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Economy

Govt announces Rs 1350 Cr financial package for J&K’s economic revival

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5% interest subvention, 50% waiver on  fixed charges of electricity, water tariff

BK News

Srinagar, Sept 19: Meeting his earlier commitment made with the business community, Lieutenant Governor, Manoj Kumar Sinha today announced a mega relief and revival package of Rs 1350 crore to help the J&K business sector to tide over their problems.

In a press conference at Srinagar, the Lt Governor announced a package of measures, both financial and non-financial, aimed at helping business and entrepreneurs.

Addressing the press conference, Lt Governor also stated that the first part of overall economic package came from Government of India in terms of Atma Nirbhar Bharat Abhiyan. He said that so far Rs 1400 crore has already been provided through JK Bank and other banks under this Abhiyan. He added that it has many components which seek to help business entities in multiple ways such as provision of liquidity and other financial supports. He said that many welfare measures such as free rations and support to the most needy were also being provided.

The Lt Governor said that the main component of today’s package is 5 % interest subvention to all borrowers irrespective of their sizes, which would cost about Rs 950 crore. The interest subvention will be available for six months in the current financial year and it will be a huge relief in the current scenario.

Lt Governor went on to say that government has also decided to provide 50 % waiver of fixed charges for one year with respect to electricity and water which would cost Rs 105 crore. He said that they have also decided to assist bus drivers/conductors, auto/taxi drivers etc who may have lost their livelihood by providing for an appropriate mechanism.

Further 50% or Rs 5.00 lakh subsidy whichever is lower shall provide to the transporters for replacement of old buses and the insurance premium shall be borne by the Government subject to a maximum of Rs 5000 per vehicle for Buses/Mini Buses, Rs 3000 for taxes/sumos and Rs 2000 for three-wheelers.

For Tourism Sector, subsidy for installation of Bio-digesters in the houseboats has been announced. Assistance shall also be extended out of ‘JK Relief Fund’ to some 19914 Shikara/House Boat owners/Tourist Guides/Pithuwalas/Dandiwalas/Sledge Walas/Pony/Camel Riders and cash assistance of Rs 1000 to all of them given from last 3 months shall be extended for further 06 months ending 31st December, 2020.

There are more than 3100 artists who have lost their livelihood during the pandemic. The artists accociated with the cultural academy shall be paid Rs 1000 per month out of ‘JK Relief Fund’ for a period of 09 months w.e.f 1st April, 2020.

The comprehensive ‘Business Revival Package’ also includes newly rolled out special Covid schemes like Guaranteed Emergency Credit Loan (GECL), Working Capital Demand Loan (WCDL) facility for Private Educational Institutions. J&K Business Support Loan Scheme for hotels and guest houses shall be rolled out on similar lines. Considering the loss suffered by the business community, there shall be extension of additional funding to all eligible borrowers for revival of their stalled business under Guaranteed emergency credit loan.

For agriculture sector, district level bankers committee shall be constituted to ensure loan coverage for agriculture and allied non-farm activities under Mudra loans. Meetings will be organised every month to overcome difficulties faced by the borrowers.

Moreover J&K Bank shall frame the customised “Help Tourism” scheme for financial assistance to persons associated with the Tourism Sector with attractive pricing and repayment features. All stakeholders shall be taken on board for any modifications.

As far as tax concessions are concerned, the filing of the GST reimbursement claims has also been extended till 31st December, 2020. Handholding to remove difficulties in filing returns and mechanism to avoid delays in reimbursement claims shall be instituted. The accumulated interest shall be converted into funded interest term loan.

A number of administrative measures for different economic sectors are part of this mega package to improve business environment. These are:

  1. Tourism
  2. Online renewal and registration system for transporters/hoteliers shall be put in place.
  3. Banks will extend every possible support to houseboat owners, tour & travel operators and shikarawalas and frame a customized scheme for their working capital requirements in consultation with the concerned associations.
  4. All renewals of Registration of Hotels, Restaurants and the like shall be done in a time-bound manner.
  5. Housing and Urban Development
  6. STPs of Srinagar will be completed in time bound manner providing relief to Hotels.
  7. Building permissions will be given in a time-bound manner within 3 months.
  8. Agriculture/Horticulture and allied sectors
  9. Farmer Producer Organisations will be increased with market linkages.
  10. Transport
  11. Suitable space for passenger taxi and auto stands will be provided to avoid traffic congestion.
  12. Handloom and Handicraft:
  13. Handicraft Cluster centres will be set up in specified zones.
  14. Handloom parks will be created in J&K and possibilities for the development of handloom parks outside J&K will be explored.
  15. Registration of Instruments will be done by the Revenue Department on daily basis, and not more than 07 days.
  16. Focus Groups
  17. Special desk shall be created to address youth and women entrepreneurs in the J&K Bank. The facility shall be put in place by the J&K Bank by 1st of October, 2020.
  18. Exclusive market space will be created for women entrepreneurs.
  19. Creation of Portal for unemployed Youth- A one-stop solution with a tie-up with employment portals and employers on the same platform will be done.
  20. Renewal of registration of Schools will be done in a time-bound manner and affiliation process with the CBSE board shall be eased out to have more CBSE school registrations.
  21. Frequent national and international events shall be organised by the Youth Service and Sports Department to have wider participation. High-end events will encourage tourism sector and improve the economy of the UT.

In addition to financial package and administration measures, the government has also constituted few committees to look deep into the issues of traders’ community and resolve them as per the current needs and their demands. These include:

  1. A committee headed by Administrative Secretary I&C Department with a representative of the Finance Department will propose the issuance of a simplified negative list for industrial incentives within 03 months.
  2. A Committee shall be constituted for settlement of Bank, Finance and Industry issues with association representatives as members to be chaired by Finance Department.
  3. Constitution of committees in each Province/District involving members of the business associations to address their issues which shall meet every month at the district level and every two months at the provincial level to settle issues of the business community. The committees shall have representatives from I&C/Finance/Banks as its members.

Advisor to Lt Governor, KK Sharma; Chief Secretary, BVR Subrahmanyam; Financial Commissioner, Arun Kumar Mehta; Principal Secretary PDD & Information, Rohit Kansal; Principal Secretary to Lt Governor, Nitishwar Kumar; Principal Secretary, Industries & Commerce, MK Dwivedi and Director Information & Public Relations, Dr Syed Sehrish Asgar were also present at the press conference.

Economy

Omicron, economy and budget deficits

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Omicron economy budget deficits

Dr BinishQadri

The World Health Organization on November 26, 2021, labelled variant B.1.1.529 a variant of great alarm, named Omicron, on the advice of WHO’s Technical Advisory on Virus Evolution (TAG-VE). Extensive evidence was presented to this advisory that Omicron has several mutations affecting its behaviour.

Research is coming up at different levels to get hold of different aspects of Omicron in a better way.  There is much ambiguity about whether there is more transmission in Omicron as compared to other variants, including the Delta variant. South Africa has seen the number of people testing positive increasing as a result of this variant. Many epidemiologic studies are in progress that aims at knowing if the positive cases are rising because of Omicron or some other factors.

One of the biggest aims of economies is resource allocation involving a balance between our priorities and competing needs so as to get the most suitable economic action. Any fiscal policy demands a judicious attitude in pursuing the goal of resource allocation and distribution. Fiscal discipline should reduce fluctuations in income, output, and employment.

Whether it is omicron or anything else the fact is that all facets of the current pandemic have in one way or the other way affected economies of the world in general and underdeveloped in particular. It is very important to correct all economic and social odds.

Fiscal indiscipline is an important characteristic related to all shocks of all times and COVID19 is no exception. Fiscal indiscipline implies that our governments are not maintaining good fiscal positions that coincide with macroeconomic stability and economic growth that is all-inclusive and sustained. Borrowing in large numbers and amassing debt like anything are enemies of every economy. The dual actions are responsible for the creation of fiscal crunches. To achieve the target of Fiscal discipline it is necessary for governments to maintain fiscal positions that are consistent with macroeconomic stability and economic growth that is sustained by letter and spirit. In order to create and maintain fiscal etiquette, there should be an avoidance of debt accumulation and excessive borrowing.

One of the biggest aims of economies is resource allocation involving a balance between our priorities and competing needs so as to get the most suitable economic action. Any fiscal policy demands a judicious attitude in pursuing the goal of resource allocation and distribution. Fiscal discipline should reduce fluctuations in income, output, and employment. COVID19 and all its variants no doubt have generated fiscal indiscipline which is why all governments should be prudent to create ‘‘budgetary beanbags’’ to combat all shocks and disturbances and to deal with anticipated economic and fiscal burdens.

Economists surveyed by Reuters argue that economies should emphasize fiscal judiciousness as there is a declining trend in the Indian economy. Lead Economist at Emkay Global Financial Services, Madhavi Arora argues that Omicron and the allied bad repercussions have a short end and is in no way a long-lasting wave.

A fiscal deficit connotes a gap in a government’s income compared with its spending thereby meaning that there is a fiscal dearth in the government spending beyond its means. There is a dip in the fiscal deficit from 135.1% in the April-November period of the previous financial year to 46.2% in the current financial year. There is a need for fiscal consolidation and all the fiscal policies carried out by the government at all levels must aim at reducing their deficits and debt stock build-up.

In order to understand Omicron and its impact on the Indian economy and other emerging markets, planners need to Google and start thinking about consolidating their budget deficits post COVID19 years. They need to include a series of fiscal responsibility laws, fiscal guidelines, and fiscal assistance (dynamic organizations in particular).

The strategy and implementation policy, alongside economic (fiscal) and political commitment are necessary and sufficient conditions for the effective strengthening of fiscal discipline during shocks.

Dr Binish Qadri is an assistant professor at the Department of Economics, University of Kashmir. You can reach her at [email protected]

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Economy

UAE delegation announces establishment of Kashmir Business Centre in Dubai: KCCI

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Kashmir Business Centre in Dubai

Malik Nisar

Srinagar: To facilitate J&K-based startups and entrepreneurs in Gulf countries for opening their operations, the UAE-based visiting business delegation has announced to open Kashmir Business Centre in Dubai, Kashmir Chamber of Commerce and Industries (KCCI) said in a press conference on Tuesday.

A 30-member UAE business delegation is on a four-day official visit to Jammu and Kashmir to explore the investment opportunities in the region.
President, KCCI, Sheikh Ashiq said during an interaction meeting with the local business community, the UAE-based delegation announced that a Kashmir Business Centre will be set up in Dubai for providing support to J&K-based entrepreneurs and connecting them to the relevant people there.
Ashiq said, KCCI not only welcomes the announcement but with the consent of the government will try its best that it materialises. He said the centre will also prove fruitful for a large number of youth, who go there in search of jobs.
Secretary General of KCCI, Farooq Amin, added that the business centre will provide an opportunity to young entrepreneurs who want to explore their new ideas but do not find them viable here. He said these new entrepreneurs will get the chance to explore their innovative ideas in the global market. The business centre will be more kind of an incubation facility, he added.
Amin said some of these youngsters have already presented their business ideas in the meeting and received applause from the UAE delegation. They will now directly contact these young entrepreneurs and will invest in their business.
Sheikh Ashiq said they are also mulling to send a J&K business delegation comprising of all the sectors to UAE for exploring the market for various kinds of produce and handicrafts there.
While welcoming the delegation for their investment proposals in J&K, KCCI hoped that local businessmen will be also included in their plans.
Ashiq said the delegation will also prove beneficial for the tourism promotion of the region as they will spread the word about the beauty and culture of Kashmir.
“We also told them that we need more international connectivity and we want global market should open for our people. Through these initiatives the unemployment rate can be brought down,” Ashiq said.

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Economy

Editorial | Ambitious Budget

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Ambitious Budget

Ambitious Budget | This week Union Finance Minister Nirmala Sitharaman presented the third consecutive annual budget of J&K in the Lok Sabha. The J&K Budget is required to be passed in the Indian Parliament as the newly formed Union Territory continues to be under the President’s rule and due to the absence of the Legislative Assembly in Jammu and Kashmir.

The finance minister presented an outlay of about Rs 1.13 lakh crore for the J&K Budget 2022-23. The budget has seen an increase of about Rs 4500 crore from the budget estimate of the financial year 2021-22. However, the revised estimate for 2021-22 shows an increase of Rs 10,000 crore.

As per the revised estimates for 2021-22, there has been a huge shortfall of estimated tax collection and other resource generation, which has proven a big handicap for the J&K Government in fulfilling its development targets.

In this year’s budget presentation, like the previous one, the focus has been put on the capital expenditure – the portion of the estimate spent on asset creation and infrastructure building, which is a positive development. However, the biggest challenge, as witnessed in the previous years, is that despite allocating funds in the budget for various sectors and projects for development works, there is either lack of resources or the inability of different departments to spend the allocations.

Take the example of Jal Shakti or the Public Health Engineering Department. In the budget of 2021-22 highest capital expenditure of Rs 6346 crore was allocated to Jal Shakti, which was more than a 400% increase. But the revised estimate presented by the Union FM shows that only Rs 2107 crore were spent, which indicates either lack of resources or an inability of the department to undertake the development works. However, a deeper analysis of the budget documents and other publicly available information suggests that both the unavailability of funds and the incapability of the administration to spend are the reasons behind it. The same is the case with many other government departments.

The revenue receipts were short of almost Rs 13,000 crore as per the budget estimate of 2021-22. Similarly, the fiscal deficit during the same period rose to Rs 16,456 against the target of Rs 10,647. The debt to GDP ratio has increased to 53% as compared to 46% in the financial year 2020-21.

As per the revised estimates for 2021-22, there has been a huge shortfall of estimated tax collection and other resource generation, which has proven a big handicap for the J&K Government in fulfilling its development targets. The revenue receipts were short of almost Rs 13,000 crore as per the budget estimate of 2021-22. Similarly, the fiscal deficit during the same period rose to Rs 16,456 against the target of Rs 10,647. The debt to GDP ratio has increased to 53% as compared to 46% in the financial year 2020-21.

The J&K Budget 2022-23 has set an ambitious target of asset creation and infrastructure development in the UT. If there are no unspent budget allocations and all these targets are completed, J&K will witness remarkable changes in the development front.

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