The proposed bifurcation of Jammu & Kashmir into two union territories could stretch Centre’s finances, but if political stability is achieved, the volatile economy could be stabilised.
The states’ GSDP was Rs 1.6 trillion in 2018-19, and it grew 6.8% in 2017-18. But it had witnessed contraction and high growth in FY15 and FY16. Inflation was near the national average at 3.74% in June 2019. Its Budget size of Rs 88,911 crore is more than 50% of its GSDP. J&K’s fiscal deficit has moved erratically in recent years, from 2% of GSDP in 2017-18, to 12.3% in 2018-19. The FY20 projection is about 8%.