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| Low investment returns, high liabilities: CAG sounds alarm on J&K finances | | | Early Times Report
Jammu, Apr 6: The Comptroller and Auditor General of India (CAG) has flagged concerns over the economic performance of the Union Territory of Jammu and Kashmir, noting that its per capita Gross State Domestic Product (GSDP) remained consistently below the national average between 2020 and 2025.
In its latest report on the UT’s finances, the CAG recommended that the government improve returns on public investments by enforcing a dividend policy for profit-making public sector undertakings (PSUs), while also considering disinvestment from non-performing entities. It further stressed the need for stronger monitoring of loans and advances to ensure financial discipline and accountability.
The report highlighted that the GSDP-to-GDP ratio of Jammu and Kashmir declined from 0.85 per cent in 2020-21 to 0.79 per cent in 2024-25, indicating a relative slowdown in economic contribution.
Revenue expenditure rose significantly from Rs 52,634 crore to Rs 70,472 crore during the period under review. A substantial portion—ranging between 68 and 76 per cent—was absorbed by committed expenditures such as interest payments, salaries, and pensions. Although the fiscal deficit registered a 24 per cent decline, capital expenditure remained subdued. In 2024-25, the UT government spent Rs 12,060 crore on capital projects, accounting for just 14.61 per cent of total expenditure. Notably, capital expenditure constituted only 20.34 per cent of total borrowings, suggesting that a large share of borrowed funds was used to meet existing liabilities rather than for asset creation.
The report also pointed to a sharp increase of 204 per cent in total liabilities between 2020 and 2025. Additionally, liabilities amounting to ₹82,050.51 crore from the erstwhile state of Jammu and Kashmir are yet to be apportioned between the two Union Territories. Un-discharged liabilities stood at 296.24 per cent of the fiscal deficit in 2024-25.
Returns on public investments were found to be modest. Against an investment of ₹4,031 crore in PSUs, the government received dividends of only ₹131 crore—equivalent to 3.25 per cent—during 2024-25.
The CAG advised the government to strengthen revenue mobilisation by improving tax compliance, enforcing a clear non-tax revenue policy—particularly in areas such as dividends, mining, and interest receipts—and periodically revising user charges and fees.
It also called for rationalisation of revenue expenditure and better targeting of subsidies, alongside measures to control interest payments to create fiscal space for developmental spending.
Emphasising the need for improved capital spending, the report recommended enhanced allocation to infrastructure sectors, avoidance of misclassification of expenditures, and ensuring that capital outlay keeps pace with economic growth.
The CAG further underscored the importance of fiscal transparency and efficient fund management, urging the government to route all financial transactions through designated accounts. |
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