Budgeting Jammu and Kashmir

The state budget doesn’t make for a happy reading.

A quick look at the state budget of Jammu and Kashmir presented in the state assembly yesterday provided the following highlights:

• J&K SGDP has a growth rate of 6.61%, compared to the all-India GDP growth rate of 8.6%
• The per capita income in the state is estimated at Rs 32,496, compared to the all India figure of Rs 54,527
• The state government borrowed Rs 1,300 crore as additional open market borrowing outside the FRBM arrangement, to reduce the accumulated overdraft of the government with the J&K Bank
• Expenditure on payment of interest is estimated at Rs 2,363 crore during the next year as against Rs 2,251 crore for this year
• Expenditure on account of cost of purchase of electrical energy is projected at Rs 2,400 crore for next year, as against the current year’s Rs 2,324 crore
• Rs 1,174 crore is estimated to go out on account of repayment of loans next year, as against Rs 959 crore this year
• State’s Annual Plan is yet to be finalised by the Planning Commission, receipt figures in the budget have been worked out on a projected State plan outlay of Rs 6,600 crore
• In addition, the PMRP outlay is of Rs 1,200 crore
• 57% of budgeted income is funded by central grants
• 44% of budgeted expenditure is towards salaries and pensions of government employees
• The budget has a fiscal deficit of Rs 2,979 crore over a total outlay of Rs 31,212 crore next year, i.e., 9.54%

The bottom-line is simple. At the next instance of the minutest trouble in Kashmir Valley, many commentators will come forth and place the blame on the economic condition of the state. The state government, it will be suggested, is not doing enough economically. But a closer look of the state budget actually shows that there is very little that the state government can do to revive the state’s economy.

Of course, it is another matter that the Central government has also not been able to do enough for the state’s economy. The Prime Minister’s Reconstruction Programme has been extended for another year now (when it was supposed to culminate in 2008) and Dr C Rangarajan has now submitted his third report on economic revival of the state (the earlier two reports lie deeply buried in the cupboards somewhere).

It is easy for many Kashmiris to look at some other parts of India and feel that they have been left behind. But the best years of India’s economic growth, since 1992, have coincided with the worst years of terrorist violence in J&K. In 1989, no one had ever imagined that the sleepy pensioners’ paradise of Bangalore would be an IT hub or Tamil Nadu a major location for auto-manufacturing. Things took their own course and hitherto unthought-of opportunities emerged in many regions of the country. We don’t know what Kashmir could have become had it not been engulfed by violence since 1989.

There is only one lesson to be learnt here. If there is a climate of fear, terror, violence and insecurity in the state, no amount of planning, funding, schemes and programmes will make a difference. While the government must do what it can to revive and kick-start the economy of the state, the most important thing it can do is to ensure peace, security and rule of law to allow economic activity to flourish. If peaceful conditions prevail uninterruptedly for a substantial period of time, one never knows what success stories can emerge from the state of Jammu and Kashmir. They may not be the sufficient condition, but peace and security remains the essential prerequisite for economic revival of the state.

Of course, this blogger does remember his old aphorism: “The secret of success is this: There is no secret of success.”