SANJAY THAPA
The abrogation of Article 370 in J&K has led to a fiscal quandary, now that the state of J&K has been reorganised as a Union Territories of J&K and Ladakh, the financial resources of the new UTs will now have to be borne by the Centre. This apart, the assets and liabilities of the two successor UTs will have to apportioned within twelve months by the centre.
Sources in the Finance Ministry on query did not reveal any proposal in this direction as sources said:”…We still do not know.” The bill for the Abrogation of Article 370 was passed in Rajya Sabha on 5th August and next day in Lok Sabha.
NK Singh , Chairman of the fifteenth Finance Commission has already ruled out considering UTs with legislatures into divisible tax pools. Last month UT with legislatures like Delhi and Pounduchery has drawn attention of the Finance Commission chairman NK SIngh to include them in the list of the divisible tax pool. The J&K Reorganisation BIll 2019, ( a copy of which is with the author) clearly spells out that ”the award made by the fourteenth Finance Commission to the existing state of Jammu & Kashmir shall be apportioned between the succesor Union Territories by the central government on the basis of population and other parameters.” It further says that ‘..”apportionment of the assets and liabilities of the existing state of Jammu & Kashmir …between the successor union territories of J&K and Ladakh shall be done on the recommendations made by the committee constituted by the Central Government and shall be completed within twelve months..”
The fourteenth Finance Commission — whose term is to end by March 2020 — the J&K state share of central taxes stood at the highest at 0.8 per cent in FY 2016 up from 0.5 per cent in the previous year. But now with the abrogation of Article 370, the state not only loses its special category status but also the devolution to the state from the central divisible pool would have to be reworked.
J&K being a revenue deficit state had the highest allocation, but now after the bifurcation of state into two union territories, the fifteenth Finance Commission will have to devolve revenue share from central divisible tax pool from 28 states instead of 29 states till this far.
