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Open Space

Economical disparity in Kashmir

Balraj Puri

People of Jammu and Kashmir state felt a sense of great relief when the state government employees called off their strike following the announcement of the government to concede their demands.

It was a rare occasion when all employees unions joined together bridging the regional and religions divide that had bedevilled the state during a large part of the last year, during which the administration, too, had remained paralysed due to agitations and counter agitations. Kashmir valley had also remained under curfew during seven phase election which extended for two months. It will now take time and extra effort to clear the pending backlog.

Soon after the Omar Abdullah government was sworn in January last, the unions of employees threatened to go on strike if the recommendations of the sixth pay commission were not implemented. The Finance Minister, a seasoned politicians, accepted the demand in principle but as its treasury was empty, he could not give a definite data for its implementation. He would seek aid from the centre, he said, and as soon as he received the money, he would do the needful.

It did not satisfy the employees who insisted on a definite data for implementation of the assurance. They struck work twice. Third time, they suspended their strike, which they had threatened to continue indefinitely, after the government agreed to implement its assurance from July next. The employees will also get arrears from January 2006, which would be deposited in their provident fund.

The Finance Minister said that he had taken greatest risk of his life but hoped that Dr. Manmohan Singh who had always been very generous to the demands of the state would be helpful this time also.

The salary bill of employees from July onward would be Rs 1380 crores while the arrears will amount to whopping Rs 3800 crores. Against it, the stateís annual income from its own resources is Rs 3806 crores (budget of 2008-09). The treasury of the state is almost empty at the moment with Rs 500 crores bills pending for payment. When short of money, the state takes an overdraft from Jammu and Kashmir Bank, the limit of which is Rs 1500 crores. It has not only exhausted the limit but has also exceeded it by Rs 500 crores.

The largest component of the state expenditure is the salary bill of about 5 lakh employees which proportion to population is perhaps largest in the country. On the top of it, the National Conference in its election campaign had promised at least one job per family. Will there be so much work for these employees? And how would the state finance their salaries?

It by no sense means that J&K is the poorest state of India and scope for mobilisation of internal resources has been exhausted. The people below poverty line (BPL) are 3.5% as against national average of 26%. Renowned economist MS Swaminathan had predicted during his visit to the state in 2003 that soon people below poverty level will be 0%. Rate of growth of economy has been from 8% in 2002-03 to 13.82% in 2005-06 against national average of 6 to 8%.

Money is being pumped to the state through various sources. Ratio of central aid to the revenue of the state is 78.65% which is twice the average of all states which is 38.5%. As against total contribution of Rs 257 crores by the state to the centre under direct taxes like income tax, corporation tax and wealth tax, it received Rs 719 crores in 2006-07.

Under Prime Ministerís Economic Reconstruction Package announced in November 2004, the state to received Rs 24000 crores of which Rs 3781 crores was to be spent by the state. The state was paid by the centre under security and for relief and rehabilitation Rs 159 crores + Rs 140 crores = Rs 299 crores in 2006.

On the whole the state is spending from various sources Rs 28 crores per day against 19 crores spent by Delhi )as stated by the Economic Advisor to the state cabinet). The actual annual expenditure of the state government exceeds Rs 1200 crores, perhaps beyond the absorbing the capacity of 11 million population of the state.

But a far bigger component of the economy of the state is its invisible part, including expenditure by the Indian army and by the militants, remittances of the state subjects working outside the state and smuggling from across LoC of inter alia drugs. Hawala money which, according to a cabinet minister, amounts to Rs 100 crore per year.

Money being poured into the state by various sources has created a neo-rich class whose income is reflected in an increase of 14 times in vehicular traffic since 1982, from 36,500 to 3,23,549. Every year seven lakh new vehicles are entering the state. Vehicular population has been growing by over 10% since 1990. Private cars witnessed a decadal growth of 141% since 1971-81.

Again while a large number of Kashmiri labourers used to go to the plains in the neighbouring states to earn their livelihood every year, now over 2 lakh labourers from far off states like Bihar, Orissa and UP annually visit the state to work for menial jobs and masons as construction workers.

Yet rise in income level is extremely disproportionate. Every year ranks of educated unemployed are swelling, including graduates, postgraduates and engineering degree holders.

This is paradox of the economy of the state. On the one hand, money is being poured in from many sources and the state is rich in national resources, creating a class of multi-millionaires. On the other hand, army of unemployed is being created. Ad hoc measures to absorb them in government jobs and invitations to outside investors would not do.

According to a team of Planning Commission of India, mis-governmance and mismanagement are principal weaknesses of the economic policies of the state. While much needs to be done to tone up the administration and remove the dubious reputation of the state as the second most corrupt state of India, according to a non-official survey, ad hocism should be replaced by well planned policies, by experts in various fields, preferably in the form of a Planning Commission.

Part of the initiative in the task of development should be passed on to the decentralized institutions who are better placed to mobilise local resources and decide priorities keeping in view the local realities.

Even a blue print of alternative strategy of development cannot be attempted in the space of an article. But apart from that, every state government is more concerned over complaints from each region about discrimination against it which its people perceive. In response to such complaints, successive governments have been assuring the people that it is committed to equitable development. The Chief Minister, of late, have been visiting as many places as possible and giving orders on the spot on the demands raised by the people. The centralized and subjective manner of decision making must be replaced by an objective and equitable formula for allocation of funds to every region and district to be spent by decentralized institutions.

A radical overhaul of the system is a pre-requisite for optimum utilisation of local resources, vast human and natural potentialities of the state.

Balraj Puri is Director of Jammu based Institute of Jammu and Kashmir Affairs.



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