What India Needs To Do To Revive Kashmir’s Dying Economy

Posted by Namit Bhasin in Kashmir, Politics
July 23, 2017

In newspapers and various forms of electronic and social media, we get a lot of news on Kashmir. There is no dearth of perspective among the common strata of the society about this region of conflict and controversy, which has been at the heart of a long standing dispute since 1947 between India and Pakistan and more recently also involving China. While there have been huge discussions, deliberations and debates regarding the presence and role of the Indian Armed Forces and the AFSPA (Armed Forces Special Powers Act ), very little has been spoken about the Kashmiri economy of the pre conflict era, its stagnation and overdependence on the center.

Kashmir occupies a strategic position with boundaries touching China, Pakistan and Tibet. Apart from Jammu and Kathua, the entire region is mountainous. Rice, wheat, and cereals are the major crops in the valley. It is the largest producer of apples and walnuts and world’s finest saffron grows in the valley.

It also exports carpets, crafts, furniture and sports goods, but more than half a century of conflict and tension between militants, separatists and the armed forces has drained the economy and the natural resources of the valley and has miniaturized its status to a high-cost mountain economy, dependent chiefly on tourism revenue. What worsens the situation is its geographical proximity to the tectonic plates of the Sindh-Baluchistan area, making it prone to natural disasters. Despite announcing several welfare schemes to improve the economic conditions of the people, 10.35% of the population in the state of Jammu and Kashmir lives below the poverty line, according to an economic survey report for the year 2011-2012.

However, putting the entire responsibility of the issue on geographical disparities is wrong and unjust as says Inam Ul Haq, a business journalist with the “Greater Kashmir”. Haq quotes, “The claim of many policy makers that the geographical disparities of Kashmir are a hurdle in the execution of the development projects is wrong, I think that most of the policies not implemented are a result of lack of political will.

A brief look at the economic history of Kashmir reveals that it remained a flourishing state, both economically and culturally, and it remained at the crossroads of civilization by the virtue and dynamics of the silk route. As an independent state, it had sound trade ties with China, Tibet, Central Asian Countries, Persia, and Afghanistan. There were many trade routes operational before the partition, the major being the Jhelum Valley (JV ) road, joining Muzzafarabad, the capital of Pakistan Occupied Kashmir ( POK ), to Rawalpindi. Another was a rail route from Jammu to Sialkot.

More importantly, the established river system comprising of Jhelum, Chenab and Indus, which was a cheap, robust and a natural transport system for timber, was diverted as the river system went to the modern day Pakistan. Century old trade and economic routes were shattered and communication links were broken. Regular threats of a full-scale wars have hampered trade, travel, tourism and people to people contact among the locals. Before the conflict, it was a recognized trade hub, connected to various parts of the region, now it has become dependent on a single fair weather road ( National Highway 1 ) for its sustenance.

The Major Reasons Behind Kashmir’s Sluggish Economy

  1. Below par agricultural production.
  2. Poor investment culture and persistent unemployment among the youth.
  3. Centuries of conflict, besides blocking of historical water and trade routes of the state and splitting of the territory has also led to the imposition of restrictions, through the Indus Water Treaty, for tapping its already exhausted water resources.

The conflict has also retarded the economic development of the state in general. Mehboob Makhdoomi, a Kashmiri studying in Harvard University complains, “conflict is the only reason, political stability is a prerequisite for any economy to flourish. As long as the issue of Kashmir remains, there can never be economic stability.

Kashmir is one of the least industrialised states in India. With the number of employed males per establishment dropping to 1.74% as per the sixth economic council (EC) from 1.79% as per the fifth EC, the days ahead look rough, just like the situation in Kashmir. Haq says, “the monetary help given by the centre is being projected as a favor not a right of the Kashmiri people.

He stresses that political activism and protests must be seen separately from the need for jobs and employment activities for the youth. Another striking issue is the disparity between the development expenditure as compared to administrative liabilities. From a whopping ₹79472 crore allocated towards expenditure, a large portion goes towards salary and pension distribution. The Foreign Direct Investment equity inflow received by Kashmir from 2000 to 2016 was a paltry 37 crore only, while the neighboring states of Punjab, Haryana and Himachal Pradesh had a cumulative inflow of ₹6,538 crores.

The Kashmir problem has been a persistent, long standing issue of violence, violation of civil, ethical and moral rights. It has deprived many of homes, and a right to live a life of dignity. A long standing, permanent and stable political solution should be the priority of all the interested stake holders.

As far as the responsibility of the state government is concerned, it must ensure the development of unexplored areas like rural tourism. With 20% of the workforce directly or indirectly involved in tourism, it is logical and reasonable to invest in this area. This will help engage the rural population and improve the overall economic stability of the region. Areas like Doodhgaga, Sukhnag, Tosamaidan, Mujipatheri, Labhkal and Hackhal have enormous potential to become the next Srinagar and Gulmarg.

Haq reiterates, “if the scheme of granting the ‘Smart City’  status to Srinagar is implemented and executed properly, I am sure that this plan will help.

He also stressed on the need to overcome the over-dependence on tourism and develop alternative sources of livelihood like cold storage. With the country ongoing a rapid economic revolution, it should be stressed that Kashmir needs to be a part of that, and ensure that all the formulated plans are executed with precision.