Srinagar, Feb 8: Salaries, pensions, interest payments, and power purchases consume a major portion of the Jammu and Kashmir government’s finances, sharply limiting fiscal flexibility in the 2026-27 budget and raising concerns over rising debt and long-term sustainability.
Official budget figures show that of the total outlay of Rs 1.13 lakh crore for 2026-27, salaries alone account for Rs 24,683 crore, followed by pension payments of Rs 15,777 crore. Together with interest and power purchases, these four non-discretionary heads total Rs 62,043 crore, or nearly 55 percent of the entire budget, leaving limited funds for development and welfare initiatives.
Officials said J&K’s fiscal stress is largely due to this heavy burden of fixed costs, particularly salaries, pensions, and debt servicing, which continue to crowd out resources for capital investment, infrastructure creation, and employment-oriented spending.
The pressure is further intensified by rising liabilities. Official finance data show that J&K’s total liabilities have steadily increased over the past decade, reaching Rs 1,37,067 crore in 2024-25 (pre-actual). The debt burden is estimated at 52 percent of the Gross State Domestic Product (GSDP).
Liabilities have surged from Rs 44,662 crore in 2013-14 to Rs 1.25 lakh crore in 2023-24, and further to Rs 1.37 lakh crore in 2024-25. Over the same period, GSDP at current prices grew from Rs 95,621 crore to Rs 2,62,358 crore, helping moderate the liabilities-to-GSDP ratio despite the rise in absolute debt.
In 2024-25, internal debt amounts to Rs 93,681 crore, forming the largest component of total liabilities. Loans and advances from the Centre have declined sharply to Rs 589 crore, bringing total public debt to Rs 94,270 crore. Other liabilities include insurance and pension fund obligations of Rs 1,400 crore, provident fund liabilities of Rs 26,430 crore, and other commitments of Rs 14,967 crore.
The liabilities-to-GSDP ratio, which remained below 50 percent between 2013-14 and 2018-19, peaked at 59 percent in 2020-21 before easing to 52 percent in 2024-25, indicating some stabilisation in recent years.
However, analysts caution that with internal debt now accounting for nearly 68 percent of total liabilities and central loans forming less than 1 percent, fiscal headroom for future budgets remains limited. Without structural reforms to rationalise salaries and pensions, curb power sector losses, and strengthen revenue mobilisation, the scope for development-led spending in J&K is expected to remain constrained in the coming years. (Agencies)
