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Open Space

How will we repay

Showkat Ali

The Jammu and Kashmir state government has initiated many developmental projects. The word development has been the mainstay of statements of all the state and union government spokesmen. Many very large and mega projects under way in the state will boost the infrastructure of the underdeveloped state. Mega projects in power, road and allied infrastructure areas have been taken up at a pace hitherto unknown. These projects are supposed to provide some of the much needed basic amenities to the State's people, who been deprived of, until now, at least, of seemingly mundane things like safe drinking water. These small but very important things are considered granted in the 21st century but Kashmir will need some time to arrive there. With the kind of under-developed and atrociously inadequate infrastructure in the State especially Kashmir valley, it is decades behind its sub-continental counterparts. Anyway, the works would have been and are welcome.

New Delhi has announced many economic packages for the state. From prime minister Narsimha Rao in early 90's to incumbent prime minister Manmohan Singh whoever has been at the helm of affairs at New Delhi announced economic packages. Mostly, these economic packages proved to be cosmetic. The major part of these packages was meant for schemes like railways, which many economists believe will not benefit the state subjects or the state economy. After congress came to power at New Delhi, prime minister Manmohan Singh's government created committees to look after different developmental schemes.

The Economic Reconstruction Agency was created to oversee all the major works in the State. The agency proposes and makes schemes, and negotiates with the lending institutions the capital component of the projects.

Notwithstanding, the packages announced by New Delhi, the major part of the capital component of the projects underway in Jammu and Kashmir, comes in the shape of loans from international financial institutions.

The financial institutions like Asian Development Bank are run in true business style, which are not used to leaving their pennies go into the drain. They will take every penny anybody owes them with interest. And there are no free lunches in the capitalist world. And we are not asking for any.

These loans usually come at an interest rate of around seven per cent that is way above what governments around the world pay for financial instruments. The United States pays around two per cent interest on treasury bonds. Commercial and business establishments may borrow at rates above 10 per cent but they invest in ventures which, earns direct profit. So when governments takeout loans on such exorbitant rates it is not a thing to shrug off - summarily.

Borrowings are a necessity in the present day world business and economic order. The question is how much and at what rate. Already the state is heavily indebted to international and Indian financial institutions. Loans are the major component of almost all the major projects - Mughal Road, Baghlihar power Project... The already indebted State government is seeking a 720 million dollar loan from the Asian Development Bank. The State economy, right now, is not what can be termed as vibrant. The state government is not able to pay an honourable salary to its employees. Without arranging the money first the government upgraded schools, announced creation of colleges, created new administrative districts besides promising moon to the gullible masses. However, the upgraded schools are without teachers, the newly announced colleges don't have classrooms, recently created districts have only district officers and no staff... So it resorted to ah hoc, contractual and Rehbar tactics, which is a blatant exploitation of the educated youth of the State.

But, that is another story.

The question is how the government is planning to repay the enormous borrowings it is incurring. It is not New Delhi's money what is spent on road widening and construction. It is no doles, nor do we ask for one. Whenever the government seeks or gets a loan it is trumpeted with chest thumping. However we have yet to hear a single repayment plan. If the government is unable to pay a reasonable salary, how will it repay principal amount or even interest component. Is the economy being driven into a morass of debt trap. People who ultimately are to pay deserve an answer. Please do.

(Showkat Ali is a Srinagar based political analyst. He can be mailed at ali@kashmirnewz.com)


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