GAUTAM NAVLAKHA

T

he 328-page Economic Survey (ES) 2006-07 for Jammu and Kashmir (J and K) looks at the state’s economy from the point of view of the “need for a reformist long-term development strategy – to raise growth, increase employment, reduce poverty, and improve factor use efficiency. In J and K, however, a long-term strategy is also needed to ensure conflict resolution and prevention, and peace through economic reconstruction” (ES, p 1).

The survey lists several benefits of “building economic bridges between Pakistan and India, and between the parts of Kashmir”. Firstly it “could help build peace constituencies that are sorely lacking during this time of bad relations”. This in turn will “give Kashmiris a greater sense that peace is possible”. And the creation of economic institutions would be a “step toward the kind of practical and honourable arrangements that most people believe are essential for a lasting Kashmir settlement”. The report also asserts that “this kind of initiative could help persuade Pakistan that its stake in Kashmir has been recognised”. Thus, by generating youth employment and opening the J and K economy there is a move to promote enthusiasm for the government project of “peace through reconstruction”.

The gross state domestic product (GSDP) of Jammu and Kashmir, at constant prices, grew from 1.83 per cent in 2000-01 to an estimated 5.52 per cent in 2004-05 and averaged 5.27 per cent overall between the two years. This is less than the average of 6.6 per cent of the all-India GDP during the same period. But it does reveal that economic activities picked up in recent years.

Economic and Political Weekly October 6, 2007

factors underlying for this massive change need a detailed study” since “no authentic and reliable data on BPL population is available for the state of J and K”.

According to the 2001 Census, there are 15,92,000 cultivators and 2,46,000 agricultural workers in J and K. They form 49 per cent of the total workforce of 3.73 million. The average landholding size is

As against farm production, horticulture is spread over 2,67,000 ha in 2005-06. Of this 1,74,000 ha are under fresh fruits and 93,000 ha under dry fruits. Fruit production has increased from 1.33 million tonnes in 2004-05 to 1.42 million tonnes in 2005-06 (ES, p 54). Export of fruits, however, declined from 8,24,000 tonnes in 2004-05 to 7,68,000 tonnes in 2005-06. The reason for the decline in exports is mainly on account of “C” grade apples being “procured at a support price of Rs 5 per kg for processing into juice concentrates in the locally established juice processing units” (p 55). Beginning in 1997-98, the development of fruit and vegetable markets has also picked up. So far out of 19 such centres envisaged, four are functional and another four are under construction. This does suggest that policymakers have become mindful of the need to augment the growth of agricultural produce and its marketability.

According to horticulture department information cited in the survey (p 60), two million people are directly or indirectly employed in this sector. The ES points out that apple production “provides 77 per cent higher mandays of employment (95 per cent higher in case of paid workers and 71 per cent in case of family workers) as compared to the cultivation of agricultural crops” (p 60). Because agriculture and horticulture continue to provide employment for nearly 70 per cent of the population in agriculture and allied activities, the question of land becomes important.

On November 19, 2006, J and K chief minister, Ghulam Nabi Azad, said that two million kanal or 2,50,000 acres of state land had been encroached, whose market value was, according to him, Rs 25,000 crore. While this encroached land has been regularised through the land order promulgated on December 31, 2006 at a fraction of its market value (now estimated to fetch less than Rs 500 crore) there is nothing in the ES on this issue either by way of calculating the loss to the state exchequer or the gains to be made from its regularisation. Similar is the silence on the occupation of productive land by security forces. With more than six lakh security forces present, according to the former deputy chief minister on the floor of the assembly on August 1, 2006, their demands for land for camps, training fields, shooting range, etc, would be substantial. The opposition to this is widespread.1

Even otherwise, large deployment has an impact on economic activities as all movement to and from the village to fields, markets and towns are affected.Were this land to be freed of occupation, which is accompanied by encumbrances placed on mobility, it would contribute immensely to increasing agricultural/fruit production and generation of revenue and reduce net outflow from J and K. While this is not dis cu ssed, land figures in another way in the ES.

The law in J and K restricts ownership of land by non-state subjects. The ES claims that “(a)ccording to one estimate, 30 per cent of the state’s population is directly or indirectly connected with this activity (tourism) subscribing 16 per cent of the state’s domestic product” (ES, p 98). This remains a bald statement without corroboration. Indeed The Hindustan Times (September 12, 2006) cites the head of department of economics, Kashmir University as saying that “hardly 4 per cent of the population depend on tourism directly or indirectly”.

Tourism as Solution?

However, the head of the Working Group on Economic Reconstruction, C Rangarajan,

MAHANIRBAN CALCUTTA RESEARCH GROUP

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A Research Associate (Consolidated Pay Rs. 13,000 per month) for a period of one year (extendable to second year). The candidate should have an M. A./M.Phil. degree with suitable publications. The age should be below 30 years. The applicant with working experience of at least two years in the field of social sciences and humanities will be preferred. Candidates with proficiency in English, readiness to do field work and having interest in any of the themes of citizenship, forced migration, gender rights, human rights, law and justice, peace studies, autonomy, globalisation, and development studies will be preferred.

Detailed applications along with two recommendation letters may be sent by post or by e-mail to the Director, Mahanirban Calcutta Research Group, GC-45, Sector - III, First Floor, Salt Lake, Kolkata - 700106 (e-mail: chatterji@mcrg.ac.in, Phone: +91-33-2337-0408 & Fax: 91-332337-1523). No TA/DA will be available for outstation candidates. Applicants are also advised to consult MCRG website -www.mcrg.ac.in. Candidates may contact MCRG for any further clarification. Last date of receiving applications is 30 November 2007.

Economic and Political Weekly October 6, 2007 is of the opinion that “tourism is the backbone of the state economy, and for making the tourism sector more sound, the state government has to clear its policy on land-lease”. According to him “(o)n these issues including land-lease provision should be made to invite outside investors interested in the tourism sector” (Economic Times, December 2, 2006). Guided by this understanding, of tourism as the “backbone”, the J and K government passed a cabinet order on land-lease dated October 23, 2006. Under clause 2 of this order, state land was going to be allotted to any outsider with the mere approval of the administrative secretary to the government (tourism) as the prescribing authority. The area thus affected was a mere 550 kanals of virgin meadow in Dobhi Ghat in Gulmarg. But its implications were far wider given that this would have set the precedent for transferring other scenic spots. Because of public protest including by the Kashmir Chamber of Commerce and Industry (KCCI) which claimed that leasing of Gulmarg, Sonmarg and Pahalgam to outside investors as being akin to “Selling of Kashmir”, the government had to back down. Interestingly, the KCCI claim that there are huge local deposits in banks to finance 14 tourist spots (The Times of India, May 3, 2006). Aggregate deposits of Rs 19,052 crore in June 2006 tend to lend weight to this claim (ES, p 235). It is also worth noting that the credit-deposit ratio in J and K of 44.48 per cent is less than 71.63 per cent for the country. In fact, per capita credit disbursed in J and K at Rs 7,327 is nearly half that of all-India average of Rs 13,769 (ES, p 29).

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Fiscal Constraints

In Chapter 12 the ES notes that “the weakness of J and K state finances arises not from lower revenues but higher expenditures” (p 230). The ratio of revenue expenditure to the GSDP of J and K at

39.2 per cent is more than twice that for the all-state average of 17.4 per cent, although only marginally higher than the north-eastern states, where it is 38.8 per cent, as computed by the Twelfth Finance Commission. And J and K’s revenue covers only 25 per cent of its expenditure. The ratio of central transfers to total revenues which, at 78.6 per cent for J and K, is twice that for all states at 38.5 per cent, compares with the 67.6 per cent for the north-east. But J and K’s debt to GSDP ratio is higher than others and has been 50 per cent to start with. Thus, more than 50 per cent of J and K’s own revenue goes towards servicing debt.

However, despite

low own revenues, the public expenditure level of J and K, at 51.4 per cent in contrast to 20.2 per cent for all states is higher than that for all states as a percentage of GSDP and on a per capita basis, the capital expenditure in J and K of Rs 2,285 is more than thrice the all-state average of Rs 626, albeit marginally higher than for the north-east which is Rs 1,924. If revenue expenditure is included then J and K’s total expenditure of Rs 9,661 is not very different from that for the north-east (Rs 8,637). But it is nearly thrice the all-India average of Rs 3,969. And yet, these higher public expenditures in J and K have not translated into growth mainly for two reasons. The first reason is the higher unit cost of service delivery – the cost of providing schooling to a child or the cost of providing healthcare to person are typically higher than the all-India average because of sparse population density, difficult terrain, poor connectivity and a host of other causes. The second reason is that the beneficial impact of public expenditure spills over beyond J and K as much of the contractors payments are transferred to and purchases are made beyond the state – a phenomenon referred to as ‘missing multiplier’ (p 232).

This is as clear an admission as one will get about the limited impact of public expenditure.

Economic and Political Weekly

available at

Economic and Political Weekly October 6, 2007

The ES also advocates a “moratorium on filling vacant posts” (p 171). But the government, going by the introduction of “employment intensive growth” in its budget 2007-08, is moving to fill vacancies running at 23,000. In addition the state government has plans to increase the size of the armed police force to nearly 1,00,000. In any case, recruitment for five battalions of the India Reserve Batallion (these are raised by respective states but fully financed by the central government) and five battalions of J and K police means a further job creation for 11-12,000 youth. (In addition J and K has demanded another 15 battalions or 16,000 additional police posts.)

On December 11, 2005, barely a month after taking over as chief minister, Ghulam Nabi Azad claimed that 50 per cent of the 2,73,508 government employees “had no work to do”. If true then to enlarge government employment would add to the ranks of those who have little or no work to perform. Dependence on the centre to cover the revenue deficit is likely to go up. Of course it is being hoped that with an increasing number of tourists, transfer to J and K of the Dulhasti project, and the likely completion of the Baglihar project’s first phase by end 2007, J and K will raise its own revenue. But the additional burden of government salary and pension will more than wipe out any increase in revenue.

Summing Up

The ES for J and K does show how despite the disruptions and privations caused by war, economic performance has improved. Quite apart from sweeping statements about employment in horticulture and the importance of tourism, it does, however, skirt the fact that without addressing the issue of occupation of land by troops and restrictions placed on the use of water resources, both intricately linked to a political solution, problems will remain in the path of realising the full economic potential of the state. The opening of some sectors of economy such as tourism to the outside investor and promotion of unfettered tourism in the Himalayas can cause environmental degradation.2 All these steps will not reduce J and K’s dependence on New Delhi. The ES lists several reasons why J and K’s “vulner ability should be taken into account in programmes of assistance provided by the union government” and considers as “appro priate” a “relatively higher level of official assistance” (p 5). It pitches for a sensitive, environmentfriendly exploitation of non-renewable resources and wishes the government of India supports J and K “both with advice and finance”.

While improvement in economic performance and employment is welcome, these cannot replace the importance of a search for a democratic solution to the six-decade-old dispute which alone can restore the dignity of the people and bring about sustainable progress.

EPW

Email: gnavlakha@gmail.com

Notes

1 The People’s Democratic Party, led by Mufti Mohammed Saeed, in a resolution adopted on February 11, 2007 states “with distress…that over the last 15 years thousands of acres of orchards and agricultural land have been acquired in the state particularly in Kashmir Valley, districts of Rajouri, Poonch and Doda by the Armed Forces”. The resolution also says that “many institutional buildings including hospitals and schools have been occupied by the armed forces”. In 2003 a member of parliament, Abdul Rashid, was told in Rajya Sabha that the army and Central Para Military Forces (CPMF) have 41,594.767 acres (3,32,760 kanals) in J and K. This comes to about 170 sq kms for which records exist. But an equal amount, if not more, is under illegal occupation, according to The Economic Times (December 6, 2006). In 2006, it was reported that the army’s Northern Command has acquired 8,000 kanals in Awantipora. There have also been reports of Indian Air Force wanting land for a new air base in Manasbal and in the same area three Rashtriya Rifles (RR) has submitted a request to acquire nearly 1,500 kanals adjoining its garrison. Manasbal also highlights another feature of land occupation. Villagers complain that since the irrigation canal passes through land which the 3RR wants, irrigation will turn into an instrument of control.

2 See ‘Pilgrims Progress Causes Regression’, EPW, July 8, 2006. Furthermore, M N Koul, president of the Geomorphological Society of India is reported as saying, in response to the melting of the Amarnath shivalingam, that the effect of the 40 fold increase in the number of pilgrims between 1989 and 2006 and the presence of security forces in large numbers, “(t)ranslated into climatic terms, nearly 10,000 pilgrims on a daily basis, with +37 degree Celsius body temperatures are breathing out carbon dioxide and the heat trapping greenhouse gases, in and around the (Amarnath) cave, can be dangerous”, Indian Express, July 4, 2007.

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