Vol. 1, Issue 2, Part D (2015)

One of the important clues to understand development issues in Jammu & Kashmir is the state’s revenue generation and expenditure pattern, which also provides valuable insights into the acute ‘dependency syndrome’ faced by the state. Low own tax revenue-GSDP ratio is the main characteristic of the fiscal scenario of Jammu & Kashmir. The absence of the private sector due to infrastructural bottle necks and security problems has meant a low tax base and the burden of generating economic activity has to be borne almost exclusively by the public sector. Excessive and prolonged dependence on central assistance has led to a complacent attitude towards resource generation, fiscal responsibility and accountability. The present study deals with the structural deficiencies of J&K state finances and attempts to understand the reasons for these features which underlie the fiscal stress in the state of Jammu & Kashmir.