The situation in Jammu and Kashmir is far from normal and the Centre is trying all it can to control the situation.
Now an analysis done by The Hindu of government finances shows that for 16 years between 2000 and 2016, Jammu and Kashmir received 10 per cent of all Central grants given to states.
This is noteworthy because the state, which has a population of just 12.55 million according to the 2011 Census, or approximately one per cent of India’s total, received a very high proportion of the funds.
But why? According to experts, the state’s ‘special category’ makes it eligible for such high assistance.
Tapas Sen, a professor at the National Institute of Public Finance and Policy (NIPFP), told The Hindu:
“In general, the special category states get a higher share of central grants, and Jammu and Kashmir being one of them will also get such treatment. But even among them, Jammu and Kashmir is getting a higher share due to its disturbed status and its border with Pakistan.”
This is noteworthy because India’s most populous state, Uttar Pradesh, got just 8.2 per cent of Central grants in the same period which translates to Rs.4,300 per person. J&K, on the other hand, received Rs.1.14 lakh crore in grants.
But there are at least two other reasons why J&K gets more funds.
One is that there is no Service Tax in Jammu and Kashmir and hence does not get a share of the same from Central repository.
“Since not and hence the state does not get a share of the same in the devolution of central taxes to states,” Ranen Banerjee, Leader – Public Finance and Economics at PwC India said adding that this has led to the Centre sending more money to finance this deficit.
The second is that hilly states and north-east states get Plan Grants unlike others.
Yet the Comptroller and Auditor General (CAG) raised flags over “serious financial irregularities” in J&K.
“There were persistent errors in budgeting, savings, excess expenditure and expenditure without provision,” CAG commented on J&K’s finances for the year ended March 31, 2014. “Anticipated savings were either not surrendered or surrendered at the end of the year leaving no scope for utilising these funds for other development purposes.”