| J&K still heavily reliant on Central grants, CAG warns of fiscal strain | | | Early Times Report
Jammu, Apr 5: The Comptroller and Auditor General of India has flagged continued dependence of Jammu and Kashmir on central grants despite modest gains in its own revenue, raising concerns over the Union Territory’s long-term fiscal sustainability.
In its report on the finances of Jammu and Kashmir for 2024–25, the CAG highlighted rising liabilities, high revenue expenditure, limited capital spending, and delays in financial reporting as key stress indicators for the UT’s economy.
Although the UT has shown some improvement in its own revenue performance, its reliance on grants-in-aid from the Government of India remains significantly high compared to other states and Union Territories.
The report noted that out of the total expenditure of Rs 82,547.28 crore, revenue expenditure accounted for 85.37 per cent. A substantial portion of this was absorbed by committed expenditure and subsidies, which together constituted 68.39 per cent of revenue expenditure and 58.39 per cent of total expenditure, leaving limited fiscal space for developmental and capital investments.
Capital expenditure also remained below budgeted estimates, indicating constraints in infrastructure creation and long-term asset building.
The CAG further observed that the UT failed to keep its fiscal deficit within the targets set in the budget. Outstanding liabilities rose from 8.87 per cent of GSDP in 2020–21 to 17.21 per cent in 2024–25. When liabilities of the erstwhile state are included, the figure escalates to 48.47 per cent of GSDP, excluding off-budget borrowings of Rs 23,197.08 crore.
“Besides, the UT government also carried forward undischarged liabilities in respect of the Guarantee Redemption Fund, interest liabilities, Consolidated Sinking Fund, pension fund, etc., to the tune of Rs 934.02 crore, accounting for 1.13 per cent of total expenditure during FY 2024–25,” the report stated.
Despite some improvement in revenue mobilisation, the growth in the UT’s own tax revenue remained modest at 2.5 per cent, while overall revenue receipts increased by 6.12 per cent, largely driven by higher central grants.
The report provides a comprehensive assessment of the UT’s fiscal position, examining revenue and expenditure trends, debt levels, borrowing patterns, and compliance with fiscal responsibility norms, while also benchmarking performance against key fiscal indicators.
The UT’s economy recorded moderate growth during 2024–25, with GSDP expanding by 11.18 per cent over the previous year. However, its share in India’s GDP declined to 0.79 per cent from 0.85 per cent in 2020–21.
The CAG also flagged financial irregularities and compliance issues. It noted large-scale excess expenditure under one revenue-charged section and overall savings across all 36 grants. The excess expenditure for 2024–25 and previous years, including that of the erstwhile state, requires regularisation by the legislature.
Delays in financial reporting were also highlighted, with 1,395 utilisation certificates worth Rs 4,105.08 crore pending submission.
Outstanding Abstract Contingent (AC) bills stood at 3,068 cases amounting to Rs 15,607.21 crore as of March 31, 2025, compared to 3,451 bills worth Rs 25,127.97 crore a year earlier.
Additionally, 28 accounts related to eight autonomous bodies remained pending as of March 2025.
The report also raised concerns over transparency in financial classification. During 2024–25, Rs 1,941.43 crore—2.35 per cent of total revenue and capital expenditure—was booked under the ambiguous Minor Head 800. Of this, Rs 49.15 crore across five major heads was classified under “Other Expenditure” despite the availability of appropriate heads.
The findings underline persistent structural challenges in Jammu and Kashmir’s fiscal management, even as incremental improvements in revenue generation have been recorded. |
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