments/ Ministries to transfer a

large number of listed activities, alongwith their

other connected functions to the Panchayats, Block

Development Councils and the District Planning &

Development Boards. Devolution of about ì 1,531

crore is expected to reach the elected bodies in the

next financial year, inclusive of funds flowing under

schemes like ‘MG-NREGA’ and other schemes,

which shall devolve directly on the elected

Panchayats. If the Panchayats can make proper

schemes for utilization of ‘MG-NREGA’ funds and

also develop their absorption capacity, they can

increase their claims to around ì 2,500 crore under

this one scheme alone.

41

76. A plan provision of ì 148 crore is proposed

for the next year for Kargil and Leh districts. A sum

of ì 125 crore is proposed to be spent exclusively in

the Border Blocks under the Border Area

Development Programme (BADP). A provision of

ì 194 crore is being made for the Constituency

Development Fund.

77. The next year’s plan outlay includes a sum

of ì 40 crore under the Tribal Sub-Plan, a sum of

ì 18 crore for the welfare of Gujjars & Bakerwals, a

sum of ì 16 crore for the welfare of Pahari Speaking

People, a sum of ìììì 21 crore for Scheduled Castes

and OBCs and a sum of ì 49 crore under the

‘Rashtriya Shram Vikas Yojana’. Additionally, a

provision of ì 139 crore has been made for the two

Directorates of Social Welfare for executing Women

and Child Development Schemes.

78. Separate outlays are also being proposed

under various programmes exclusively aimed at the

42

welfare and empowerment of women through the

schemes being implemented by the Department of

the Health and Medical Education Department, the

Department of Social Welfare, the J&K Commission

for Women and the J&K Women Development

Corporation etc through the process of gender-

budgeting.

79. Last year, I had referred to a provision of

ì 100 crore under the ‘Border Area Development

Programme (BADP)’. It is a matter of satisfaction

that under the ‘BADP’, an amount of ì 125 crore has

been authorized during the current year. I had also

referred to a special package to address the unique

development needs of other backward areas and

bad pockets. During the current financial year, we

have made a beginning by releasing an additionality

of ì 11.64 crore for taking up developmental projects

in the identified areas. I propose to carry forward

this process during the ensuing year and announce

a special provision of ì 50 crore for such areas over

and above the likely BADP allocation of ì 125 crore

43

and the ‘Backward Region Grant Fund (BRGF)’

allocation of ì 52 crore.

Welfare of Migrants:

80. Out of the 5,242 two-room tenements, meant

for the Kashmiri migrants, 4,876 flats have been

completed and the remaining units shall be

completed in the current financial year at a total

estimated cost of ì 484 crore. A sum of ì 140 crore

was kept as the provision for meeting the salary

expenditure of the migrant employees. I propose to

increase it to ì 189 crore in the current year to

provide for the payment of one installment of the

arrears of pay revision. For the BE (2012-13), the

proposed figure is ì 171 crore. Additionally, an

expenditure of ì 104 crore is proposed to meet the

requirement on cash assistance for the Kashmiri

migrant families. Further, ì 76 crore are expected to

be incurred on the scheme of the return and

rehabilitation of the migrants in the current financial

year. The next year’s provision has been kept at

ì 130 crore.

44

81. A medical insurance scheme for the

Kashmiri migrants was announced by me earlier in

this August House. Hoping that the scheme will

finally take off after the prospective beneficiaries

feel persuaded to take its benefits and come

forward to join this scheme aimed at mitigating their

sufferings due to ailments, I propose to repeat a

provision of ì 8 crore in the next year’s budget for

this purpose.

Financial Restructuring:

82. Last year, I had apprised this August House

about the details of the government’s decision to

switch-over to the ‘ways and means’ system of the

Reserve Bank of India in place of the traditional

‘memorandum of understanding’ which had been

operational for many years between the government

and the Jammu and Kashmir Bank. As anticipated

by me, and elaborated before this August House

last year, the new system has been working very

satisfactorily to the mutual advantage of the State

Government and the Jammu and Kashmir Bank.

45

We have saved interest expenditure of around ì 200

crore so far in the current financial year through the

new arrangement.

83. On the other hand, the J&K Bank made

record profits and declared an all time high dividend

of 260% to its shareholders. The amount of dividend

disbursed, included a sum of ì 67 crore paid to the

State Government as its majority share-holder. The

Bank continues to move towards still higher

business and profit targets in the current financial

year.

84. I am very sure that the fears expressed last

year by my friends, sitting on the other side of this

August House, have been adequately allayed by

this time. I assure the Hon’ble Members of this

August House that other reforms, initiated by me,

and those which may be initiated in future, shall

always be guided by the principles of public benefit

and shall continue to be advantageous to the

financial management of the State.

46

State Financial Corporation:

85. Continuing my efforts to revive the glorious

past of this institution and resurrect its role in the

rapid industrialization and promotion of economic

activities in the State, the government has

sanctioned a sum of ì 22 crore as additional share

capital in favour of the J&K State Financial

Corporation in the current financial year.

Additionally, a sum of ì 14 crore, reflected as the

unpaid dividend amount to the State government,

accrued under the statute, has also been converted

into paid up share capital of the Corporation. We

hope to contribute an additional capital of ì 25 crore

towards the authorized share capital of the

Corporation in order to clear all its past liabilities

towards SIDBI. These measures will strengthen the

Corporation’s claims on funds to the extent of ì 150

crore for the revival of its activities, as

recommended by the Prime Minister’s Task Force

on MSME, and, subsequently, also supported by

the Prime Minister’s Expert Group on the generation

47

of employment for the youth in Jammu and

Kashmir.

86. The Corporation has already cleared the

backlog of its audited balance sheets upto the year

2008-09. I am very hopeful of its audited accounts

becoming upto date in the next few months’ time.

Computerization of VAT Administration:

87. The Government is continuing its efforts in

making extended use of Information Technology

for improving its public interface and for

enhancing the transparency and efficiency of the

government departments. I am happy to report

that an IT-enabled system has been rolled out in the

Commercial Taxes Department. Facilities of

downloading forms, e-filing of returns and

e-payment are being made available. I appeal to the

registered dealers to come forward and make full

use of these facilities.

Outsourcing of services:

48

88. Fast expansion of the Services Sector is a

global phenomenon. In our own State, we are

witness to regular and rapid increase in the share of

the Service Sector in our GSDP. This Sector has

tremendous scope for providing vast employment

opportunities to our unemployed youth.

89. The requirements of peripheral services by

the government departments for their own use have

also increased manifold over the years. As such,

the government has decided to adopt a systematic

process of outsourcing of non-core, peripheral and

auxiliary activities in the identified fields by all

the government departments, thereby creating

additional opportunities of employment for our youth

and also encouraging the growth of expertise in the

private sector in such areas. These services are

proposed to be outsourced to the private sector

under a comprehensive set of guidelines and also

under the PPP mode, wherever it is found more

feasible.

49

Re-structuring of public sector enterprises:

90. Our public sector has played a historic role

in the field of economic development of the State by

promoting, supporting, actively participating as also

indulging in the direct production of goods and

services for the benefit of the society. Over the

years, the private sector has grown as a sound and

healthy competitor and has now come of age. This

development has resulted into the redundancy of

some of the functions performed by our public

sector. Many of their manufacturing activities have

already closed down over the years and several

other activities have been scaled down.

91. The government has embarked upon a

comprehensive exercise of re-structuring of the

existing Public Sector activities to make them more

aptly suited to the present business environment.

A High Level Committee of Officers and experts has

been given the task of preparing well considered

and detailed recommendations in this behalf.

50

92. In the meanwhile, I propose a sum of ì 75

crore as budgetary support for the Public Sector

Enterprises in the Budget Estimates for the next

financial year. This provision includes a sum of ì 26

crore to take care of claims under VRS/GHS.

Arrears of pay revision and other benefits to the government employees:

93. Last year, I had reported before this August

House that the government had decided to pay off

50% of the arrears to the government employees

and pensioners on account of the revision of pay

and pensions, as per the recommendations made

by the Sixth Central Pay Commission.

94. Continuing the employees’-friendly policy of

the coalition government, headed by Jenab Omar

Abdullah Saheb, the government has settled all

their pending pay related issues through mutual

understanding and it has been decided to pay off

100% arrears in five equal annual installments. The

current year’s liabilities on this account have almost

51

doubled to about ì 917 crore in the Revised

Estimates.

95. The House Rent Allowance (HRA) has been

brought at par with the Central Government

employees by increasing the highest rate applicable

to Srinagar and Jammu cities to 20% with effect

from first July 2011, from its previous rate of 17.5%

of pay. This measure has necessitated an additional

outgo of around ì 70 crore in the current financial

year and will involve additional expenditure of about

ì 110 crore during the next financial year.

96. The Hardship Allowance, sanctioned by the

government in favour of the police personnel, is

expected to cost ì 122 crore in the current financial

year. A provision of ì 129 crore has been included

in the Budget Estimates for the next financial year

for this purpose.

97. As a further gesture of its employees’

friendly policy, the government enhanced Move TA

of moving employees from ì 6,000 to ì 10,000 for all

52

categories and also enhanced the rate of

Temporary Move Allowance from ì 650 per month to

ì 1,500 per month.

Part - B

98. I now come to the last part of my speech

before this August House.

Continuing with Fiscal Initiatives:

VAT on food grains:

53

99. I had apprised the Hon’ble Members last

year that several states are charging VAT at rates,

ranging from 4% to 5%, on atta, maida, suji, besan,

paddy and rice etc. In consideration of last year’s

rising food inflation as an All India phenomenon, I

had deferred my proposal to bring these items

under the VAT net and announced the continuation

of exemption from the levy of VAT on these

commodities upto 31st March, 2012.

100. Food inflation has, considerably, eased in

the recent months. I am tempted to bring these

items under the tax net from the next financial year.

However, I feel that it will be prudent to wait till

the economy stabilizes sufficiently. Accordingly,

I announce continuation of these exemptions upto

31st March, 2013. I will have to forego revenue of

over a couple of hundred crore of rupees on this

account.

VAT on Industrial units:

54

101. I had mentioned last year that the industrial

units, registered in the state, have been enjoying tax

concessions under the relevant packages of

incentives, announced by the government from time

to time. With the switch over to the VAT regime,

these concessions were supposed to have come to

an end but were continued in a modified manner.

Serious discussions have been taking place at the

national level through the Empowered Committee of

State Finance Ministers and other national level

workshops to switch over to a uniform national level

Goods and Services Tax (GST) regime in the

interest of bringing in further transparency, simplicity

and efficiency in tax administration and removal of

the cascading effect of the tax burden on the

consumers. The proposed date of implementation of

GST has been deferred from time to time because

of a lack of unanimity among the States.

102. Tax concessions to the industry cost nearly

ì 500 crore annually. I had announced extension of

the benefit of this tax concession to the industry for

55

a further period of one year or till adoption of the

proposed GST regime by our state, whichever

happens to be earlier. The period of concession

expires on 31-3-2012. On the aforementioned

considerations, which are still valid, I announce

continuation of the existing tax concession to the

industrial units for a further period of one year upto

31st March, 2013, or till adoption of the new GST

regime by our State, whichever happens earlier.

Tax on Hotels:

103. The Tourism Sector is highly beneficial to

our people and to the State’s economy, but it

contributes very little to the revenues of the State,

despite the fact that it puts heavy pressure on the

resources of the State and its infrastructure.

104. In view of the fluctuating arrival of tourists in

the State, I had announced several concessions

and exemptions favouring the Tourism sector.

These concessions have been extended by me on

56

yearly basis, first upto 31st March, 2011, and then

upto 31st March, 2012.

105. The current financial year has been a boon

for the Tourism sector of the State. I would be

amply justified in asking this sector to start making

some revenue collections from the visitors by way of

taxes and fees under the existing laws for

contributing to the exchequer of the State. However,

as a gesture of high goodwill of the government in

favour of this sector, I announce no change in the

status-quo for a further period of one year,

commencing from the first April, 2012.

Additional benefits for the farming community:

VAT on fertilizers:

106. A smiling farmer is the most prominent

symbol of economic strength. The present

government is determined to broaden his smile by

continuing to support the agriculture sector through

all possible means.

57

107. Chemical fertilizers, bio-fertilizers and micro-

nutrients are extensively used for improving farm

productivity. As a sequel to the earlier tax

concessions, announced by me for my brothers

engaged in agriculture, I propose to fully exempt all

types of chemical fertilizers, bio-fertilizers and

micro-nutrients from the levy of VAT.

VAT on fungicides:

108. I have already exempted pesticides,

weedicides and insecticides from the levy of VAT.

The use of fungicides is equally important for the

protection of crops and improvement in productivity.

Presently, fungicides attract VAT at 13.5%. I, now,

propose to exempt all types of fungicides from the

levy of VAT.

Service Tax on Crop Insurance and Cattle

Insurance:

58

109. A Central Government supported scheme of

crop insurance is under operation in the state also.

However, the National Agriculture Insurance

Company has not provided the desired level of

coverage to the farmers so far. Similarly, another

scheme of cattle insurance is in operation through

private sector insurance companies. These private

sector insurance companies are reluctant in coming

forward to extend insurance cover to cattle, sheep,

goats and poultry units as they apprehend high risks

and low profits in this type of insurance activity.

110. All insurance services attract levy of service

tax under the provisions of the J&K General Sales

Tax Act. As such, in order to attain the dual

objectives of making this vital insurance programme

popular among the farmers and more attractive for

the insurance companies, I propose to exempt the

insurance services, which cover agricultural and

horticultural crops and all types of cattle wealth,

including infrastructure of dairy, poultry, sheep,

59

goats, bird units and fish farms, from the tax,

chargeable under the J&K GST Act.

Incentives for the Tourism sector:

111. Next to Agriculture, the Tourism sector has

always proved to be an important vehicle of

economic growth and employment generation in our

State. This sector has gone through tough times

during the last over two decades. We are expecting

a turnaround in this sector now because of the very

encouraging experience of the last summer. The

Government has, accordingly, revisited the existing

package of incentives for ‘Tourism Units’, which

term includes hotels, motels, houseboats, paying

guest houses, cafeterias, swimming pools,

conference centres, amusement parks, recreation

centres, cable cars, adventure activities and tourist

coaches etc. I am happy to announce the following

60

new package of incentives to benefit the ‘Tourism

Units’:-

(i) The list of areas and locations, where the

‘Tourism Units’ shall be eligible to get

incentives as per the new package, is

being considerably liberalized and

expanded.

(ii) A Capital Outright Investment Subsidy of

30% shall be given by the government on

fixed assets, created by new investments,

subject to a limit of rupees 30 lakh.

(iii) The limit on the amount of Capital Subsidy

shall be increased to rupees 100 lakh in

the case of Prestigious Units, which invest

rupees 25 crore or more.

(iv) The Capital Subsidy shall also be available

on substantial expansion by the existing

Units, which make at least one third

addition to their existing bed capacity.

61

(v) The cost of preparation of Detailed Project

Reports shall be reimbursed by the

Government in full.

(vi) Remission of Stamp Duty on mortgages to

be allowed to the extent of rupees fifty

thousand.

(vii) The cost of Insurance Cover shall be

subsidized up to 60%.

(viii) The cost of DG Sets shall be subsidized up

to 75%.

(ix) Capital Subsidy in case of Paying Guest

Houses shall be 40%.

(x) Subsidy up to 50% shall be admissible on

equipment for adventure tourism, kitchen &

related appliances, tourist coaches, air

conditioning, office automation, etc.

(xi) The cost of training of managerial

personnel shall be reimbursed to the extent

of 50%.

62

112. Details of the expanded list of locations,

where these incentives shall be available, the

conditions of eligibility and the procedure for

sanction of these incentives, along with other

details, shall be notified by the Government

separately.

Lessening the burden on housewives:

113. Housewives have been weary of rising

prices and keep on complaining that their home

budget is going out of hand. With a view to

improving their home budget, I am inclined to

transfer a part of their burden to my budget.

Accordingly, I announce complete removal of Value

Added Tax on domestic cooking gas. I do hope that

with this measure, not only will the budgetary deficit

of their homes get somewhat mitigated, the

pressure on our Power Development Department

for more and more energy supply shall also get

reduced.

63

114. At this juncture, I have two more

announcements to make in pursuance of my gender

budgeting approach in budget formulation.

115. Under the ‘Beti Anmol Scheme’, the

Government has decided to incentivize admissions

to the 11th Class, taken by girl students, belonging

to BPL families and living in Educationally Backward

Blocks. I further propose to fully exempt such girl

students from making any contributions to the

authorized Local Funds of the concerned

Government Higher Secondary Schools. This

measure shall provide to them, an additional

financial relief, varying between rupees 600 to

rupees 900.

116. Every year, thousands of girls, belonging to

BPL families, compete for Government jobs through

the J&K Public Service Commission, the J&K

Services Selection Board and the J&K Police

Recruitment Board. They are required to pay the

prescribed Application Fee and a fee for appearing

64

at the competitive examinations. I propose to

exempt them from making such payments. The

losses, caused to the Revolving Funds of the

examining bodies, shall be compensated by the

Government, wherever necessary.

Considerations for our Youth and Students:

117. Information Technology, particularly the use

of IT gadgets like desktops, laptops, palmtops etc

has become very popular among our youth.

Unfortunately, the high price tag of these items has

kept them out of the reach of the less affluent

sections of our society. Nevertheless, the use of

computer peripherals like pen-drives, CDs, memory

cards, chips, headphones, computer cleaning kits,

electronic diaries and other IT peripherals has

become very common, even among the youth who

do not own computers themselves. With a view to

further boosting the use of Information Technology

among the youth, I propose to wholly exempt

computers and all the aforementioned IT related

items from the levy of VAT.

65

118. Some stationery items are being taxed at the

rate of 13.5%. Another group of stationery items

comes under the 5% category. Items like adhesives,

gums, glues, adhesive solutions, gum pastes,

lapping compounds, epoxies, resins, tapes, tags,

markers, sealing wax, paper envelopes, pencils,

crayons, highlighters, erasers, sharpeners, pencil

boxes, ‘takhti’ etc are extensively used by our

school going children. These young groups

constitute our future. I feel that we owe it to them to

contribute to the building of their future. As a token

of my contribution, I propose to fully exempt all the

aforementioned stationery items from the levy of

VAT.

Exemption to mini hydel projects from certain

taxes:

119. The J&K State Hydroelectric Projects

Development Policy, 2011, seeks to accelerate the

construction of Mini Hydel Projects by the private

sector under the IPP Mode. This sunrise, clean and

66

green industry needs some initial support from the

government for improving the financial viability of

Mini Hydel Projects and keeping their cost of

generation low. I, accordingly, propose to exempt all

power generation and transmission equipment,

building material and construction equipment for the

hydel projects, awarded under this policy, from the

levy of tax under the J&K Entry Tax Act. As a further

incentive to such hydel projects in the private

sector, the new policy also provides for exemption

from the levy under the J&K Water Resources

(Regulation and Management) Act, 2010, for a

period of 10 years.

Some more exemptions from VAT/ GST:

Service Tax on IT Institutes:

120. All coaching centres, teaching institutes and

educational institutions in the private sector are

subjected to the levy of tax under the J&K GST Act.

IT education is also covered by this tax.

67

121. The Government has been encouraging the

establishment of IT centres and institutes in the

private sector with a view to promoting computer

literacy, IT awareness and IT applications within the

State. In support of this objective, I propose to

exempt all IT Institutes, IT coaching centres and IT

educational institutions from the levy of tax under

the J&K GST Act.

Service Tax on Medical Treatment:

122. Medical services in the private sector had

been brought under the ambit of tax, chargeable

under the J&K GST Act. Private hospitals, nursing

homes, diagnostic centres, pathological laboratories

etc have to pay service tax at the rate of 10.5%. It

has been pleaded before me that medical services

are provided to the sick in conditions of distress. It is

widely believed that tax on medical services is the

only tax which is to be paid by people, going

through conditions of misery, regardless of their

financial status.

68

123. I have thought over the issue and feel

inclined to agree with this view. I, therefore, propose

to remove all types of medical, diagnostic and

curative services for humans, as well as the

veterinary sector, from the levy of tax under the J&K

GST Act. I trust that the benefit of this exemption

shall be passed on to the patients. I shall be

constrained to withdraw this concession if this does

not come about.

VAT on electric blankets:

124. The use of electric blankets in homes,

hospitals and tourism establishments is gaining

popularity. Presently, it attracts VAT at 13.5%.

I propose to exempt this item from the levy of VAT

in the interest of popularizing its use and helping in

the promotion of local industry.

Levy of tax on job works:

125. Execution of ‘job works’ by a registered

industrial unit, on behalf of another registered

industrial unit, attracts the levy of tax under the J&K

69

GST Act. Several industrial organizations have

contended that this levy of tax would take away all

the benefits of industrial clusters, which are to be

established as part of the current industrial policy

followed by the Ministry of MSME, as this policy

involves undertaking of lot of ‘job works’, by way of

specialized services, to be rendered by the

industrial units.

126. With a view to resolving this issue, I

announce 100% exemption from the levy of tax

under the J&K GST Act in favour of registered

industrial units in respect of ‘job works’, done by

them on behalf of any other industrial unit.

Entry Tax on items for scientific research:

127. Scientific research is essential for any

economy to grow. The institutes, engaged in the

conduct of such research in our State, are

dependent on costly scientific equipment, critical

chemicals and reagents, which are to be procured

70

from outside the State. Presently, such goods are

liable to Entry Tax. In order to facilitate and

encourage scientific research, I propose to exempt

scientific equipment, critical chemicals and

reagents, used by the Research and Development

Institutes of the Central and the State Governments,

functioning within the State, from the levy of Entry

Tax.

Stamp Duty rates on certain transactions/deeds:

128. I have apprised the Hon’ble Members of this

August House about the tremendous improvement

in tax collections from Stamp Duty and registration

fees. It has come to my notice that the raising of

loans from commercial banks and the registration of

hypothecation deeds against such loans has

become costly. I have examined the issue and

propose the following modifications in the existing

rate structure:

71

(i) Stamp Duty on deeds of hypothecation shall

be reduced from its current level of 0.5% to

0.25% and shall be subject to a minimum of

` 1,000 and a maximum limit of ì 50,000

in place of the present limit of ` 5 lakh.

(ii) The Stamp Duty on equitable mortgage shall

continue to be 0.25%, but will be subject to a

minimum limit of ` 1,000 and a maximum

limit of ` 50,000 in place of the existing

upper limit of ` 5 lakh.

Strengthening the collection mechanism of

GST:

129. The amount collected through the

government departments, making deduction of tax

at source under the provisions of the J&K GST Act,

forms a sizeable chunk of revenue. In order to

strengthen this mechanism, I propose to make

timely and proper deduction of this tax and its timely

deposit into the government treasuries mandatory.

72

Once this is done, the large number of contractors,

who have, practically, no direct responsibility of

depositing this tax into the treasury, can be saved

from unnecessary procedural hassles. I further

propose to take the following measures to simplify

the procedure in this behalf:-

(i) The tax clearance certificate, which is

required to be obtained afresh by the

contractors for each NIT, shall remain valid

for the whole financial year.

(ii) Security, which is equivalent to 10% of the

expected annual turnover, shall be waived

off.

(iii) The registration renewal fee shall also be

waived off.

Special Amnesty Scheme from SFC for less

privileged classes:

130. The J&K State Financial Corporation had

extended soft loans to beneficiaries from the

73

Scheduled Castes, Scheduled Tribes and Physically

Challenged groups. As of now, over 100 cases,

belonging to SC and ST and a couple of cases,

belonging to Physically Challenged groups, are

pending settlement, despite the lapse of nearly two

decades. I propose to settle all these long pending

disputed cases through a Special Amnesty Scheme,

which will be worked out by the J&K SFC, keeping

in view the indigent circumstances of these

beneficiaries.

131. Having announced all these relief measures

and financial incentives, I deserve to be

compensated for the loss of revenue involved in

these measures. For this purpose, I propose to

touch only a few areas.

Anti- tobacco measures:

132. As a part of the health protection measures,

I had announced a couple of tax measures to

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curb the menace of smoking and other forms of

tobacco consumption. I had announced an

increase in Toll on the import of raw tobacco

from ì 150 per quintal to ì 250 per quintal. I had

also announced increase in VAT from 13.5% to

25% on the sales of cigarettes and other related

products.

133. The monitoring of imports and sales of raw

tobacco and cigarettes during the current financial

year, up to the third quarter, has revealed that the

actual imports have not increased so far, even

though they do not show any declining trend over

the previous year’s import figures. I propose to

continue with my anti tobacco campaign, which I

had started last year, and announce a further

increase in the rate of VAT from 25% to 30%.

134. Last year, I had announced a contribution of

rupees one crore to the corpus of the Cancer

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Treatment and Management Fund. Government

employees have also contributed in large numbers

to the Fund, which I highly commend. The Fund has

done an appreciable job by extending financial

help of over rupees one crore and twenty two lakh

to 444 needy and poor patients. I announce a

further contribution of rupees two crore to this

Fund during the next fiscal. Simultaneously, I repeat

my appeal to all the Government employees to

donate generously to this Fund as they did the last

time.

GST on sale of liquor:

135. Smoking and drinking are harmful and

equally undesirable. If I increase tax on cigarettes

and leave out drinking, it may be considered

discriminatory. Sales of IMFL, beer etc carry a sales

tax tag of 25%. I propose to enhance this rate to

30% under the J&K GST Act.

Tax on Services under GST Act:

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136. I have been reviewing the list of Services,

covered by the J&K GST Act, from time to

time. Last year, I had added six more services to

the list. I now propose to add the following three

more services to the list to be brought under the

tax net:-

(i) Security and Placement Services,

(ii) Pandal and Shamiana Services,

(iii) Annual Maintenance Contracts.

Revision of Toll rate:

137. As the Honorable Members of this August

House are aware, Toll is not an ad valorem tax. As

the cost of collection of toll keeps on rising, it is

prudent to keep on adjusting the rate of Toll. In

consideration of this factor, I propose a modest

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increase of five paisa per kilogram in the existing

rate of Toll.

138. Taxation law is continuously evolving. Its

administration, sometimes, leads to conflicting

interpretations and requires a conciliatory effort on

the part of the tax administrators and the registered

dealers to resolve such issues, as they arise.

Complicated procedural issues may, sometimes,

necessitate changes in the prescribed procedure.

With a view to creating an institutional mechanism

for this purpose, I propose to constitute a Grievance

Redressal Committee, comprising all the concerned

senior Government functionaries and representative

of trade bodies, to undertake such redress

exercises periodically.

Financial relief in identified sectors:

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139. The Government has been continuing with

its employee friendly policy, as has been amply

exhibited so far. We shall continue to do so in future

as well.

140. The present rate of remuneration, payable to

the teachers, engaged under the ‘Rehbar-e-Talim

scheme’, is rupees 1,500 per month. After the

expiry of two years, they are paid rupees 2,000 per

month. These teachers are rendering valuable

services to the society in the field of education. In

recognition of their valuable services, I propose to

enhance their remuneration to a uniform level of

rupees 3,000 per month from the next financial

year.

141. ‘Nambardars’ and ‘Chowkidars’ are being

paid a monthly remuneration of ì 501 per month and

ì 500 per month, respectively. These rates have

been in operation since 1.4.2007. In recognition of

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the services, which they have been rendering to the

society, I propose to increase their remuneration to

ì 751 and ì 750 per month, respectively, from the

next financial year.

Conclusion:

142. Consolidation of peace always opens up

ways to progress and prosperity for the people. The

current year has amply proved this. Now is the time

for the people of the state to reap the dividends of

peace, as has been stated by our honourable Chief

Minister, Janab Omar Abdullah Saheb. It is our duty

to nurture the present climate of peace and

momentum towards growth. Let us join together in

this effort, regardless of our political ideology and

irrespective of our assigned roles in this August

House.

143. With these submissions, I commend the

Annual Budget 2012-13 to this August House.

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