Kashmir can be a model for sustainable economies of tomorrow: Haseeb Drabu

Haseeb Drabu was the Finance Minister of Jammu and Kashmir from 2015 to 2018. He tells Aditi Phadnis the government needs to cast a fresh eye on the state's economic development

Haseeb Drabu was the Finance Minister of Jammu and Kashmir from 2015 to 2018. He tells Aditi Phadnis the government needs to cast a fresh eye on the region's economic development

How do you think the severe contraction in GDP numbers impact J&K?

The economy of Kashmir is an export-oriented, import-dependent economy. As such, the impact of the pandemic lockdown will be much more severe. The main difference from an economic point of view is that while the earlier shutdowns were localised, the pandemic lockdown is a global one.  During the localised shutdowns, the production activity used to continue to some extent. Quite a bit of the output of the economy – especially from the household enterprises, horticulture, and the artisanal sectors – is produced. For instance, the artisanal production process which is a household informal type of a production system. Or even the horticultural sector.

Also, while local trade and transactional activity would get curtailed, import from outside the valley and exports to the rest of the country and the world would still be done, even if at a lower level. So the income generation would take place from sales outside the state. Added to this, the non-resident Kashmiri inflows in the form of remittances also continue.

With the pandemic, even this anemic economic cycle has got disrupted. Even if goods continue to be produced in the Valley, their value cannot be realised in the market. With the national and international markets shut, there is no realisation of the value that is being generated in the process of production. Much of the inputs that go into productive activities within the local economy has caused a supply-side disruption. Hence, curtailed production to that extent. This will extend the adverse impact of the pandemic to the medium term as well, in addition to the short-run losses that we are seeing.

How can the government revive the Kashmir economy after one year of complete lockdown exacerbated by a communication blockade?

Kashmir can be the model for sustainable economies of tomorrow. I see Kashmir as a cultural economy at the heart of which is the incredible craft sector that is social in its organisation, material in its production, and sustainable in its development. It needs technology, innovation, and disruptive collaborations. The artisanal economy that Kashmir has can be a viable force in opposition to existing systems of production through the humanization of work and commerce. Globally, it is the culture and creative economy which is now growing exponentially as a result of online shop-fronts and home-based micro-enterprises.

Then there is the apple economy, the horticultural sector if you like. The Valley, on its own, is the sixth-largest producer of apples in the world. With very little investment it can become the second-largest apple producer in the world. Finally, there is a tourism and visitor economy with its services sector linkages.  None of this industrial-manufacturing stuff that the government is planning needs to be done here. It will do more harm than good. We need to get linked not in a manufacturing sub-contracting assembly line but to the global value chain.
 

 

Are you seeing any scope for private investment?

No. Certainly not at this time when the investment expenditure in the country is down 50 percent. Kashmir, which in any case is a high-risk investment destination because of the volatile business and enabling environment and a fragile political situation.

The central government would do well to put its own money rather than looking for private investment. Why isn’t it investing in J&K through its PSU’s? The 300 odd Central PSUs that have investments of about Rs 25 lakh crore, and employing more than a million people across the country have invested a paltry sum of Rs 150 crore in J&K. And employ 21 people! The Union Government and its companies faced no Article 35A barriers. Why then has there been practically zero public corporate investment in the last 70 years? The fact is that the Government of India has not invested in growth capital in J&K. Obviously, private corporate investment also didn’t venture in. The real deterrent to private corporate investment in J&K is its disputed tag sanctified by the United Nations. That continues to be so. The Abrogation of the special status has made no difference to that.

What should the centre do to fix the huge salaries and pensions bill that J&K incurs every year? Could this instead be spent on health and education?

Contrary to fixing the problem the Centre is aggravating the problem. Out of a population of 1.25 crore, 5 lakh people work as government employees. Bihar with nearly 10 times the population of J&K, has 4 lakh employees. If the population below 20 (which is about 45 per cent) and above 60 (which is 15 per cent) is excluded, then one out of every ten people is on the payrolls of government! The average size of a family in J&K is 5. So one person from every other family is in government.

Despite this, in the last year or so, a remuneration package for urban local bodies -- the highest in the country -- has been worked out for Mayors, Deputy Mayors, and councilors. It has been raining raises; Sarpaches, panches, Anganwadi workers, VLW others have got 25 per cent to 500 per cent hike in salary, or stipend.  4,000 teachers have been recruited in schools, 30,000 Rehbar-e-Talim have been regularised. This despite the fact that the student to teacher ratio in J&K at 16: 1 is not only better than the national average of 24 it is even better than that of China at 19:1! For comparison, Gujarat had a student to teacher ratio of 32:1 and Bihar is at 57:1.  Health and education are basically being funded through CSS schemes which will take a big hit now. So the situation is grim.