J&K’s Budget for 2025–26 provides an important window into the region’s fiscal stance and the broader dynamics of economic governance. On the face of it, the macro-fiscal aggregates suggest relative stability. There is an estimated Gross State Domestic Product (GSDP) of ₹2.88 lakh crore, a revenue surplus of ₹10,826 crore. However, the fiscal deficit warrants careful interpretation. While the Budget Analysis places the deficit at 5.6% of GSDP, the Budget Speech reports a substantially lower estimate of approximately 3.0%. This gap indicates differing interpretations of deficit components, and therefore the fiscal position should be understood with these methodological variations in mind.

Yet under this apparent discipline lies a structural imbalance. We witness a public finance model heavily sustained by central grants and deeply constrained by the rising cost of governance.

A Budget of Two Natures

The budgeted net expenditure for 2025–26 stands at around ₹1,06,641 crore. Of this, ₹79,703 crore, which accounts for roughly 75%, is allocated to revenue expenditure. These are funds that cover the day-to-day running of government machinery: salaries, pensions, interest payments, subsidies, and upkeep. Only ₹26,836 crore (approx.) is dedicated to capital outlay, which includes investments in infrastructure, social services, and public assets. The tilt toward revenue expenditure persists under the post-Article 370 UT administration, even as fiscal autonomy remains limited.

According to data from PRS Legislative Research, committed expenditure in the form of salaries (₹23,894 crore), pensions (₹15,300 crore), and interest payments (₹11,518 crore) totals ₹50,712 crore. This is about 56% of the J&K’s total revenue receipts. In plain terms, more than half of J&K’s total revenue receipts are consumed before a single rupee is spent on development.

The Central Lifeline

A key feature of J&K’s budget is the overwhelming role of........

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