‘More PSUS, please!’
HASEEB DRABU was finance minister of Jammu & Kashmir from 2015 to 2018. He tells Aditi Phadnis the government needs to cast a fresh eye on the state’s economic development: Where more, not less, government is needed. Edited excerpts: How do you think the contraction in the GDP numbers affects j&k?
The economy of Kashmir is export-oriented and importdependent. As such, the impact of this lockdown will be much more severe. The main difference from an economic point of view is that while the earlier shutdowns were localised, this is a global one. During the localised shutdowns, production took place to some extent. Quite a bit of the output — especially from household enterprises, horticulture, and the artisanal sectors — is produced.
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 income generation would take place from sales outside the state. Added to this, non-resident Kashmiri inflows in the form of remittances also continue.
With the pandemic, even this anaemic 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.
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 collaboration. The artisanal economy that Kashmir has can be a viable force in opposition to existing systems of production through the humanisation 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 homebased micro-enterprise.
Then there is the apple economy, the horticultural sector if you like. The valley is the sixth-largest producer of apples in the world. With very little investment, it can become the second-largest. Finally, there is a tourism and visitor economy with its services-sector linkages. None of this industrial manufacturing 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 investment expenditure in the country is down 50 per cent. Kashmir 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 look for private investment. Why isn’t it investing in J&K through its public sector undertakings (PSUS)? The 300-odd Central PSUS, which have investments of about ~25 trillion and employ more than a million people across the country, have invested a paltry ~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 past 70 years? The deterrent to private corporate investment in J&K is its disputed tag sanctified by the United Nations.
What should the Centre do to fix the huge salaries and pensions bill J&K incurs every year? Could this instead be spent on health and education?
Rather than fixing the problem, the Centre is aggravating it. In a population of 12.5 million, 500,000 are government employees. Bihar, with nearly 10 times the population of J&K, has 400,000. If the population below 20 (which is about 45 per cent) and above 60 (which is 15 per cent) is excluded, one of every 10 is on the payroll of the government!
Despite this, in the past one year or so, a remuneration package for urban local bodies — the highest in the country — has been worked out for mayors, deputy mayors, and councillors. It has been raining raises; sarpanches, panches, anganwadi workers, villagelevel workers, and others have got a 25-500 per cent hike in salary, or stipend. Four thousand teachers have been recruited in schools, and 30,000 Rehbar-e-talim have been regularised. This, despite the fact that the student-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!