Union Budget 2026 Wish-list: J&K Seeks Increased Central Assistance As Fund Crunch Hits Developmental Projects

The Jammu and Kashmir government has sought an increase in central assistance to ₹50,000 crore from the current ₹41,000 crore, citing a funding crunch that has stalled development projects across the Union Territory.

The reduction in central assistance to ₹41,000 crore last year triggered sharp political reactions, with several parties warning it would impede development. The government now hopes the Union Budget for the next financial year will restore and enhance the allocation.

Deputy Director (Budget) Shahnawaz Ahmed said the UT has requested over ₹50,000 crore in central support. “We have sought a step-up in assistance to meet rising development-related expenditure,” he said.

In his budget speech last year, Chief Minister Omar Abdullah said that while the UT’s own revenues from both tax and non-tax sides are estimated to be Rs 31,905 crore, in addition to that, Rs 41,000 crore is to “flow as central assistance.”

Jammu and Kashmir remains heavily dependent on central funding, much of which is used to pay salaries of employees recruited years ago. “The government’s fiscal stress arises from high committed expenditure, over 70 per cent of total spending, with salaries and pensions alone accounting for nearly 60 per cent of revenue expenditure,” said Omar Abdullah in his budget speech last year.

Limited funding from the Centre has also severely affected development works, leaving several projects stalled for years. In 2018, the government decided to prioritise the completion of long-pending projects, identifying many as ‘languishing’. It noted that numerous projects had remained unfinished for seven to eight years, making earlier investments largely wasteful and fuelling public dissatisfaction.

Former Minister, Hakim Yasin, says that in his constituency of Khansahab, there are several projects  that have been hanging fire and the work has not completed on them for the last  over 6 to 7 years. Listing out some of the incomplete projects, he says that the work was started on the Gujjar hostel some 7 to 8 years back, but it has also not been completed. Furthermore, he added, the “shop allotments in the fruit market were not made even as the work was started several years back.”

“The work on the mini stadium, on which Rs 8 to 9 crore was spent, is also not in use. People are suffering immensely due to the incomplete projects as work has dragged on for years together due to a shortage of funds,” he says.

Engineer-in-Chief Rajesh Kumar Gupta, however, said projects are undertaken only after budgetary approval. “All projects are taken up within approved allocations and after proper estimation,” he said.

Several projects of the Jal Shakti department have also been affected and classified as languishing.

Anbreena Anjum, Superintending Engineer in the Jal Shakti Department, said delays were caused not only by funding shortages but also by local disputes and a lack of manpower. She cited the construction of an overhead water tank in Srinagar, where work was slowed due to labour shortages. “Most of the workforce is hired from outside Jammu and Kashmir, making recruitment difficult,” she said.

Amid ongoing financial constraints, economists have urged the government to boost local production to strengthen the tax base. The challenge was acknowledged by Chief Minister Omar Abdullah in his last budget speech, where he said Jammu and Kashmir faced persistent fiscal stress due to high committed expenditure and limited revenue sources. “Our own tax and non-tax revenues account for just 30 per cent of revenue receipts and 25 per cent of overall budgetary requirements,” he said.

Sajad Ahmad Bhat, Assistant Professor of Economics at Kashmir University, said low revenue realisation stemmed from the UT’s heavy dependence on imports and weak local production. “Around 90 per cent of our consumption is met through imports. Producing locally would improve revenue mobilisation and expand the tax base,” he said. He also stressed the need for fiscal consolidation, adding that curbing wasteful government spending was essential to improving the region’s financial health.