“ There is nothing new in world except the history you do not know.” – Harry Truman

Junaid sees a deja vu in Chief Minister’s new claims

(Mr. Junaid Azim Mattu, 26, was born in Srinagar. He partly completed his schooling at the Burn Hall School, Srinagar, and partly at the Bishop Cotton School, Shimla. He attended college in America and graduated with a degree in Business and Finance from the Eli Broad School of Business at Michigan State University. He is a consulting financial analyst and telecom-IT entrepreneur based in Srinagar. A seeded national varsity debater throughout his school and college career (his grandfather – Khwaja Ghulam Ahmed Ashai – was one of the founding fathers of the Muslim/National Conference), Mr. Mattu also played under-19 cricket at national level for J&K. He is a founder of the World Kashmiri Students Association (WKSA), a global youth association for Kashmiris based in Srinagar, Kashmir, working on social, economic and political issues through constructive and informed activism. WKSA, as of today has 1,700+ registered members in Kashmir. He is also a nominated alumnus of the Global Young Leaders Conference. He is also the Srinagar District President of J&K Peoples’ Conference, led by Mr. Sajad Lone. In his leisure time, Junaid likes to engage in reading, gardening, watching movies and listening to music.)

80,000 More Government Jobs. HOW?

The salary and wage bill for the J&K Government is around 16,000 crores. The State’s total revenue is around 6,500 crores. So what our State has to pay in salaries, wages and pensions to its employees is 246% of what it earns in taxes and other forms of revenue. Our Revenue Expenditure rose by a whopping 27% in 2012, while there was a marginal increase in Revenue Collection. J&K with about a 5% fiscal deficit has the third highest fiscal deficit in India, after Manipur (8.24%) and Pondicherry (7%). In terms of the amount of fiscal deficit, J&K’s fiscal deficit is incomparable and staggering. However, with around 8 Billion USD grants from the Center, the fiscal deficit isn’t a relevant reflection. Out of 28 Indian States, J&K’s Economy is ranked 8th from the bottom, followed by Goa, Tripura, Meghalaya, Nagaland, Manipur, Arunachal Pradesh, Mizoram and Sikkim. The Economic Survey of India Report (2011-2012) shows an increase of Rs 2,548 crore in our fiscal deficit from a back-breaking Rs 28,724 crore in 2009-10 to Rs 31,272 crore during 2010-11. Twenty-percent of J&K’s population lives below the poverty line – which means that every fifth individual of this State lives below the BPL. Around 26% of our Rural Population and around 8% of our Urban Population falls below the poverty line – which in itself is an unrealistic measure of economic welfare to start with.

We have quite frequently heard the ridiculous, ironic declarations of “Zero Deficit Budgets”. For a State that pays 16,000 crores in salaries to its employees and has a total revenue of around 6,500 crores – a “Zero Deficit” Budget is a crafty accounting trick – nothing more. And successive governments have resorted to this accounting trick without any inhibition. The overdraft available to the J&K Government from the Jammu & Kashmir Bank was increased from the limit of Rs. 2,965 crores to a limit of Rs. 4812 crores in 2010-2011 – all of which was fortunately discharged ending a monstrous financial liability for the State Government that had become a hallmark of its operations and “zero-deficit” budget trickery. The overdraft in 2010-2011 was liquidated by a collective Open Market Borrowing of around Rs. 1,300 crores. Unsurprisingly, this Market Borrowing of Rs. 1,300 crores isn’t considered by the State Government in estimating its total fiscal deficit.
J&K is buried under debt. Our State Government functions on grants by the Center. The State has witnessed an economically paralyzing political turmoil, agreed. However, successive State Governments are almost criminally guilty of poor economic planning and lack of a political will to steer J&K out of debt, dependence and destitution. Two liabilities for our State are gruesome, and for both – we have our traditional mainstream parties and their leaders to blame – including the present dispensation. One – the money we have to pay to purchase power from the national grid. Two – the staggering salary, wage and pension bill that we have. Both operating expenditures, collectively, leave little hope for the State to develop. Almost all of our own revenue and what we get as grants from Delhi is spend on operating expenditure, leaving little money for the desperately needed Capital Expenditures in the State – better roads, hospitals, schools, bridges, flyovers, universities and hydro-electric power projects. We are engulfed in a never-ending vicious circle of paying our bills by borrowing and begging money. But, will Delhi keep financing our operating and revenue expenditures limitlessly? Apparently and understandably – No! And this is not a presumption. The Central Government has on various occasions expressed serious displeasure at the State’s financial situation and its failure to control its rising revenue expenditures.

And NOW, lo and behold – our Chief Minister wants to add 80,000 more government employees to the list of the State’s vagaries. 80,000 additional government jobs could translate into an addition of around Rs. 2,500 to 4,000 crores to our revenue expenditure – which could potentially double our fiscal deficit. So, the question is pertinent – how does our Chief Minister plan on paying for 80,000 new government jobs? The CM cannot ask the tax-payers to bear the cost of this lunacy and here is why – the State Government in ads responding to the employees strike has stated that any increase in the State’s Salary Bill would result in an increased tax-burden on the State’s tax-payers. So, is it OK to put a burden on them NOW, now that elections are around the corner? The other option would be to ask the Center to bear the brunt of an additional 2,500 to 4,000 crores annually – and that too isn’t going to happen if one goes by the fact that even doles and grants don’t come from a bottomless coffer.

So – if the CM isn’t repeating the “Meter Nahi Heater” sloganeering of 2008 (which most probably is the case – in which case there is little to be worried for) – he needs to answer – where will the money to meet this additional, recurring liability come from? More taxes, more open-market borrowing or more grants from Delhi?