New
Delhi, 24 November 2004
Mohan
Guruswamy who was Economic Adviser to erstwhile
Finanace Minister Yashwant Sinha before he fell out,
has an economist's vision. He was recently in
Kashmir and has sent us this report. He offers a
view on the sops given by the PM Manmohan Singh to
Kashmiris. No one can deny money makes the Mayor go
round and the situation in Kashmir is very much
better than it was till a few years ago. With
734 km of the LOC fenced in (OP Deewar by the Army
Engineers) and with tourism picking up
considerably, even better days are ahead.
India's
growth rate needs peace in Kashmir and Manmohan
Singh has to balance politics and economy and keep
the UPA Government and his job in place for five
years, so that Sonia can get a hold of the
entire country in the coming years with elections
due in three states.
A
Fresh Vision And A New Blueprint?
By
Mohan Guruswamy
I
visited the valley last week and it seems the more
things change the more they are the same?
The
Prime Minister addressing an impressive meeting in
Srinagar on November 17 announced an “economic
revival plan” of Rs.24,000 crores for Jammu and
Kashmir. By unwrapping the package as a bold new one
the Prime Minister is guilty of some terminological
inexactitude. What is new is just Rs.5,800 crores.
The other Rs.18,200 crores had been committed
several years ago to ongoing power projects of the
Central Government’s National Hydroelectric Power
Corporation.
If
this Rs.5,800 crores is in addition to what J&K
is in any case slated to get, it would no doubt be
most welcomed by the entire government apparatus and
those who have a parvenu relationship with it ––
like contractors. After all it translates into a
grant of additional Rs.5,712 per capita. As it is
J&K does rather well in terms of central
government grants. Between 2002–3 it got Rs.13,188
crores, which is more than three times what
India’s most poor and violence prone state Bihar
got –– Rs.4047 crores. When you consider that of
the Rs.14,085 crores net resource transfer by the
Centre, Rs.13,188 was a grant––you will get an
idea of the magnitude of dole that J&K gets.
Another way to view this is to consider that if an
additional grant were to be given to Bihar on this
basis, it would amount to Rs.83, 000 crores!
Quite
clearly Dr. Manmohan Singh thought this was not
enough for he put some icing on the cake by
announcing in Jammu that he is ordering the lifting
of the freeze on new government employment ––
its not that the state does not have enough public
employees. In fact it seems to have far too many. By
its own admission the J&K government employ’s
3.5 lakh persons giving it a ratio of 34.5
government employees to every thousand persons. To
get a better idea of the enormity of the PM’s
largesse consider this. The Rajasthan government
employs about 6 lakh persons and that state is about
five and half times as big as J&K in terms of
population.
The
underlying problem of Jammu and Kashmir is not
economic. The state does quite well in terms of
socio-economic development. Its literacy level
(64.8%) is almost on par with the national level
(65.4%). Its sex ratio (923/1000) too is almost on
par with the national average (933/1000). Its birth
rate (19.9/1000) is lower than the national average
(25.8). Its death rate (5.4/1000) is also lower than
the national average (8.5/1000). J&K’s infant
mortality rate (45/1000) is also superior to the
national average (68/1000). The per capita income of
Jammu and Kashmir is recorded at Rs.12, 399 and is
much lower than the national average of Rs.16, 707.
But it is much better than, say Bihar’s Rs.5,108
and Orissa’s Rs.8,547. For the 10th
Five Year Plan, J&K got a per capita allocation
of Rs.14,399 whereas Bihar and Orissa got Rs.2,536
and Rs.5,177 respectively. The national per capita
expenditure during the 10th Plan period was only
Rs.5,668. It can thus be nobody’s case that
J&K does not get enough.
This
is not all. In 2002–3 J&K raised a mere Rs.936
crores by way of taxes when its total non-tax
revenue was Rs.4,745 crores. India’s poorest and
most backward state, Bihar collected Rs.2,814 crores
by way of taxes and had a total non-tax revenue of
just Rs.2062 crores. Quite clearly the nation's
munificence is lavished upon J&K. It seems
to miss most people who matter, even those at the
helm in Bihar, that the valence of public disorder
when measured in terms of violent deaths is no less
in Bihar than in J&K. If disorder and violence
is the basis for allocation of Central Government
funds, then Bihar clearly has as good a case as
J&K?
Its
not that all the money has gone down the tubes in
J&K. In the last ten years its poverty level has
dropped from 25.17% to a mere 3.48%. The poverty
level in India still hovers around 26%. Whatever be
the reasons for this, good government is most
certainly not one of them! The proof is there for
all to easily see and perceive. There are hardly any
public works contributing to the common good and
higher productivity to show. Roads are in a terrible
condition. The power situation is miserable. There
is no public sanitation worth the name and all the
sewage seems to flow into the Dal Lake and thence
carried into Pakistan by the Jhelum.
The
J&K government’s books have not been audited
for over a decade and no one really knows what was
spent, where and who got what? Talk to even the most
ardent pro-India Kashmiri, and there are some, and
he will tell you that the politicians and
bureaucrats have stolen most of the money. Lending
credence to this is the amazing explosion of new
construction in evidence all over the Kashmir
Valley. It is believed that every second house
belongs to a government employee or one connected
with it. Relate this to the low poverty level in the
state and it would seem that trickle-down
economics works! It also underlines John
Galbraith’s description of trickle-down economics
–– that
it is akin to feeding racehorses high-quality oats
so that the sparrows can eat the dung!
The
only effective antidote to an insurgency is the
restoration of good government and order. In J&K
you have neither. The forces meant to impose order
are themselves often quite disorderly. The Indian
Army and the various para-military forces work
independently of each other and often at
cross-purposes. Worse still they work independent of
the popularly elected government of J&K. We must
wonder if powerlessness makes the state government
purposeless as well?
Speaking
at Srinagar the Prime Minister said: “The time has
come to put forward a new blueprint, a fresh vision
for Kashmir and for the Kashmiri people, free from
war, want and exploitation.” Instead of a fresh
vision and a new blueprint, we have this Prime
Minister also doing what all previous Prime
Ministers have done –– put more good money into
the hands of those who cannot deliver the goods. One
of his flunkies has even planted a line in a leading
newspaper that, “The Prime Minister is of the view
that while Kashmir’s political problem will take
some time to solve, massive investment to develop
the state’s infrastructure can deprive militancy
of its popular base.”
The
threat of secessionist violence has become an
integral part of our political process. In Punjab
successive Chief Minister’s have been extracting
higher procurement prices and quotas each year by
implying that otherwise things may go out of hand.
Ditto for water that Punjab is obliged to supply to
neighboring states. We seem to have no answer to
this other than more handouts. But we also know
handouts don’t work. We have seen it not working
in the Naga Hills region, which has remained one of
our poorest regions despite having long had the
highest per capita “development” expenditure in
India. On the other hand the abundant availability
of state funds is only an easy source of funding for
the insurgents and terrorists. We kid ourselves
believing that only Pakistan’s ISI funds
insurgencies in India. The ISI’s Kashmir budget is
but a mere fraction of what goes into sustaining the
insurgency in the state. Do the Naxalites who now
dominate large swathes of territory in Bihar,
Jharkhand, Chattisgarh, MP. Maharashtra, Orissa and
AP get ISI funds? Like all our other insurgents they
too milk the system for it.
When Dr. Manmohan Singh
first became Prime Minister, he spoke of the need to
revitalize public administration and promised to
focus on improving governance. Instead he is
traveling on the route charted out by Narasimha Rao,
Deve Gowda, Gujral and Vajpayee. Is it possible that
he knows no other way?
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