Blaming each other

Unfortunately, fears expressed during the June meeting — of all new developmental activities being affected — have come true and the extent to which the Centre should finance J&K’s process of restoration and development turned into a deeplypoliticised issue.

And even as the political leadership steps up pressure in New Delhi, bureaucrats in Srinagar are evidently worried about the slowdown of development work and inevitable cost over-runs. Says S.L. Bhat, divisional commissioner of Kashmir, “What we are seeing in J&K is a whole chain of consequences. It is a manifestation of what happened here in the last decade social, political and finally, economic disorder.”

There are others who admit that besides making “exorbitant” demands, the Farooq Abdullah Government can be faulted for the over-zealousness it displayed while making budgetary allocations last year itself. According to M.L. Koul, director general of the Institute of Management and Public Administration (IMPA), and till recently the financial commissioner (planning), the fiscal crisis had, in fact, set in by end-1997 and the early warnings given by officials like him were ignored.

Koul says the situation worsened because the State Government did not adopt a systemic approachto planning and development. “Controls and systems were not been fully revived. Once the Government started spending money, it made the crucial mistake of not taking recourse to administrative approvals and costing,” he said.

A similar prognosis has been made in a 350-page report on economic reforms submitted recently by a committee headed by former Home Secretary Madhav Godbole — the first official attempt at a post-mortem of the State’s threatened economy. Several top-level State officials were on the panel and copies have, since, been circulated to the Centre and key officials in the State. The beleaguered J&K Government can seek solace in some recommendations of the panel, which has asked the State to put “its financial house in order.” For instance, Godbole has goaded New Delhi to adopt a “uniform policy” of waiver of Central loans as it has written off huge quantum of loans to Punjab and Assam. The waiver of loans (estimated at Rs 2,545 crore), the report states, was essential “to avoid anyfeeling of grievance in J&K.”

The panel has also asked for a “one-time grant” for helping J&K wipe out its bank overdraft, now touching Rs 944 crore. The overdraft is over and above the “liberal” Central financial assistance given to J&K, but which should now be helped to start with a “clean state.” J&K should also change over to banking with the Reserve Bank of India (RBI) and abide by he same rules applicable to other States.

On the flip side, the Godbole report recommends the following to help J&K achieve an economic turnabout:

Besides these, the committee has also exposed some “questionable” practices adopted by the Government. For one, just like the state of West Bengal, J&K too had begun opening public ledger accounts (PLAs) and crediting un-spent amo-unts at the end of the year. Secondly, the Government had adopted a “short-sighted policy” ofencouraging consumption of alcoholic drinks with a view of mobilising large revenues.

This, the report warns, should not lead to increasing the hold of criminals, mafia dons and other anti-social elements by cartelisation.Top officials in the State Secretariat point out, that the Centre had also listed some “options” for reducing their fiscal deficit. They had, for instance, asked them to hold payment of arrears due to Government employees in view of the recommendations of the Fifth Pay Commission. The subject of revision of salaries, is, incidentally, is yet another bone of contention between the Centre and State since members of the National Front maintain they “inherited” the hike: the parity with Central Government scales was granted during Governor’s rule, bringing up an additional annual liability of Rs 325 crore.

The Central Government has also suggested that J&K adopt other drastic measures like stoppage of all Provident Fund withdrawals. Chief Minister Farooq Abdullah told The Indian Expressthat the suggestions are “untenable.” Ajit Kumar, the additional chief secretary (finance), also described them as “impractical” and says they have almost turned the suggestions down.

Chief Secretary Ashok Jaitley says that given the state of economic distress of J&K, the only tangible solution could come by way of the Centre agreeing to cover the shortfall in their non-plan deficit (of Rs 720 crore). “This is the crux of the problem and we, after all, only have New Delhi to appeal to, ” he said.