Politicians’ minefield is economists’ nightmare

But first the facts: against a total budget outlay of Rs 8,770 crore in fiscal 2002-03, the state’s annual spending estimates are pegged at a whopping Rs 9,991 crore. The tourism sector that had seen 35 lakh visitors — bringing in a cool Rs 1,500 crore — even as late as in 1998 recorded a dismal 30,000 last year.

Then there is the small glitch linked to the controversial Article 370 that bars any non-Kashmiri from buying land in the state. A provision that effectively seals the fate of outside investment in an age of diminishing economic frontiers.

If this violence-wrecked state is a minefield for politicians, it is a nightmare for economists. The planners have to manage with an annual income of just Rs 1,800 crore from tax and non-tax sources; for the rest, J&K takes the long and winded road to New Delhi for grants and loans.

As is the story with the entire nation, J&K’s too is one of under-utilisation of capacities. Take power, for example. Despite a comfortable generation capacity of 16,000 MW, the state has to manage with 800 MW, which is just half of the peak demand. The rest is transferred to the Northern Grid. The paradox is that, to meet the domestic demand, the state imports electricity from the same Northern Grid in Punjab with a bill amounting to Rs 730 crore.

‘‘The first priority for the new government should be to review all the power projects with the Government of India,’’ feels noted economist of the valley, Professor Nisar Ali. ‘‘We generate power in collaboration with NHPC where J&K provides the water and land and the Centre pumps in the capital. But the configuration of these treaties is loaded against the state like the Uri Civil project where we get 12 percent in royalty and the Centre gets 88 percent. Same is the case with Salal project where J&K has 18 percent and the Centre, 82 percent.’’

Experts believe that another way to get around the crisis would be to promote foreign investment in hydro-based electricity projects in a big way. But, warns Muzafar Khan, president of the Kashmir Chamber of Commerce and Industry: ‘‘Things need to be brisk. We can’t afford projects that take 10 to 15 years and lose their worth once they are built.’’

The caveat: foreign investment in the J&K power sector won’t be an idea that New Delhi will endorse happily. Valley experts feel that loathe to losing it’s monopoly over the state’s power scenario, the Centre may play safe in giving counter guarantees on the borrowings to the state from financial institutions.

Getting even with Delhi but can’t be an option for the state’s newly sworn-in Finance Minister Muzaffar Hussain Baig. Even as far back as 1974, J&K was dependent on the Centre for 50 per cent financial support. The situation has only worsened with the figure rising to 86 per cent in 2002. The only way out is to focus on reviving the sectors that were once major revenue earners like horticulture and traditional handicrafts, feel experts like Ali.

Other finance-related priorities of the new coalition government, say economists, should be to seek immediate resolution of revenue assets held by the Government of India and the money it owes to the state on account of the Indus Water Treaty (IWT). The revenue assets with the Centre are estimated at Rs 12,000 crore with IWT forming the major chunk, at Rs 8,000 crore for the period 1960-2000.

Finance Minister Baig who is scripting a three-stage economic revival plan, says his government would pursue the compensation case from Centre on the IWT. ‘‘We are preparing a three stage revival plan to turn around the economy. Our top priority is power and rehabilitation of the militancy-affected families. We would take up the issue of IWT compensation with the Centre,’’ says Baig.