epilogue magazine, january 2008

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Epilogueb e c a u s e t h e r e i s m o r e t o k n o w

Jammu and Kashmir’s Monthly Magazine

Now

Telling

The J&K Stories

Jammu,January1

,2008/Vol2/Issue1||PriceR

s.40||PostalRegistrationNo.JK-350/2007-09||www.epilogue

.in

Market :Raghunath Bazar

CMRD Publications and Communications

INSIDE Epilogue Calendar - 2008

Special Report:2007 : The Year in Review

&OTHER IDEAS

ECONOMY

STEPPING INTO 2008

INTERVIEWS

COLUMNS

Lt Gen (Retd) S.K. SinhaTariq Hameed Karra

Prof. Amitabh Mattoo

Abdul Rahim Rather Prof. Nisar Ali

D Suba ChandranRam Sahai

Arjimand Hussain TalibAnnil SuriDipankar SenguptaFalender K Sudan

Sameer Suryakant Patil

.



Special features of the University

tThe only fully residential university

of the state.tState of art Laboratories.tWell equipped and modernized

Library with DELNET

t24 hrs Internet facility for students and staff.tProactive Placement Cell with full

time Placement Officer.t A fleet of vehicles facilitating

mobility of residents.tSab-rang Square - the

shopping hub, a place for

meaningful socialization.tHealth Centre with resident

Doctor, Technician and nursing

Staff.

tBank, Post Office and Book Stall.tComodious Hostel facilities for

Boys and Girls.tSalubrious ambience.

Facilities we provide :

tInteraction with Guest faculty.

t100% Placement.

tCoaching for personality

development.

tScholarships to 60% of the total

Students enrolled in a session.

tNewspapers to all boarders free o

cost

tProvision for indoor and outdoor

games

tCamp offices at Jammu & Srinag

for the convenience of students.

tConduct of National Seminars an

paper reading for unleashing the

potential of young professionals i

the making.

tMoU with leading institutions for arranging an interface between o

students and their experienced

faculty.

He inaugurated :

Release of University Publications:

Special events of the Annual Day :

sCollege of Engineering and

Technology

sUniversity Health Centre

sUnivesity Cafeteria

sPlacement Cell

sParent’s Lodge

sCentre for Biodiversity Studies

sUniversity Calender 2008

sInformation Bulletin for Academic

Session 2008-09

sMBA Placement Brochure 2007-08

sMCA Placement Brochure 2007-08

sNewsletter Annual (November)

sObeisance at Shahdara Sharief

sTalawat/Quran KhanisCultural activities

sSports activities

sPrize distribution

Hon’ble Chief Minister of J&K State

was the Chief Guest

Baba Ghulam Shah Badshah University, RajourKeeping our steady march forward and celebrating

rdOn our 3 Annual Dayon

Dec 15, 2007

Schools

tManagement Studies tMathematical Sciences & Engineering tCollege of Engineering & Technolog

tBio-Sciences & Bio-technologytIslamic Studies

Rajouri Head Office : 01962-262616. Jammu Camp office : 0191-2466892/264402

Regional Office Srinagar : 941901144webside : bgsbuniversity.org e-mail: [email protected]

Buildings for Inauguration the Annual Day

Centre for Biodiversity StudiesCentre for Biodiversity Studies Parent’s LodgeParent’s Lodge CaféCafe



Epiloguebecause there is more to know

www.nag.epilogue.in

Editor in Chief Zafar Choudhary

Consulting Editor D. Suba Chandran

Associate Editor Irm Amin Baig

Executive Director Mohammad Yasmeen

Mailing AddressPO Box 50, HO Gandhi Nagar,

Jammu

Phones & emailEditorial: +91 94194-80762Administration:+91 [email protected]@gmail.com

[email protected]

Edited, Printed and Published byZafar Choudhary for CMRD

Publications and Communications

Published from ‘Ibadat’, Madrasa

Lane, Bhatindi Top, Jammu, J&K

Printed atDee Dee Reprographix, Jammu

Disputes, if any, subject to jurisdiction

of courts and competitive tribunals in

Jammu only.

Price : Rs 40

CONTENTS

Letters to the editor 2

Prologue 3

Column

Eye Witness 4

Special Report

6

Interviews

Lt. Gen (Retd.) S.K. Sinha 11

Prof. Amitabh Mattoo 16

Cross Loc Interaction

45Trade

Report

47Wiscomp Workshop

Neighbours

48Burma

Market

Raghunath Bazaar 50

Opinion

Kashmir Today 51

Columns

Tareekh 52

Jest Ponder 54

2007 : The Year in Review

No Progress On Peace Process

Volume 2, Issue 1, January 2008

IN FOCUS

ECONOMY & OTHER IDEAS

Buoyancy in J&K Economy and Budget192008-09

“Financing Development23in J&k is Financing Peace”

J&K State in the grip of 29financial crises

Budget 2007-08 :31The unfinished business

How not to Promote Economic Growth :33The case of Jammu & Kashmir

Participatory Natural Resource Management :36Experiences and Lessons Learnt

An economy in41disadvantaged position

A lot still needs to be done43

EpilogueØ×January 20081



P R O L O G U E

FROM THE EDITOR


It is the New Year eve and the world is in Today Epilogue has arguably become a

festive mode. In this restive part of world first choice of intellectuals and the

too celebrations are taking center stage. influential readers. Outside the state,

It is New Year revelry every where this journal is now being seen as most

around. When looked at from other parts authentic and objective source of

of world, Jammu and Kashmir is seen as a information on Jammu and Kashmir.

country lost in violence and unrest. The

violence and unrest have though become No wonders that the leading social

more or less a legacy of this state but love science journals of the country like

f o r p e a c e a n d p r o s p e r i t y i s Economic and Political Weekly , leading

unprecedented here. One can gauge the national newspapers like Hindustan

trend from the New Year party rush. It all Times and the news agencies like Indo

begins from the Christmas Day and Asia News Service have often quoted

continues till people step into the next Epilogue in their reportage and analysis

year. on Jammu and Kashmir. This calls for

celebrations and we are celebrating this

The Christian population in Jammu and success. Our way of celebrations is,

Kashmir is quite miniscule but still the however, little different. Instead of

Christmas celebrations are most visible partying we are focusing on further

here particularly at Gulmarg where improvements both qualitative and

people from across the country pour in. It quantitative.is this dominating urge for peace and a

life full of joy which is giving a run to the In our review of year 2007 we have

elements hostile to peace. Coming to a pointed out that the year was certainly

personal front, to be very honest to my not that of Jammu and Kashmir (see page

readers, I never like partying. I have 6) but when we look at each issue of this

never found myself a part of New Year magazine we easily sum up that 2007 was

celebrations until recently when a a momentous year for Epilogue. As we

realized something worth celebrating. step into 2008, it is going to be another

Braving al l odds…literal ly, al l defining moment in the history of Jammu

odds…'Epilogue' has completed its one and Kashmir.

year of well noticed existence. When

first issue of this magazine hit the stalls The state is up for assembly elections.in January 2007 there was little The real test is not in seeing as what kind

skepticism which has over a period of 12 of arrangement returns to power it is

months turned into confidence. We have actually about seeing as how the

been quite careful in being confident of democracy behaves. For the forthcoming

our role and not become over-confident. year Epilogue too has set out an agenda

A good deal of effort goes into making which seeks to empower the readers with

improvement over the previous issue. knowledge.

We are celebrating

Zafar Choudhary

Epiloguebecause t he r e i s mo r e t o know

EPILOGUE aims at providing a

platform where a meaningful exchange

of ideas, opinion and thoughts can take

place among the people and about the

people of Jammu & Kashmir. The

attempt is to research, investigate,

communicate and disseminate

information, ideas and alternatives for

the resolution of common problems

facing the state and society of Jammu &

Kashmir and in the context of their

significance to South Asia as a whole.

We welcome contributions from

academics, journalists, researches,

economists and strategic thinkers. We

would also like to encourage first-time

writers with the only requirements being

a concern for and the desire to

understand the prevailing issues and

themes of life in Jammu & Kashmir

Contributions may be investigate,

descriptive, analytical or theorectical.

They may be in the form of original

articles or in the form of a comment on

current events. All contributions have to

be neatly types in double space and may

be sent to the address given alongside or

e-mailed to the editor.

While the editor accepts responsibility

for the selection of the material

published, individual authors are

responsible for the facts, figures and

viess ithe tier articles.



C O L U M N

EYE WITNESS


There is very little public debate on If one starts going through the entire expenditure of J&K State at Rs 2285 is

economic issues of J&K State. Partly maze of data on all these accounts, one thrice the national average of Rs 626.

because political leaders are engaged in would get more confused than (capital expenditure is on productive

what they consider higher issues of the enlightened. Therefore only a broad activities). Total per capita revenue plus

state's future. And partly because the summary of its lessons are attempted capital expenditure of J&K State is 9661

state government does not involve here (only visible part of the economy). which is more than thrice average of all

economic experts and intellectuals, for states of Rs 3969.

less the public in general, in evolving Net state domestic product has beeneconomic policies. The annual pre- increasing in the state from 7.91% in The contribution of the centre to thebudget discussion that the finance holds

2002-03 to 12.67% in 2003-04 11.33% in higher rate of growth GSDP and higheris confined to chambers of industrials and revenue expenditure than the nationalcommerce, which represents only a average is mainly due to the higher ratesectional interest. of aid. Ratio of central aid to the

revenue of J&K State is 78.6% ie twice theThe first step that the government should average of all states which is 38.5%. Astake to create wider public interest in against total contribution of J&K State of the economy of the state is to make the Rs 257 crores to the centre under directentire economic data available on taxes like income tax, corporation taxinternet and arrange a consideration of and wealth tax, it received Rs 719 croresall the comments and suggestion it in 2006-07.receives.

Under Prime Minister's EconomicA formidable difficulty in getting full Reconstruction Package announced indata at many levels at which the November 2004, the state is entitled toeconomy operates. Firstly it is about the receive Rs 24000 crores of which Rs 3781internal economy of the state ie revenue,

crores was to be spent by the stateexpenditure and capital budget from

directly (only 1352.44 crores could beinternal sources. Secondly the central

spent till 2007). The state was paid byaid under different heads namely

the centre under security relatedcontribution to the revenue account of

expenditure and for Relief andthe state, capital budget, under state

Rehabilitation Rs 159 crores + Rs 140component of the aid, directly operated

crores in 2005-06.by the centre, security related 2004-05, 13.82% in 2005-06 against the

expend itu re, aid for rel ief and maximum national average of 8% andOn the whole the state is spending fromrehabilitation and so on. Thirdly expected to reach 9% in the current year.various sources Rs 28 crore per dayremittances by the state subjectsagainst Rs 19 crore spent by Delhi (asworking outside the state. Ratio of total revenue expenditureEconomic Advisor to the state was(Revenue expenditure is mainly onreported to have told the state cabinet).But a far bigger component of the administration of which there is noThe actual annual expenditure exceedseconomy of the state is its invisible part, return). to gross state domestic productRs 1200 crores supposed to be beyond thehawala money estimated to be Rs 100 at 39.20% is more than twice that of theabsorbing capacity of 11 millioncrore a year, smuggling, expenditure by average of all states (vide 12th Financepopulation of the state.the Indian army and by the militants etc. Commiss ion ). Per capita capital

Some basic facts about

J&K economy

Balraj Puri

The first step that the

government should take to

create wider public

interest in the economy of

the state is to make the

entire economic data available on internet and

arrange a consideration of

all the comments and

suggestion it receives.



The level of money being spent in the and farming families, balanced diets and the state most of which is entirely

state by invisible sources could be safe drinking water for all.” It required, unproductive.

anybody's guess. If mounting expenditure fo r it s success, synergy among

on all these accounts is added, it is bound technology, public policy and people's The objective of a sound economic policy

to be reflected in the incomes of the participation.” should, be to gradually reduce itspeople. One such outlet of such incomes dependence on central funds, apart fromis of the rich class which is reflected in an There are many other factors, besides what it is entitled to according to federalincrease of 14 times on vehicular traffic ex ce pt io na ll y fa vo ur ab le fi sc al norms, reduce its revenue expendituresince 1982, from Rs 36,500 to Rs indicators, that made Swaminathan and top heavy administration, raise5,23,549. Every year seven lakh new optimistic about the future of the state's saving and investment capacities of thevehicles are entering the state. economy. They include rich natural people, with adequate incentivesIncreasing liquidity is being used to land resources, hydro-electric potential of through appropria te insti tut ion s,speculation and higher bank deposits. 15,000 KW, forest wealth, mines of increase employment avenuesin publicJ&K bank is the fastest growing bank in precious stones, art and craft and human and private sectorsimprove social sectorthe country. Its share value crossed Rs talent. like education (including job oriented1000 on new year day. But its deposits are courses) and health, raise powermostly invested outside the state. Thus potential through micro projects, keep in

But happened to the 15 point plan and itsJ&K is perhaps only state of the country view specific needs and capacities of objectives? Why is the state far from thewhich its exporting its capital. different regions and sub-regions andtargets he had fixed for August 2007?

their balanced growth, provide facilitiesDespite heavy central aid, debt burdenAgain while large number of Kashmiri to improve skills of artisans, at districton the state is mounting. Every singlelabourers used to go to the plains in the and rural levels. The present policy of person is indebted to the tune of Rsneighbouring states to earn their sanctioning project at highest level, in10,655. The state government had takenlivelihood, now 2 to 3 lakh labourers from response to knee jerk reactions to thean overdraft of Rs 1500 crores in 2006far off states like Bihar, Orissa, and UP more vocal demands and agitations orfrom the J&K bank to balance its budget.annually visit the state to work for menial canvassing by political leaders should beEven though agriculture is the mainstayjobs and masons as construction replaced by a well thought out long termof the population, the state is deficit inworkers. plans prepared by experts in consultationfood grains by 45 per cent. Despite a

with decentra l ized democrat iclarge number of nomadic tribe of cattle

institutions. The economic policy shouldThe people below poverty line in the rearers, the state is a big importer of also aim at maximum utilization of itsstate had fallen to 3.48% according to the meat and dairy products. There arenatural resources.last NSS round when it was 26% in the about 2 lakh unemployment persons

country as a whole. Encouraged by registered with the state Employment

economic indicates available in 2003, the Exchange. Most of them are educated A full plan for the achievement of all the

renowned economist M.S. Swamnathan you th, including graduates , post above objective would make this article

had declared, on October 7, 2003, that graduates, engineering degree holders. too long. But surely it should not be

“the state is in an excellent position to The government service is the main beyond the resourcesof expertise with

ensure that no one is below the poverty source of employment for the people bureautic assistanceof the government

line by August 15, 2007.” At a high level which already has 3.14 lakh employees, and with the help of nonofficial

national consultation on the Agenda largest number in the country in agenciesto plan such an exercise. The

2007: A Food Secure and Poverty Free proportion to the population. The state government should appoint a planning

Jammu and Kashmir, “organized by M.S. spends Rs 2570 crore on salaries and Rs commission, which is a pre-requisite of

Swaminathan Research foundation and 620 crores on pensions every year. The framing economic policies in developing

attended by representatives J&K state government has proposed to economies, to do the requisite job with

government, Sher-e-Kashmir University, increase the police strength thrice to its largest possible consultations. Above all,

National Bioresources Development, present strength which is already at the administration of the state, which

government of India and Sir Dorabji around one lakh. Apart from making it has the dubious distinction of being the

Trust, he proposed “ a 15 point action the most highly policed state of the second most corrupt state of the country,

plan to ensure a sustainable and country, which has its own implications, should be radically reformed to be able to

profitable farming system, happy rural it would be on extra financial burden on perform the historic role that awaits it.

C O L U M N

EYE WITNESS




SPECIAL REPORT

THE YEAR IN REVIEW


2007 was certainly not the year of Jammu besides some other leaders as also he between New Delhi and Islamabad too

and Kashmir. There were noises, hues and called on separatist and militant leaders could not pick up the pace. In New Delhi

cries but nothing substantially moved on in Pak administered Kashmir. Mirwaiz's avoided talking Kashmir with Islamabad

the ground. Writing a year-end review for Pakistan visit was widely believed as an as sustenance of such a process was

Jammu and Kashmir particularly means exercise with full concurrence of the doubtful owing to disturbance in

an assessment of the progress made on Government of India to have a word with Pakistan. It was a thoroughly wait and

peace process at home and with the leadership in Pakistan. His statement watch policy for return of normalcy in

neighbours. This year the peace process from Pakistani soil that gun has lost its neighbouring country and the position

was nearly a dud except that the Prime relevance and dialogue is the only way which President Musharraf assumes at

Minister Dr Manmohan Singh convened forward gave credence to the opinion the end of the day. However, with each

the third Roundtable Conference and that the peace process may be reaching a passing day the things turned from bad to

recommendations of four of the five defining moment. His opponent in the worse culminating into a chaos with the

Working Groups constituted by him in separatist camp, Syed Ali Shah Geelani assassination of leading political leader

May 2006 were adopted. The fifth then said that Mirwaiz was making bids to Benazir Bhutto. Though the disturbance

Working Group which deals with the seek a role in power structure of Jammu in Pakistan cast its imminent shadow on

“bone of contention” center-state and Kashmir by entering into a deal with the Kashmir peace process but at the

relations was yet to arrive at a conclusion New Delhi. Since then the entire course home front the Central Government in

till the end of this year. Precisely on of dialogue has been into a pause. India too remained faced with the threat

peace front the year remained a non- Continuing with precedence of the past, of instability. The controversy over

starter. This lack of progress on the peace the separatists refused to join the third Nuclear Deal with America had a near

process can be primarily attributed to Roundtable Conference chaired by the escape for the UPA government which

the internal disturbance in Pakistan. Prime Minister Manmohan Singh in April. appeared falling at several occasions. A

Interestingly, on the peace dialogue front Since then neither the Government of multitude of reasons kept the Kashmirthe year had indeed began at a very India invited them nor did they send any dialogue process at a backburner. It is

enthusiastic note but all this enthusiasm visible feelers for talks with New Delhi. pertinent to mention here that 2007 was

fizzled out as scheme of thinks unfolded Later, in September Prime Minister the most important year lost in Jammu

in Pakistan in the subsequent months. At Manmohan Singh expressed his regrets and Kashmir. 2008 is the election year

the beginning of the year, it appeared for that the separatists did not come for a and the dialogue may not pick up at all

a while that some basis consensus among dialogue despite a commitment. Hours waiting for the new government to be in

New Delhi, Islamabad and the Kashmiri after Prime Minister's remarks a quick place.

separatists has been arrived at and its reaction came from Mirwaiz Farooq and

unfolding is just a matter of time. No Mohammad Yasin Malik of JKLF “we had Finally, Government Surviveswonder that J&K Chief Minister Ghulam never made any such promise”.

Nabi Azad told a meeting of his CongressSince 1990s, it has been the separatist

party legislators in first week of January Political observers believe that internal politics making headlines in Jammu andthat 2007 will set a milestone in the disturbance in Pakistan and President Kashmir. However, 2007 was the yearhistory of Jammu and Kashmir. “The issue Musharraf loosing authority had a major mainstream politics with separatistswhich has been hanging balance for impact on the course of Kashmir looking at the factional fight withindecades is now all set to get settled dialogue. A section of separatists here ruling alliance. The government surviveddown”, he had said. The same month follow the course of dialogue in sync with at the end of the day that is the biggestMirwaiz Umar Farooq, the chairman of the vibes coming from Islamabad. news of the year.the moderate faction of All Parties Pakistan embroiled in the internalHurriyat Conference traveled to Pakistan problems for almost entire year put the

One important feature of 2002 assemblywhere he met President Musharraf separatists on back foot. Dialogue

2007 : The Year in Review

No Progress On Peace Process

Epilogue Research Bureau



elections was that it threw up a rag-tag favouring continuation of the present arrangement. Since then the Panthers

alliance of various parties and individuals ruling alliance in Jammu and Kashmir, Party had been sulking and taking on the

to form the government Congress and the the PDP desisted from fielding its government on one or the other issue.

Peoples Democratic Party being the lead candidate in Poonch constituency. While announcing its decision to

players agreed to work under a three- Congress got the reading correct. Few withdraw support from the government,yearly power rotation arrangement. days later Chief Minister Azad called on the party chairman Bhim Singh said that

Everything went smoothly till PDP was in PDP leader Mufti Mohammad Sayeed at the Congress led coalition has failed to

the driving seat. However, Congress' his residence. A little later Muzaffar serve interests of Jammu region which

Ghulam Nabi Azad took over as Chief Hussain Baig was re-inducted in the his party espouses.

Minister in November 2005, the politics cabinet and the embittered Qazi

of one-upmanship begin to churn. Azad Mohammad Afzal resumed duties in his Forces Maintain Edge, Militants on Edgewould often say that he has taken over a Civil Secretariat office and the Forest

corrupt and inefficient system. On the department was returned to him. NowSecurity forces, including the local Police

contrary, the PDP leadership accused PDP and Congress leaders don't want hearand the paramilitary forces, maintained

Azad of de ra il in g the po si ti ve that there were differences betweena clear edge over the militants in almost

a t mo s ph er e o f r e con c i l i a t i o n them as strategies are being working outall parts of state throughout the year.

consolidated post-2002 elections. In for a future electoral alliance.

February 2007 the war of words broke outin open. Azad ridiculed PDP's demand for

troop reduction. The government came

close to a collapse when the Prime

Minister intervened to defuse the crisis.

Government got a breather on March 30

with constitution of a central committee

to study the troop reduction demand but

parties rushed to the field for campaign.

For next two months there was hardly

any work in the secretariat as parties

entered into an undeclared poll

campaign putting the entire state into a

political uncertainty.

Some semblance of order returned in

summer but the ruling coalition boat

rocked once again when Chief Minister

stripped a PDP Minister of his portfolio.

Qazi Mohammad Afzal, who enjoys the

stardom for defeating NC's Chief Panthers Party Pulls Out Even though the organizations like HizbulMinisterial candidate Omar Abdullah in

Mujahideen, Lashkar-e-Toiba, Jaish-e-Ganderbal constituency, resigned asMohammad and Harkat-ul-Jehad-e-Minister in protest after loosing his Forest The Jammu and Kashmir NationalIslami suffered the most at the hands of department. PDP upped ante against Panthers Party of Bhim Singh having its

security forces, neither the politicalChief Minister and the government once four members in the State Legislativeleadership nor the top security bossesagain appeared falling. Assembly walked out of the coalitioncould give an objective analysis of thegovernment. Panthers Party had been asituation. The other outfits whichpart of the ruling coalition ever since itsThe by-elections to Poonch assemblysuffered major losses were: These outfitsformation in November 2002 and it hadconstituency held on December 12,Al-Badr, Tahreek-ul-Mujahideen, Al-two ministers in the government tillhowever, settled down the animosityUmar, Jamail-ul-Mujahideen.November 2005 when Ghulam Nabi Azadbetween coalition partners. Taking cue

took over the reigns from Muftifrom a resolution adopted by a one-dayMohammad Sayeed under power sharing The main reason for the contradictorysession of All India Congress Committee

SPECIAL REPORT

THE YEAR IN REVIEW




figures on the militancy and security followed by 49 of LeT, 18 of JeM, 11 of Al- over the corresponding period of the

situation was that the ruling coalition Badr and 20 of HuJI. previous year. During the same period,

partners were engaged in a war of wits on security forces foiled more than 50

demilitarization. infiltration bid and killed about 100In 2006, out of 105 commanders killed,

militants immediately after theyHizb lost 41, LeT 32, HuJI 10, JeM fivesneaked into this side from Pakistan -To call the bluff of Peoples Democratic and Al-Badr four. In 2005, Hizb lost 31 topadministered Kashmir. However, theParty's demilitarization demand, the commanders, followed by 12 of LeT, nineinfiltration from across the border alsoDefence Ministry, state government and of Al -B ad r, s even of JeM, twodecreased as compared to previousvarious heads of the security forces commanders each of HuM and HuJI,years.maintained that the militancy was besides one each of TuM, JuM, HeI and Al-

maintaining a steady trend with no Barq.

positive change in the situation. More than 100 militants and their

However, security analysis took an families also surrendered before theThis year Hizb lost one operation chief interesting turn when the outgoing Chief security forces near the border afterc o m m a n d e r , f o u r d i v i s i o n a lof Army Gen JJ Singh said that the their return from PoK during the past twoc o m m a n d e r s , s e v e n d i s t r i c tsituation in Jammu and Kashmir was fast years. Security forces and policecommanders, nine tehsil commanders,returning to normal. However, the next

eliminated over a dozen top commanders12 area commanders and companyday his predecessor Gen Deepak Kapoor of different militant outfits during thecommander, the officers said.pointed out that the situation was far period.from normal and it called for stern

Top among those killed in 2007 includemeasures.

Cell Wars Hot UpBilal Afghani, chief commander of Al-

Badr on December 3 in Budgham followedThe contradict ion of analys i s by Qari Umar (deputy chief of HuJI for J- Registering a customer base of eight lakhnotwithstanding, the militants suffered K), Abu Hamza (chief operation in Jammu and Kashmir, Bharti Airtelhugely this year with Hizbul Mujahideen commander of JuM), Qasim Bhatti (chief claimed to have become lead player insuffering the maximum loss of its cadres operation commander of LeT), Iajaz the State, ahead of BSNL. Aircel is third inand top commanders. The HM lost 34 top Ahmed Chopan (chief operation the line but is improving with its newcommanders and 307 cadres in commander of HM), Aby Tallah (operation schemes and BSNL believes that it is agunbattles with security forces this year. commander of LeT's Jammu region), temporary setback.

Mohammad Younis (commander-in-chief,

As a result, Kashmir militancy's backbone HMPPR) and Mohammad Khalid-ur-Celebrating the achievement at end of

has been broken and Hizb cadres have Rehman (LeT's India operations head).the year, Airtel introduced Super Life

gone into hibernation after gettingTime Validity (SLTV) recharge at Rs. 499,

demoralized. Hizb tops the list of 13 With forces continuing to enjoy an edge less than half the standard price of Rs.terror outfits whose top commanders over militants, the overall security 999. “The milestone of eight-lakhwere among those killed. situation in the state improved customers in a short span of three years

considerably with the number of clearly reflects the conviction of peopleA total of 77 top militant commanders militancy related incidents, killings of of the State in the services beinghave been killed by security forces till civilians and security force personnel provided by Airtel,” said Bharti's Chief November this year and Hizb tops the list coming down as compared to previous

Operating Officer, Vishal Sehgal.followed by LeT, JeM, HuJI, Al-Badr, HuM, years.

JuM, TuM, HeI and Al-Barq, according to Sehgal said the network was operatingpolice data. The number of militancy - relatedwith 1,100 cell sites and hoped to scale it

incidents came down by 33 per cent inup to 1,300 cell sites by the end of the

The list of militants killed includes 17 2007, confirmed an official spokesman.current financial year.

commanders of LeT, 13 of JeM, 10 of HuJI During the year, the killing of civilians by

and three of Al-Badr. During past two militants and in the cross - firing betweenWith the huge customer base, Airtelyears of Congress rule in Jammu and security forces and ultras also registeredaccounted for 44.34 per cent of theKashmir, 182 commanders were killed a 59 per cent decrease. Similarly, theState's 1.8 million telecom market. BSNLand of these 75 commanders were of Hizb security force killing fell by 28 per cent

SPECIAL REPORT

THE YEAR IN REVIEW




enjoys 43.32 per cent while Aircel has last year referred to the government for Some More Wait For Baglihar

10.77 per cent share. accord of sanction for prosecution.

Sanction for prosecution was accorded in Like several years in the past, the68 cases against 105 officials (includingJammu and Kashmir has emerged as the Baglihar hydro-electric project the

30 gazetted officials). controversial yet most prestigious powerthird best market for Airtel after Delhiproject of J&K failed to keep a date withand Mumbai and Kashmir valley

this year. It had been ambitiouslycontributes a major share to this. Under the amended provisions of announced that Baglihar will beginPrevention of Corruption Act, thegeneration of electricity by DecemberVigilance officials said properties of sixThough the BSNL authorities are worried31, 2007 but that did not happen. Theofficials valued over Rs 1 crore have beenabout the emerging growth of its mainproject has overrun the deadlines severalattached. The total number of competitor, they maintain that it is atimes in the past.attachments of property cases increasedtemporary phase. “We have stopped

to 12 and the attached property wassales for sometime but we are revivingNow finally the government has officiallyvalued at Rs 4.48 crores, they said.and will be back in our position” said aannounced that the hydroelectricsenior BSNL official.project will start partial operations by

“We registered cases against 19

next June, supplying much neededgovernment servants for acquisition of Likewise, Aircel is confident of having itspower.

assets through corrupt means.pie in the market. “We are not that old

Disproportionate assets worth Rs 4.27but our share is also rapidly improving,”Pakistan has said it fears the one-billion-crores have been detected in these casessays and Aircel official. The coming yeardollar project could deprive its wheat-so far,” the officials said.is likely to witness intense competitionbowl state of Punjab of vital irrigationbetween telecom players.water. It says the dam violates a decades-

They added that a number of casesold water sharing treaty brokered by the

War against corruption related to misappropriat ion of World Bank.government funds in works, awarding of

contracts and purchases were alsoAudacity of loud slogans may have slowed But India says the Baglihar hydroelectricreg i s te red, and accord ing todown owing to political reasons, but project on the Chenab River does not

tirade against corruption continued in conservative estimate a loss of over Rs 15 violate the pact and could go a long way2007. During the year the Vigilance crores was caused to the state exchequer to ending routine 12-hour blackoutsregistered 81 cases against 109 in these cases. plaguing the Himalayan state.government officials (including 44

gazetted officials) and 18 private “Our objective of quality investigation in "The first phase of the 450-megawattpersons. These included 41 trap cases in a specific timeframe recorded further Baglihar Hydel power project willwhich 46 officials were caught red-

success in 2007. The success of proved become operational by June, 2008,"handed while accepting bribe.

Chief Minister Ghulam Nabi Azad saidcases during investigation increased toafter a visit to the project site. "The paceover 90 percent in 20062007 as against 65

Of the 81 cases registered in 2007, 43 of work on the project had slowed,percent during 20032005,” the officialsrelated to districts other than Jammu meaning the target date for completionsaid.and Srinagar. And of the 41 trap cases, 21 was missed," Azad said, referring topertained to rural areas. Besides, the objections raised by Pakistan. The

The Vigilance Organization duringVigilance filed challans in 88 cases in second phase would be completed in theinvestigation detected a loss of Rs 77.40court against 154 officials (including 58 "near future." The project willcrores to the exchequer since Januarygazetted officers) and 164 private "considerably improve" the power2005 mainly due to corrupt practices by position in the Himalayan region, he said,persons like businessmen, middlementhe officials. The amount includes giving no details on how much electricityand beneficiaries of graft.misappropriation of Rs 58.05 crores and would be generated by the initial start-

up. The work on the project began inpossessing disproportionate assets worthSeventy-nine cases against 166 officialsApril 1999.Rs 12.61 crores(including 69 gazetted officials) were

SPECIAL REPORT

THE YEAR IN REVIEW




Jammu and Kashmir has the potential to conferred on him in his long public institution of excellence. He said, “let

generate 20,000 megawatts of power, career. Jammu and Kashmir Governor me say, at the very outset, that I have

but less than 10 percent of it has been and university chancellor S.K. Sinha been impressed by the remarkable

exploited. Massive power theft has conferred the doctorate degree on strides that the University of Jammu has

compounded the state's electricity woes Manmohan Singh - the first from an Indian made in recent years. I compliment youwith people refusing to pay power bills. university after he became prime all, especially your dynamic Vice

minister in May 2004. Chancellor Prof Amitabh Mattoo. The

steps taken by your University toAn expert appointed by the World Bankestablish itself as a center of excellenceruled earlier this year that the dam India Manmohan Singh has been the recipientare impressive. I commend theis building in the disputed Kashmir region of honorary doctorates from numerousUniversity's achievements in teachingdid not violate the water-sharing treaty universities both in India and abroad.and research, especially in fields likewith Pakistan. This long list includes honorary degreeshigh energy physics, glaciology,of D. Litt from Panjab University, Gurubiotechnology and strategic studies. I amNanak University, Delhi University, SriThe 1960 Indus Water Treaty governs thealso happy that the University hasVenkateshwara University, Panjabisharing of common river waters. Pakistanactively participated in extension work,University, University of Mysore, Osmaniasaid it would be deprived of its rightfulin partnership with civil society, inUniversity and Italy's University of

share of water from the Jhelum River. disaster management, empowerment of Bologna. He has received other honoraryrural women and

A t P a k i s t a n ' s t he e f fo r t s a trequest, the World strengthening theB a n k i n 2 0 0 5 region's culture of appointed Professor t o l e r a n c e a n dRaymond Lafitte, of p e a c e . I t i sthe Swiss Federal precisely this blendI n s t i t u t e o f o f a c a d e m i cTechno logy , t o excellence, socialaddress differences r e l e v a n c e a n dwith India over the a e s t h e t i cdam being built in sensibility that oursouthern Indian Universities mustKashmir. Under the n u r t u r e ” .terms of the 1960 t h e y e a r w a streaty, the decision equally momentousw a s f i n a l a n d degrees - a Doctor of Laws from the for the Vice Chancellor at the individualbinding on both parties, according to the University of Alberta, Edmonton, level. Prof Mattoo was nominated to theWorld Bank. Canada; and a Doctor of Social Sciences board of directors, India Afghanistan

from the University of Roorkee among foundation (IAF), for an duration of two

others. years.An Year of Honour for Jammu

University

Prime Minister getting an honorary The 10-member board has five members

degree from the University of Jammu each from India and Afghanistan. It wasFor Jammu University and its Vice

was indeed a rare honour for entire constituted during the Afghan PresidentChancellor, 2007 was a year of glory. TheJammu and Kashmir state. On receiving Hamid Karzai's visit to India in April.world class and majestic General

the degree, the Prime Minister Mattoo is an expert in India's foreignZorawar Singh Auditorium this year saw

remarked, “I have received similar policy and as a member of the IAF board,Prime Minister of India Dr Manmohan

honours before but your gesture is he is expected to foster the civil societySingh receiving an honour from the

special for me”. The Prime Minister also links and academic and scientific contactUniversity of Jammu. Prime Minister on

placed on record his deep appreciations between the two elected as the memberJuly 15 receive an honorary doctorate of

for the Vice Chancellor Prof Amitabh of governing council of Pugwash, theletters (D. Litt) from Jammu University,

Mattoo for making the University an Nobel Prize winning NGO, this year.the latest in the many academic honours

SPECIAL REPORT

THE YEAR IN REVIEW




D I A L O G U E

J& K S I TUA TI ON


You came to Jammu and Kashmir in Hindu, Muslim, Sikh Hain Tayyar…. This against us, in 1947 secularism was at its

2003. That was 56 years after you had was quite an unusual scenario for me. best in Kashmir.

come first as part of India's first Army The previous year I was in Calcutta where

deployment to Kashmir. You have seen Though I had worked in J&K for over ten

the developments from different years as an Army officer in between alsolevels. What difference do you find in but in 2003 when I landed at the samethe situation of 1947, 2003 and now? airfield of Srinagar where I had landed

first 56 years back, my thoughts went

When I came here in 1947, the feeling back to the same situation. I could mark a

was that the Army has been given almost stark difference. In 1947 Kashmir stood

impossible task to accomplish. All odds an example of secularism while in 2003

were against us. On the afternoon of the element of fundamentalism has

badly crept in the Kashmiri society. TheOctober 26 we were told to go to

Kashmiri Pandit minority had been drivenKashmir; that Maharaja has acceded and

out of the Valley. I can recall when I wasthe Army has to be in Srinagar. About

sworn in as Governor on June 4, 2003enemy: the Pakistani side comprising

there were rifle fires quite audible inover 5000 tribals and also regular soldiers

Srinagar City. There was violence.was led by Gen Akbar Khan. They hadopened an attack from Baramulla. We

were just 300 soldiers. I was a Major and But I was more confident of the situationthe only Indian Army officer at the mov ing fo rward. Fo r me theControlling Headquarters where all other fundamentalism was a more seriousofficers were the British. The British concern than violence. I had dealt withGovernment had decided that none of similar situation earlier also particularlytheir officers will go to Kashmir. For me during my term as Governor in Assam.the task was stupendous, I did not

actually know what happens next. It was In 2007, there was optimism. Things area miracle that we succeeded. moving forward. The level of violence is

reducing; ceasefire is holding well on the

We were able to defeat the Pakistani Line of Control for fourth year now.raiders as we enjoyed enormous goodwill Peace process is moving on and dialogueof the local people of Kashmir. They with Pakistan is also taking place. Therelooked at us as savours. Sheikh is a general change in the attitude forMohammad Abdullah was the undisputed peace, development and prosperity.leaders of Kashmir; he had a secular

outlook and had opted to with India. I still Army was dealing with the communal For Jammu and Kashmir, the year 2007remember the popular slogan those days: violence following selective killings. The had begun at a very enthusiastic note.Hamlewar Khabardar, Hum Kashmiri bottom-line is that despite all the odds Mirwaiz Umar Farooq going to Pakistan

We need a J&K-centric solution

and not Kashmir-centric

Interview with Governor Lt Gen. (Retd.) S.K. Sinha

In 2007, there was

optimism. Things are

moving forward. The level

of violence is reducing;

ceasefire is holding well on

the Line of Control for

fourth year now. Peace

process is moving on and

dialogue with Pakistan is

also taking place. There is

a general change in the

attitude for peace,

development and

prosperity.

LT. GEN (RETD.) S.K. SINHA’S association with Jammu & Kashmir has completed 60 years. He was a part of thefirst contingent of Indian Army to touch ground in Kashmir in October 1947. In 2003 he returned to the stateas Governor. In an Exclusive Interview, Gen Sinha share with Epilogue’s Editor-in-Chief ZAFAR CHOUDHARY his

assessment of the prevailing situation. Here are excerpts :



and condemning the use of gun from the mindset. People are gett ing there is complete lack of democracy. The

Pakistani soil. General Pervez disillusioned with Pakistan. You must be Punjabis are the dominant class;

Musharraf declaring that the elements knowing Lord Averbury of UK, a renowned Pathans, Baluchs and Sindhis come in the

supporting violence have no role in the protagonist of Pakistan. His organization second category. Stil l worst, the

peace process. But slowly every thing conducted an opinion poll in Kashmir the Kashmiris fall in the third category of came to a halt. How do you analyze the MORI survey, its results were quite people there. Given this situation, in

progress on peace process over this in te re st ing -61 pe rcen t o f the Kashmir the element of sympathy for

year? interviewed people wanted to stay with Pakistan is becoming negligible.

This problem is here for 60 There have been many models

years now. There are so many and proposals in discussion for

ramif icat ions. Expecting resolution of Kashmir issue.

results in matter of months is What do you suggest as a

unrealistic. We are moving in a workable way forward?

situation where expecting

matching response from See, in Kashmir Valley there is aPakistan is difficult. Political

feeling of a separate identity.situation in India too has been Some want to be totallyuntenable this year. At one independent. This sentiment forpoint of time one could have independence needs to beexpected fresh elections in the understood. In Jammu andcountry; there were some signs Ladakh regions opinion is not theof instability. Let's keep moving same. There is a question of in a direction and wait for the managing contradictions. Therefinal results. has to be a “Jammu-Kashmir

centric solution” and not the

Shortly ahead of the internal “Kashmir centric solution”. This

disturbance in Pakistan it was has to be ensured that none of

widely rumoured that New the identities is compromised

Delhi and Islamabad were with. Realignment of the lines of close to a deal on Kashmir. Can division is unthinkable. We have

you imagine…? enormously suffered on this

account and such experience can

not be repeated. While movingNo don't think so. I don't thinkforward towards a solution, carethere can be a deal on the issue.has to be taken that allI too had read about this but Iaspirations are accommodated.don't find anything substantial.We are living in an era of

How do you see the internalglobalization.

disturbance in Pakistan

casting an impact in Kashmir? India, 6 percent wanted to be withThe national boundaries are melting andPakistan and 37 per cent were

the economy is taking the center stage.undecided. I believe, today even the 6In Jammu and Kashmir there is a lobby You see, the concept of nation state waspercent figure too has come down.sympathetic to Pakistan. This lobby wasfirst evolved in Europe and now it isminiscule in 1947. Those who wanted toEurope taking lead in blurring thego to Pakistan had gone. But now over the As the internal picture of Pakistan comesnational boundaries towards achievingyears this lobby has become stronger. In out, people don't want to be a part of economic empowerment of the entire1989 when the militancy erupted, the such a place. Apart from the instability,region. What I propose is a South Asianpopular slogan in the Valley was there is sectarian violence, the terrorEconomic Union. In such an arrangement“Kashmir Banega Pakistan”. However, machinery pumped into Afghanistan andall the existing animosities will get a backafter 2002 there has a definite change in Kashmir is now working at home too,

D I A L O G U E

J& K S I TUA TI ON




seat and the economic prosperity of the the Peoples Democratic Party seem to buildings in the Valley. But in its report

be over, for the moment. There have the expert panel constituted by thepeople. Jammu and Kashmir, including

been signs of bonhomie but debate on Prime Minister, it is learnt, has notthe areas under occupation of Pakistan

spoken of downsizing the troopand also the Northern Areas can make a

strength. How do you comment on thebeginning in this direction and soon theresituation after having witnessed acan be a South Asian Economic Union.raging conflict of ideas between theOne can also take a cue from the South-ruling coalition partners over the year?East Asian countries the ASEAN has

emerged as powerful economic bloc.

In fact the very word “demilitarization”

was ill conceived. Pakistan's PervezIt is widely believed that the prolongedMusharraf used this word and somestandoff between the ruling coalitionpeople in Kashmir starting echoing. Inpartners in Jammu and Kashmir spanningplaces where there separatist violenceover a year now contributed in blockingor other forms of violence, the troopthe peace process, particularly the coursestrength has to be maintained.of dialogue between New Delhi andHowever, the strength or positioning

Kashmiri separatists. My point is that the can be reconsidered depending uponrole of state government is seen as athe evolution of situation. Therefore,facilitator in the peace process with thethere can be three things:separatists.

? Return of troops to the barracks,I don't known if there was any lack of ? Reduction in strength oreffort at the part of government. The

person, you are talking about, has ? Relocation of position

worked more for the dialogue. In fact he

has been the driving force. There is no In first case there has to be anreason to believe that the government appreciation of the situation prevailingand leaders of the coalition lacked any on the ground. The need foreffort in this direction. It was during this politicization does not arise at all. People

time that we had the roundtable who have been talking loud about thedemilitarization must realize theconferences. If you understand what asituation assuming in Pakistan.roundtable conference means, its idea

was conceived in 1930s. What British did

was that they held roundtable The terror infrastructure is still intact.conferences in 1930s and 1940s. That Reduction in the troop strength istime Mahatma Gandhi was a widely unthinkable without getting convincedaccepted leader with no rivals. The about dismantle of terror infrastructure.British invited many to the roundtable As far as relocation of the position of conference and Gandhi too would get troops is concerned, this process is ainvitations. There can be differences but continuous. Relocation has been goingwhen all parties sit together it makes the for several years and it is going tounderstanding better.

continue.

Therefore, the state government can be Jammu and Kashmir enjoys a speciala facilitator and this role they have constitutional position in India. Theplayed well. If separatists don't come to Chief Minister too enjoys specialjoin the roundtable conference no body powers and authority as compared to

the contentious issue still remains.can be faulted for this. his counterparts in other states. DoesThere has been relocation of some this difference extend to the Rajtroops from some hospitals and school Bhawan too?Differences between the Congress and

The national boundaries are

melting and the economy is

taking the center stage. You

see, the concept of nation state

was first evolved in Europe

and now it is Europe taking

lead in blurring the national

boundaries towards achieving

economic empowerment of the entire region. What I propose

is a South Asian Economic

Union. In such an

arrangement all the existing

animosities will get a back

seat and the economic

prosperity of the people.

Jammu and Kashmir,

including the areas under occupation of Pakistan and

also the Northern Areas can

make a beginning in this

direction and soon there can

be a South Asian Economic

Union. One can also take a

cue from the South-East

Asian countries the ASEAN

has emerged as powerful economic bloc

D I A L O G U E

J& K S I TUA TI ON




No, the Governor does not have any Chancellor of Universities I have been Shri Mata Vaishno Devi University and the

special or extraordinary powers or proactive in promoting the Higher upcoming state-of-the-art Cancer

position which is not available to his Education and as Chairman of the two Hospital are the initiatives for the

counterparts in any other state. His Shrine Boards I have been proactive I common good.

powers emanate from the Constitution of India which have been endorsed by the You have vast experience of serving inConstitution of Jammu and Kashmir. the Armed Forces, Public Life, and

Diplomacy and at Raj Bhawans. How do

You remained Governor of Assam. How you compare the political maturity in

do you put the difference in your Jammu and Kashmir with other parts of

experience at two places? the country?

The problem of insurgency is almost the There may be religion bias among some

same at both places. But in Jammu and sections of people but Kashmir as a

Kashmir the serious dimension of community is not fundamentalist.

problem is the religious fundamentalism Politics here is quite seasoned and its

which was not in case of Assam. The heritage is Kashmiriyat.separatist movement in Jammu and

Kashmir would not have been called as During your present term as the Jammufundamentalist if the people involved and Kashmir Governor two Chief were mix of all in the state. In Assam the Ministers have worked with you. PublicULFA was not confined to any particular understands the differences of religion. Moreover, the Assam problem relations both maintained with the Rajdid not have international dimension Bhawan. Could you please tell us whowhich is a history of Jammu and Kashmir was (or is) more comfortable workingdue to involvement of Pakistan. with you.

At more than two occasion, particularly It is just a matter of public perceptionduring the demilitarization debate both were my Chief Ministers. Once therewhen you raised the security concerns, were some differences of opinion witha part of ruling alliance issued one Chief Minister on Amarnath Yatra.statements asking you not to speak on People asked me a lot of questions but Ithe political matters. Is this something never criticized the Chief Minister. Todaythe Jammu and Kashmir Governor no one asks such questions. After all it isshould not speak about? my government and they are my Chief

Ministers. If I returned the Panchayati Raj

I never spoke on the political issues. Bill during the tenure of the previous

However, upholding the constitution of Chief Minister in case of the present

India and expressing concerns on the Chief Minister's tenure I have recently

issues of national security is a part of my returned the Right To Information Bill.

right and responsibility. I admit that I Both have respected my opinion.

have been proactive in some matters. Ihave been proactive in reviving When last time I had interviewed hisKashmiriyat, I have been proactive in Excellency in March 2006, themaintaining the national integrity, I have functional democracy in Jammu andbeen proactive in upholding the Kashmir was described as best form of constitution of the state and country. self rule. President Pervez Musharraf Besides being Governor I have been have been proactive in reviving and and other protagonists of self rule wereassigned (by the legislature) some other promoting the pilgrimage and utilizing advised to learn from the Jammu andresponsibilities too. Therefore, as the resources for the common good. The Kashmir experience of democracy. But I

It is just a matter of

public perception both

were my Chief Ministers.

Once there were some

differences of opinion with

one Chief Minister on

Amarnath Yatra. People

asked me a lot of questions

but I never criticized the

Chief Minister. Today no

one asks such questions.

After all it is my

government and they are

my Chief Ministers. If I

returned the Panchayati

Raj Bill during the tenure

of the previous Chief

Minister in case of the

present Chief Minister's

tenure I have recently

returned the Right To

Information Bill. Both have respected my opinion.

D I A L O G U E

J& K S I TUA TI ON




believe in Jammu and Kashmir the development of the state this year. He country. Two newly found Universities

democracy in real sense has been said that 3.7 per cent of the state's total the Mata Vaishno Devi University and thedenied to people by keeping the population lives below the poverty line Baba Ghulam Shah Badshah UniversityPanchayati Raj Institutions in perpetual and he wanted this to be close to Zero. are have done exceptionally well in a

limbo. His Excellency's comments… very short span of time. Now the need is

to enhance the quality of education. I amHe prepared three vision papers for theDemocracy has to be all levels. In Jammu of the opinion that better standards of state. Since the agricultural terrain isand Kashmir we enjoy democracy to a higher learning certainly lead todifferent in Kashmir, Jammu and Ladakh,greater extent than many parts of the economic development.therefore he suggested different set of world but there may be some problems in

mechanism.the actual operation of the system. If

In Jammu and Kashmir working atthere are certain shortfalls, they are not

bringing peace and ushering the stateconstitutional.

into an era economic prosperity every

day counts its own significance. How doThe shortfalls may at the level of the

you rate the present year in terms of people who are supposed to implement

achievements on different fronts?

the constitutional provisions. There arevarious levels of democracy. At state level

In 2007, my government has donethe democracy in Jammu and Kashmir istremendous work for development. Onebetter than many other states. I agree thecan see the coming up of Hajj House inreal democracy is not percolating down to

Srinagar in a record time. The Hajj Housethe grassroots in Jammu and Kashmir as it

is the case with many other states in the has emerged as first of its kind in the

country. we must understand that the country. Works on many importantprovisions do exist but the people projects are being executed in doubleresponsible for implementation may not shifts.have been able to implement. I hope the

Panchayat elections are held soon and theThere is a new work culture which sets

democratic system is devolved to the

high standards. The government hasgrassroots levels. been trying to fight corruption in the

system. As far as the peace front isWhat is His Excellency's vision about

concerned, results can not be expectedthe economic development of Jammu

overnight but there have been definiteand Kashmir?

developments.For sustainable economic development

self sufficiency in all spheres is most

important. Let's take the example of Your message for the new year…meat.

In the year which is about to end we have

done well. Whether on restoring peace orThe majority in Jammu and Kashmir has a The vision paper has been forwarded toeconomic development all fronts havenon-vegetarian way of life. To meet the the government and I am sure its

seen huge activity. The concerted effortsbasis requirements a big chunk of meat implementation will bring in a revolutionhave contributed in improved economicand eggs has to be imported. Here we are and make the state self sufficient inconditions and better educationnot self sufficient to meet the almost all spheres. Education is the keyfacilities. We need to carry on with thisrequirements. I had invited the to economic prosperity. Our state isand make Jammu and Kashmir morelegendary Agricultural Scientist MS making huge strides in the highervibrant in 2008. With such sincereSwaminathan to Kashmir. education. There are seven Universitiesefforts, I believe our state can be a modelin the state which by all accounts reflectsstate in the country.a better picture than other states in theHe prepared a roadmap for economic

In 2007, my government has done tremendous work

for development. One can

see the coming up of Hajj

House in Srinagar in a

record time. The Hajj

House has emerged as first

of its kind in the country.

Works on many important

projects are being executed

in double shifts.

D I A L O G U E

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The beginning of year 2007 was quite of peace process in Jammu and groups. The situation assuming Pakistan

enthusiastic on peace dialogue. But the Kashmir? has a definite impact on New Delhi-

enthus ia sm th inned down in Islamabad relations also to the extent

subsequent months. How do you see that there is no positive development onThe immediate impact is that onethe peace process moving? a wide range of issues. In long term it is

separatist group has lost the idea as what important that Pakistan emerges as a

stable and healthy democratic society. ItYes if we look back, the year 2007 hadis in the interest of India for being thebegun full of promises and expectationsimmediate neighbour.on carrying forward the peace process. I

agree that the year has ended at a note of

pessimism. There were some positive What is your analysis of the latest

developments too. Path-breaking reports security situation in Jammu and

of four of the five Working Groups Kashmir?

constituted by the Prime Minister were

presented at third Roundtable Situation is much better than any year inC o n f e r e n c e . T h e p r o c e s s o f past 15 years. It is still getting better.implementation is on. We can say there is There is a climate of change and the

a pause or comma but not the full stop at waves of peace can be clearly seen on thethe end of the peace process. There were horizons. The major reason for this fastinternal problems in Pakistan due to emerging atmosphere of peace is thatwhich the course of dialogue between there is an all pervasive feeling amongthe Prime Minister Manmohan Singh and the people of Jammu and Kashmir thatPresident Pervez Musharraf could not be violence is not the instrument of strengthened and sustained as it had achieving the political ends.been going on. On the internal front, the

dialogue between the separatists and theWhat is your idea of economic

Government of India too turned out to bedevelopment of Jammu and Kashmir.

a non-starter this year. I, however,Our state has the lowest rate of poverty

remain convinced that the Prime Minister(little over three percent) but still it is

is fully committed to using his term as the

projected as one of the poor states inChief Executive of the country to bring the country.sustainable peace in Jammu and Kashmir.

Now what shape the South Asian politicsThis is a stark paradox. People aretakes has to be seen.generally not poor but the state is poor in

terms of its resources and production.How do you see the impact of internal

There is a general feeling that peopledisturbance in Pakistan on New Delhi-

negotiations they should take on. There lack the due empowerment. There has toIslamabad relations and on the course

is a degree of confusion between several be a clearly defined objective of making

At peace process there is a comma

and not the full stop

Interview with Prof. Amitabh Mattoo

The Vice Chancellor of the University of Jammu, PROF AMITABH MATTOO plays the role of a strategic analyst and social

scientist which stretches far beyond the Campus. In an exclusive interview with EPILOGUE, he shares his opinion about

The peace process, educational scenario and possibilities of his joining politics. Here are excerpts:

Situation is much better

than any year in past 15

years. It is still getting

better. There is a climate

of change and the waves of

peace can be clearly seen on the horizons. The

major reason for this fast

emerging atmosphere of

peace is that there is an

all pervasive feeling

among the people of

Jammu and Kashmir that

violence is not the instrument of achieving

the political ends.

D I A L O G U E

J& K S I TUA TI ON




people empowered through education It was provincial university with huge Which department of the University do

and better governance. I believe that the potential. Located in a tense and conflict you rate as number one in terms of

present Chief Minister has a vision for the ridden state it was looking towards academic excellence?

future to see Jammu and Kashmir future but there was no line of action in

e m e r g i n g a s p r o s p e r o u s a n d place. Some of the departments were I would rather talk about twoeconomically empowered state. CM has doing quite well but the talent was not departments. One is new and the other isbeen trying to improve the system of fully exploited. The campus was lacking older with a new outlook. I am talkinggovernance but unfortunately the in terms of infrastructure. about the department of biotechnologyinstruments are still caught and microbiology as the newin a time warp. The

emerging faculties makingbureaucracy needs to gear

excellence in the discipline.up to meet the challenges

The older one is theof governance. In this

department of Managementconnection, two critical

studies which was given aareas for improvement are

new outlook, a new brandingthe Panchayati Raj and the

and a new name as theinfrastructure building

'Business School '. Theapparatus.department was refurbished

and put under a dynamicHow do you look at the

leadership which has madechanging educational

it among the top tenprofile of Jammu and

business schools in theKashmir? There are seven

country.Universities, two deemed

Universities. 40 newYour ISO certification hasg o v e r n m e n t d e g r e eoften been laughed at bycolleges have recentlythe critics. How do youcome up. How do youexplain the advantages of make comparative analysis

this quality certification?with other parts of thecountry?

We are the first University in

the country with ISODespite th i s mass ivecertification which simplyinfrastructure development,means quality satisfaction.Jammu and Kashmir still lagsThe ISO certification is anbehind in higher education.

assessment of level of What were witnessing today

in terms of expansion are the satisfaction expected by the

revolutionary steps to put stakeholders. There are

the state at part with other periodic assessments and

parts of country. We are each time the UniversityWhere does the University of Jammugoing through a phase which can be comes true up to the expectations of thestand today?described as a real inquilab in enhancing stakeholders. It is a statement of

the educational profile. This needs to be constant improvement in all spheressustained and strengthened. Well, today the University of Jammu is on including academics, discipline, delivery

the radar of higher education map of and infrastructure.India. Potential of its students is fullyCould you please describe the Jammubooming and is being appropriatelyUniversity the way it existed on the day Of late, there have been some cases of exploited. Concerted attempts atwhen you had taken over as Vice indiscipline on the campus. What doexcellence have made the University oneChancellor? you see as provocation?of the best in the country.

D I A L O G U E

J& K S I TUA TI ON




I have always pursued a liberal approach been several attempts to destabilize me I would have a become a journalist

with several ways but the most hurtingto student politics. But unfortunately, inword was “communal”. In fact theliberal atmosphere students sometimes It has been widely speculated that youcommunity and caste consideration is anfall prey to some vested interests. It was may join politics after your present

anathema to me. I see myself asa d i f f icu l t s i tuat ion. In such stint as Vice Chancellor. Media reportsreligiously blind. have often suggested that twocircumstances, the Vice Chancellor is

important political parties in J&K haveseen as the only person who can provideapproached you for a role insome relief. Every body looks up to the Vice Can you enlist some persons or otherorganization and government. Is there

Chancellor who comes across the real test of influences which contributed to thesomething like this on cards?

making of your secular outlook?leadership. There were some external

influences but we were able to resolve the(Laughs) Well, honestly speaking, I neversituation, of course, with the support of an My mother, Jawahar Lal Nehru University had the time to think on anything like

overwhelming majority of the students for and Oxford University this. I may think once I am free from thewhom this University is a pride. present responsibilities.

You were selected for Indian PoliceDuring this disturbance at the Campus, Service but you preferred to pursue your Is it true that political parties have

somebody accused you of being career as an educationist or social approached you for joining them?communal. How to you react to this? scientist. What would you have preferred

to become if not an educationist?That was the biggest shock. There have Yes that is true!

Epiloguebecause t he re i s more t o know

ARE YOU MISSING YOUR

EARLIER STORIES ?

Write [email protected]

June 2007 Looking Beyond “K”

May 2007

Peace Process

April 2007 PDP-Congress Coalition

Schism

March 2007 Baglihar

February 2007 The Promise Ahead

January 2007 Book of the year

D I A L O G U E

J& K S I TUA TI ON




I N F O C U S



The budget 2008-09 of Jammu and position of the state since there is no situation. The sales tax/vat seem to be

Kashmir State is in its making and has to effective monitoring so that quarterly potential area of revenue generation as

be linked with the previous historical data could be made available. during the 2005-06 fiscal year the

budget presented by Finance Minister Mr revenue was around Rs.1015 crore and

Tariq Hameed Karra in January 2007. It we estimated the same for the fiscal yearThe international resource mobilizationbecomes historical for the reason of Rs 1422 crore.on account of tax revenue seems to showbeing preceded by presentation of first upward trend primarily due to expectede v e r p r e - bu dg e t Combined with powerEconomic Survey to tariff and service taxenlighten public the levied first time westate of economy and should be able tothe state of mind and est imate our taxalso becomes now an revenue in the ensuingannual feature of budget 2008-09 Rsbudget presentation 3000 crore and non taxin the legislature. revenue Rs 1000 croreOne has to view the to generate Rs 4000

ensuing budget from crore as internalits prescriptions of resource mobilization.innovations to be Comparing the own taxp r e s e n t e d a n d revenue-gross stateresponses thereafter, domestic product ratioexpectations raised during 2002-03 toa n d o b j e c t i v e 2006-07 one finds thefunctions realized or ratio not has been verylikely to be realized by low but increasingthe termination of the marginally from 0.047next fiscal year. In the in 2002-03, 0.052 inpresent paper an 2003-04, 0.0577 inincrease in value added tax and powerattempt is be made to predict the 2004-05, 0.0640 in 2005-06 and 0.0653 in

tar i f f . Assuming e f fect ive taxpossible outcomes of the budget and its 2006-07.administration, the revenue on accountfocus areas.

of service tax is also likely to augment

internal tax revenue. We estimated tax A similar trend is observed when weFiscal Position revenue to be realized by the end of compare non-tax revenue-gross state

current fiscal year around Rs 3112 crore domestic product ratio which stood 0.017

, excise and sales tax/vat is likely toIf we look at current budget completing in 2002-03 and 0.020 in 2006-07.

perform well given the increase inits three quarter of execution it is

volume of business and relatively betterdifficult to ascertain existing fiscal This demonstrates potential buoyancy in

Buoyancy in J&K Economy and

Budget 2008-09

As the Finance Minister prepares to present the last annual budget of the present PDP-Congress coalition

government. PROF. NISAR ALI analyses the achievements of previous year and projects expectations

For the future planning.



tax and non-tax revenue and both depends on effect iveness of tax gains realized on the revenue realization

vertical and horizontal increases in administration particularly during the front. We need to exercise budgetary

internal resource mobilization are last quarter of the current fiscal year. di sc ip line in case of ove r-h ead

justified. But one has to exercise a The budget management much depends expenditures at this stage of fiscal year

caution in advocating this because of on the fiscal discipline. If we look at the to minimize the public expenditure.the ensuing elections the Finance revenue expenditure of the current

Minister may not be in a mood to do so. budget estimated at Rs 10763 and Macroeconomic Aggregates and PriorityIt would be a land mark budget as in primary revenue expenditure mainly AreasJammu and Kashmir fiscal history the comprising salaries, wages and pensions

internal resource generation has been estimated at Rs 8606, that is, 80 per centBefore we analyze the impact of current

at snails pace as compared to previous of the total revenue expenditure and 53budget on the economy and the focus

decade . The addit ional revenue per cent of the total budget or 84 perrequired in the ensuing budget we need

generation would be from tax on cent of the central devolution (share into know the pressing problem areas of

vehicles, passengerthe economy. One such

goods, service tax, etcarea is the backlog

mostly coming fromu n e m p l o ym e n t o f

higher income brackets.

educated manpower asBetween 2002-03 anda stock and the net

2006-07 the states ownaddition to annual

revenue has increasedunemployment as a

by 88.65 per cent.flow.

Similarly the non-tax

revenue of state hasUnemploymentincreased by 75.3 per

c e n t d u r i n g t h eThe economy is trappedreference period whichin a paradox. It importsshown buoyancy andlabour more than 300needs to be sustained.thousand of various

ski l l s who remainThe own tax revenue gainfully employedrealization need to be compared with central taxes +resources from centre),

across the districts in all economiccapacity in the economy and consumer the state has to exercise a great care inpursuits. The estimates are based oncapabilities and the statistics of the nits disbursements. According toobservations and not any officialreference period shows that the per schedule of establishment, there are

th estimates and seem to be realistic. On3,14,125 employees depending uponcapita income during the 10 planthe other hand the governmentcurrent budget for their wages and Iperiod,2002-03 to 2006-07, in theappointed a few times Cabinetbelieve there are another 100 thousandstate demonstrate a rise from Rs 19219Committee to look into the problem ass o - c a l l e d e m p l o y e e s a n d i nto Rs.24830 at current prices and aserious area of concerned. The officialadministrative language casual labouryear earlier 2001-02 it was just Rsestimates reveal that there are about 109engaged in State establishments,17543, that is an annual growth of 7.2thousand (2006) educated youthbudgetary supported corporate and localper cent. The per capita income hasunemployed on live register of bodies with annual financial implicationbeen sharp particularly during 2004-05

employment exchange. Therefore, it looksof Rs 250 crore. It remains a serious2006-07, hence additional resourcea paradoxical as labour importingquestion whether these official organs of mobilization on account of taxeconomy is crying for unemployment.state and corporate bodies haverevenue is justified.Assuming its seriousness, it works around 1legislative mandate to incure theper cent of the population and 5 per centexpenditure on account of the said wagesBudgetary Management and Fiscal of the active labour-force. According tocomprising disbursements at operationalResponsibility NSS 60 the Round the unemployment ratelevel.The lack of discipline here may endin the State is 4.21 per cent which meansu p t h e c u r r e n t b u d g e t w i t h

Much of the revenue augmentation 400 thousand roughly.unmanageable deficit or will off-set the

I N F O C U S





This is to be viewed in terms of incentives. Only a few success stories block headquarters. The post-workshop

identification of unemployed, a youth have come on to the surface. The State tr a in ee an d tr a in ed po te nt ia l

seeking state sector job or a youth go ve r nm en t En tr ep re ne ur s hi p entrepreneur must be subjected to

working in a private school as under- Development Institute needs to re-orient evaluation and monitoring with exit-

wage teacher/employee or an educated itself and carry out the budgetary feed-back to EDI. This would enable theyouth working in a private sector seeking proposed programmes on innovative Honble Finance Minister to keep a track

state sector job or a casual labour/ daily lines and purposeful mode. Their thrust of the extent to which mission proposed

wager in the state establishment in the needs to be on workshops of specific skill in the budget is successful and the extent

queue for permanent state sector job. To and specific venture rather than to which his budgetary incentives realize

avoid business uncertainties and to cover conventional lecturing to relevant the desired end.

entrepreneurial initial risk and business clintale with focus on motivation. As a

risks a provision was made in the current Resurgence of Tourism to Generatebudget for Rs 100 crore as venture capital Income and Employmentfund. It was created to facilitate small

and medium commercial enterprises toThe tourism industry today is different

re-equip themselves to carry onthan what it was in the past. It is not

activities. But it looks that the takers of

Gulmarg or Pahalgam but with newventure capital benefits have not madeinitiatives and state interventions the

their presence felt when only a quarternew tourist destinations have been

of the current fiscal year is left.identified. There are 50 tourist villages

identified and 5 villages have beenThis has got to be moved forward in the identified in the phase I at the cost of ensuing budget by reactivating High Rs250 crores. The new road connectivityPower Employment Mission proposed in is initiated to make potential areasthe current budget. The budget 2007-08 accessible to tourists. More than 6 lakhis committed to launch new self- tourists visited the valley in 2005 andemployment ventures and schemes for more than 29 thousand to Ladakh in 2006upgradation of skills, trainings and drive up to July. The pilgrim tourists totowards entrepreneurial ability. The Amarnath cave in 2005 stood 3.88 lakhs

other areas in self-employment ventures and in 2006 2.55 lakhs. Thus more than 10include service sector ventures, export lakh tourists visited in the valley andpromotion programmes, new emerging another 62 lakh pilgrim tourists visitedareas like floriculture, fish farming, Jammu and Katra. In 2005.There areapiculture and rural transport. In this some new pilgrim and heritage sites likeconnection the capital subsidy was raised “Buddha Amarnath” in Poonch, “Babafro 5 per cent to 10 per cent of the unit Ghulam Shah Badshah,” in Rajouri whichcost and the ceiling also is doubled fro Rs need to have tourist infrastructure so7500 to Rs 1500 in each case. The debt that these sites could be exposed toresult of this the budgetary proposals doservicing or interest subsidization is visitors. We also need to preparenot meet the desired results at theextended to other sectors in addition to heritage and tourism Atlas for bothconclusion of the fiscal year. A self-handlooms and handicrafts. How far vertical and horizontal expansion of employment motivational drive, skillthese incentives have been fully availed tourism industry. The resurgence of formation and skill upgradation has to beof by entrepreneurs is not known as yet. tourism industry needs to be viewed inmade a “movement and a mission” toSimilarly the motivitational incentives terms of development of infrastructureinitiate investment climate and smallfor urban entrepreneurs in establishing and new thrust in the industry.scale industrial base in the stateintegrated communication Kiosks, or Therefore, the greater thrust need to beparticularly in the valleyspecialized marketing cells for processed for promotion of winter tourism eco-food product s we re proposed tourism away from Pahalgam-Gulmarg

The ensuing focus of the budget needs toparticularly for educated urban women tourism hence warrants greaterbe for the said mission with EDI skill andand I do not think the potential allocation for the sector. Shift away frommotivational workshops at district andentrepreneurs have been driven to the Gulmarg-Pahalgam would have greater

A self-employment

motivational drive, skill formation and skill

upgradation has to be

made a “movement and a

mission” to initiate

investment climate and

small scale industrial

base in the state particularly in

the valley

I N F O C U S





tendency to generate income and in 2005-06.This means that the irrigation privileged children accessing education

employment. capacity building is stagnant for last two in private schools.

decades hence foodgrains production is

stagnant during the reference period.Agricultural Growth & Economic Leakages Power Economy and Fiscal Management

Therefore, we need to re-focus ouragricultural development policy in the

Power economy is a political-economyAgrarian economy presents a dismalensuing budget problem. The state economy is powerpicture for last two and a half decades.

scarce economy with generation

potential of 20 thousand MWs. Ironically

the state imports power worth Rs 1608

crores estimated 2006-07 and realizes

revenue Rs 266.36 crore estimated

2006-07 thus reducing the power

budget deficit Rs 1372 crore. The

projected power expenditure for 2007-

08 is Rs 2069 crore.

It is the power budget which makes thestate budget deficit and the state is

unable to overcome the problem in the

short run. The people are entitled to

low tariff power because of plenty of

states own water resources. Secondly if

power sharing from centrally sponsored

projects is on 50:50 basis the state is

able to reduce its deficit and

industrialize for higher growth.The average size of holdings is declining Education and Human Resource

very fast reducing state's arable land to PlanningCONCLUSIONirreducible minimum.It was 0.93

hectares in 1971 with about 50 per centAccess to education has been a primary The ensuing budget of the state is likelyof holdings less than 0.5 hectares and interest of the Government in its policy.

to be partly sweet and partly growthabout 75 per cent holdings less than just That is precisely why the literacy rate has stimulating. It seems the additional1 hectare. As per Agricultural Census gone up from 12.95 per cent in 1961 to resource generation may be put off due2001 the average size of holding is 55.52 per cent in 2001. The number of to elections approaching. However, thereduced to 0.66 hectare with about 78 secondary education institutions and al locat ions for in f rast ructuralper cent holdings less than 1 hectare.It below has increased from 10265 in 1980- development may increase in themeans means most of the state arable 81 to 19735 in 2005-06 with student proposed budget to stimulate growth.land is economically unviable and does enrolment from 7.98 lakhs to 20.73 lakhs The state needs to implement service taxnot give bare subsistence to cultivating during the reference period. There are on a large scale because it has a lot of households.We need to make a law on number o f s t a te in te rven t ion potential to generate revenue.the floor limit for size of holding.There programmes outside the budget to makeare more than 2 million agricultural education accessible in the state. The A member of the Editorial Board of

workers dependent on farming and if size ensuing budget needs to focus on Epilogue Magazine, Professor Nisar Ali isof holding gets reduced at such an Dean Faculty of Social Science,restructuring education by morealarming rate, the State may get into University of Kashmir. He is also memberallocation for need-based professionalinsurmountable crisis. Therefore, farm- of J&K State Finance Commission.and skilled based education and alsobased supplementary self-employment withdraw the budgetary allocation forprojects must find a focus in ensuing The views expressed here are personalprimary/middle school education inbudget. The net area sown was 732 and not attributed to J&K Govt or Statedistricts where enrolment is belowthousand hectares in 1985-86 and has Finance Commission.threshold level. The private schools canjust increased to 734 thousand hectares be aided to cover poor and under-

I N F O C U S





“Financing Development

in J&k is Financing Peace”

Interview with Tariq Hameed Karra

While presenting your first budget this The comparison of budgets for the two increase of around 47% in capital

year, you had said something very years will vouchsafe the fact that we expenditure which is entirely for

peculiar “Finance Department is have committed more resources for development.

financing peace in Jammu & Kashmir”.

How far have you been actually able to Besides certain qualitative changes,finance peace in its real sense ? the annual budget 2007-08 set a

different precedence that it was

Firstly, I would like to make a correction presented in the month of January.

here for the purpose of record. I never Once again you are up for maintaining

said something to use your phrase, as the precedence of advancing the

“peculiar” as “Finance Department is budget. Did this shift in timing of

financing peace in J&K”. In fact, in the presenting budget bring the desired

first part of my budget speech for the results?

year 2007-2008, I referred to the context

in which my budget proposals were There were many reasons for earlyanchored. Under the caption “The budget presentation. One of theContext”, I talked of peace budget objectives is to optimally utilize theproposals echo the peace through learn winter months for seekingdevelopment agenda of the coalition legislative approval of the budgetaryGovernment. After all, financing the proposals much ahead of the norm so ascountry and the region. Therefore, my to help maximize the limited workingbudget is about development through season for implementing and monitoringmore efficient and judicious application plan schemes. As the wintery climaticof resources and utilization of such conditions improve in the months of resources especially human resource.” February and march, the progress in

implementation of various development

As you will appreciate, there was no works can be accelerated. Budget

reference to Finance Department per se. sessions held earlier in February/March

However, the central idea behind what I would not leave time for various

said is that the budget is all about executing agencies and officers todevelopment through more efficient and supervise and/or monitor both pace and

judicious use of resources. I sincerely quality of execution of developmental

hold the v iew that f inancing works particularly towards the close of

development in J&K is financing peace, the financial year. Further, earlier on thedevelopment. For the year 2006-07, thenot only in J&K but across the country. budget used to be passed by the

capital component of the plan amountedDevelopmental initiatives such as Prime Legislature around last week of March. It

to Rs. 2737 crore and for the current yearMinister's Reconstruction Plan (PMRP) would normally take the executive twothe same is Rs. 4016 crore i.e. anshould also be seen in such a context. to three months to prepare various

The comparison of budgets

for the two years will

vouchsafe the fact that we

have committed more

resources for development.

For the year 2006-07, the

capital component of the plan amounted to Rs.

2737 crore and for the

current year the same is

Rs. 4016 crore i.e. an

increase of around 47% in

capital expenditure which

is entirely for

development.

On January 16, the Finance Minister TARIQ HAMEED KARRA will present in the legislative assembly the annual budget for the year 2008-09.

This budget being the last of the present coalition government, being presented in an election year and the first of the Eleventh Five Year

Plan raise is huge expectation. In an exclusive interview with Epilgoue Editor-in-Chief ZAFAR CHOUDHARY, the Finance Minister makes an

elaborate account of the achievements of previous year and hints at What should be expected from his forthcoming budget.

I N F O C U S





estimates/plans in pursuance of budget slightly vary due to some receipt ARM and the trends show that we will

announcements/ allocations. Once our identified earlier not coming through or exceed this target.

budget for the next year is in place two due to some expenditure budgeted for

months ahead of the start of financial earlier not taking place or due to some The growth during the last financial

year, it gives ample time for the extra ordinary expenditure on account of year was estimated at 5.75%. For theexecutives to prepare estimates, seek some extra ordinary situations like financial year 2007-08, the annualapprovals including technical approvals natural calamities, etc. arising during growth rate was pegged at 6.5%. Youand release allocations so as to ensure the course of the year. If you look at my are about to present the secondexecution of developmental consecutive budget, couldworks and schemes right from you please explain theday one of the new financial Jammu and Kashmir growthyear. I may add here that so story.far as non-plan allocations are

concerned, 75% of theAs you are aware, the growth

provision for the current yearstory of J&K is extremely

in most cases was released of po s i t i v e . G r o s s S t a t e

March 30 itself.

Domestic Product (GSDP),which measures the growth in

Even after years of “Zero the economy w i thou tDeficit” budget, a majority a c c o u n t i n g f o r t h eof people yet do not component on consumptionunderstand the term in the of fixed capital (CFC), has

practical terms. The leader increased from Rs. 15,660

of opposition, Mr Abdul crore in 1999-00 to Rs. 29,115

crore in 2006-07. Net StateRahim Rather, who has to his

Domestic Product (NSDP) orcredit presentation of nineS t a t e I n c o m e , w h i c hbudgets, ridicules the “Zerodemonstrates the behaviourDeficit' as fudging theof the economy in real terms,figures and postponing

was estimated at Rs. 24,836liabilities. Could you pleasecrore in 2006-07 as comparedexplain the features of 'Zeroto Rs. 13,533 crore during

Deficit' budget ?(1999-00) prices, the NSDP

estimates of J&K stood at Rs.I am glad that you have asked 13,533 crore in 1999-00this question, as there is a lot whileas it is estimated at Rs.of misunderstanding with 18,516 crore in 2006-07. Atregard to “Zero Deficit constant (1999-00) prices,Budget”. In fact, I get amused the Per Capita Net Income forwhen many people use the the state is estimated to

term incorrectly and call the record a growth of 3.04%budget proposals for the current year in during 2005-06 over the previous yearbudget as “Zero Budget”! t has been

detail, the total receipt were projected 2004-05 and 3.19% during 2006-07 overmade clear a number of times that “Zeroat the level of Rs 16,117 crore. The total the year 2005-06. The average annualDeficit Budget” means that ourexpenditure has been estimated at the growth rate of Per Capita Net Incomeestimated receipts and estimatedlevel of Rs 16,267 crore. during the period 1999-00 to 2006-07 wasexpenditures are equal. It mean that no

2% at constant prices and 6.37% atpart of expenditure is being budgeted forcurrent prices.Thus, very clearly, there was a resourcewithout identifying the resources to fund

gap of about Rs 150 crore. The In short, what I am trying to convey isthe same.amount/deficit was to be met through that, so far as economic growth is

At the end fo the day, the position may

I N F O C U S





concerned, we are on tract. achievement, a s more and more s tagnation in our developmenta l

expenditure is getting committed for activities. Some part of plan has to be

development of the State. funded by raising loans and the budgetYour budget had painted rosy picture of also provides for subsequent repaymentWhat is the deficit position? For theexpectations. In your speech, you had

of these loans. Hence the budget takesrecent few years the government hasraised expectation son rise in receiptcare of loans that are being raised forbeen trying hard to ensure the fiscaland decrease in expenditure. At thedevelopmental activities.discipline but still the burden of loansend of the year, what picture do you

and overdrafts has been rising. How doobtain on this account ?you put the present situation ? A realistic picture with regard to our

deficit, based on the actual level of Our revenue receipts for the currentexpenditure will emerge only after ourfinancial year are estimated at Rs. 7,950accounts are fully reconciled with thecrore as against Rs. 7,359 crore last year.books maintained by the AccountantSimilarly our plan receipts are estimatedGeneral. I am happy to share with youat Rs. 4,755 crore as against Rs. 3,921that, for the first time after many years,crore last year besides the receipt underwe have reconciled our expenditure forCentrally sponsored Schemes (CSS). So,2006-07 with the books of Accountant

there is a trend of increase in receipts General to an extent of 100%. It is myand hope and expectations is that such ahope that Finance Accounts for the yeartrend will continue.2006-07 will bring out the correct

expenditure situation. The trend isWhen I say decrease in expenditure, it

continuing and for the current year, wedoes not mean that our expenditure will

hope to reconcile revenue numbers alsogo down as decline in expenditure would

to the full extent. We are moving-in amean lesser developmental activities.

professional consultant to take stock of The focus is to restrict growth in our

the state's finances and, thereafter, workrevenue expenditure; not hat there

out a roadmap for better expenditureought to be no growth in revenue

and debt management.expenditure. We have to pay salaries,

wages, pensions and meet our

The increase in the non productivemaintenance requirements, service debtexpenditure would hamper the growthand interest. All this points out thatof the State. How efficiently have youincrease in expenditure is inevitable. Thebeen able to check the non-planonly issue in our focus is to increaseexpenditure this year ?developmental expenditure and restrict

growth in revenue expenditure. This we

have achieved but much remains to be You had admitted while presenting last

done still. Let us look at the position in budget that non plan expenditure has

the last three years. During 2005-06, the increased and there was storage of Rs.

revenue expenditure was Rs 9,921 crore 200 crore in the non plan productive

as compared to capital expenditure went expenditure during 2006-07. As I

up to Rs. 3,365 crore. In the current year, spoke about just a while ago, the growth

it is estimated that capital expenditure of revenue expenditure is under check.

will go as high as Rs. 4,643 crore, while At the same time, the assets that are

the revenue expenditure will be at the created through developmental planMuch depends upon what type of deficitlevel of Rs 10,615 crore only. have to be maintained and hence thewe are talking about. As I said earlier, our

growth in revenue expenditure cannot bebudgetary deficit during the currentzero. Besides, capital expenditurefinancial year is estimated to be zero. SoTherefore, we are in a situation whereexcludes the salaries that being paid forfar as our fiscal deficit is concerned, wegrowth rate in revenue expenditure iscarrying out the developmentalhave been trying contain its growth. Itmuch less than that of growth underactivities. It means that increase incannot be zero as that would meancapital expenditure. This is an

Our revenue receipts for

the current financial year

are estimated at

Rs. 7,950 crore as against

Rs. 7,359 crore last year.

Similarly our plan

receipts are estimated at

Rs. 4,755 crore as against

Rs. 3,921 crore last year

besides the receipt under

Centrally Sponsored Schemes (CSS). So, there

is a trend of increase in

receipts and hope and

expectations is that such a

trend will continue.

I N F O C U S





developmental activities will definitely your budget speech you had clearly agree to the Power Reform Grant

add a small percentage to the revenue mentioned that the Government of dispensation for a period of minimum 3

expenditure as well. I would also like to India had decided to give Jammu and years. The current year has been year

mention that a substantial portion of our Kashmir a plan of Rs. 4000 crore. It was number two. Various other issues like

plan was accounted for by revenue also said that the Government of India transfer of Dul Hasti HEP, ascomponent including the salaries under will finance the power reforms grant of recommended by Dr. Rangarajan

the plan. It is first time during the year Rs. 1300 crore. There were fears that if Committee, have also got linked up to

2006-07, we took a very bold decision to the grant did not come the entire the larger question of Power Reforms

shift plan revenue component to the non budget proposition will go haywire. grant for the State. In the Scheme of

plan side aggregating Rs. 450 crore. Could you please allay those fears as Financing (SOF) approved by the Planning

During the current year also, plan the year comes to en end ? Commission of India for the current year

revenue component amounting to Rs. 400 annual plan, Power Reforms Grant of Rs.

crore has further been taken on to the 1300 crore has been spec ificallyBudgets can 't be prepared onnon plan side. All this obviously creates a committed. However, it is true that therepresumptions. Every decision is based onpressure on the non plan side. Yet, this is are problems with regard to flow of thisinputs that are received from variousthe most logical way to go forward. We money. We are sorting out the matterdepartments, Government of India andmust transfer liabilities on the plan to with the Union Ministry of Finance andPlanning Commission of India. Somenon plan and made the plan more and Planning Commission of India and it is mye s t i m a t e s a r e b a s e d o n t h emore capital intensive. Further, our hope and expectation that the moneyr e c o m m e n d a t i o n s o f F i n a n c einterest burden is showing an increasing would come before the close of theCommission. Our plan size has been fixedtrend. In the past, we have contracted financial year.by the Planning Commission. Of India atliabilities for which interest provisions Rs. 4,850 crore for the current financialhave to be made. year and we expect that Government of Employment was the major thrust area

India will fulfill all its commitments : of your budget this year. There is no

In our pre-budget economic survey you there are still more than three months to perceptible change in the scenario.

had categorically pointed out that the go before the current financial year Unemployment still remains a major

time for offering amnesty has gone. comes to a close. concern and seen as assuming alarming

However, your budget proposed proporti ons. Coul d you plea se

amnesty for trade and industry but elucidate the achievements on thisHaving said that, I do recognize your

against with a categorical condition front ?specific question on the Power Reformsthat this was the last opportunity. Did Grant. I have no hesitation in admittingthe amnesty scheme bring desired that this has been a tough task. Power I draw your attention the “challenges of results ? If yes what was the quantum ? reforms are easier said than done. We unemployment” that I incorporate in my

have taken up an ambitious programme budget speech for the current year. A

I am still committed to eh budget of electronic metering, electronic billing plain reading of para 73 onwards clearly

announcement made in the budget. We etc. We have introduced energy demonstrates the State Governments'

propose to bring legislation in the budget accounting at the sub-transmission level. will and commitment for tackling the

session for removal of the provision that Huge investments under Prime Minister issue of unemployment. It is my belief

allows amnesty so that the recently Reconstruction Plan, roughly of the order that one of the principal reasons for the

concluded amnesty scheme would be the of Rs 1,000 crore and similar flows under poor off-take of self-employment

last and final. I had accepted that the APDRP, are be ing made in the schemes is the fault in the design of

amnesty scheme wou ld bring in transmission and distribution section. financing of employment schemes across

addi ti on al re sour ce s. I am no t This should leader to reduction in the country, and more particularly in a

disappointed with the outcome of that. I Aggregate Technical and Commercial state like J&K. Debt financing of

shall talk about in detail at the time of (ATC) losses. Efficiency gains would not employment has not worked.

presentation of the budget in the state only improve availability of power but

legislature. also effectively reduce the outgo in May it be on account of faulty selectionterms of payment by the consumers. process or poor post-disbursementHowever, all this will take time. We areMany had said that your budget was monitoring of the project and generalconvincing the Central Government toentirely based on presumptions. In risk awareness on the part of banks, debt

I N F O C U S





financing has simply not worked. Another significant aspect of the on lessons of the past and make

Therefore, in my budget speech, I talked present year's budget was its strategies for the future. What cues

of venture capital funding of self- presentation at the last year of Tenth have you picked from the past and what

employment schemes. This is a new are the major strategies for the future ?

concept and I do not claim finalunderstanding on this concept. But Yes. Indeed, there are a number of building on this concept, during the lessons that we have learnt. I would justcourse of the year, A draft Employment give one example. Our efforts on thePolicy document has been prepared by maintenance side leave much to bethe Economic Advisor in consultation desired. Our motto should be “publicwith Planning and Development constructs and private maintains”.Department and Finance Department.

This draft is currently under the activeIn other words, public investment should

consideration of a Cabinet Sub-create infrastructure and maintenance

Committee. We are looking at review of of such infrastructure should be done by

the existing employment schemes andprivate players under Public-Private

also up-scaling of the subsidy component

Partnership mode. Based on thisso to make the existing self-employmentlearning, a separate sub-plan for

schemes more attractive.maintenance of assets is being

conceptualized so that the flow of The Banks in J&K are charged with not resources under non plan maintenance,keeping up their social obligations of plan maintenance and allocation undergiving loans to raise self-employment. Twelfth Finance Commission could beDoes the Finance Department have any clubbed together and the challenge of details on how many youth had applied maintenance of assets is met in a morefor loans before the banks this year and focused and synergized manner.how many cases were sanctioned ?

The J&K Fiscal Responsibility andI just covered this issue. The credit Budget Management legislation is in

deposit ratio in J&K is around 48% as force since April 1, this year. Thisof now and is fairly below the legislation was expected to put innational average of 60%. In the past, place stringent policy measures formeetings have been held with the mobilization of additional resources,Chairmen of Banks. Our effort has better tax and non-tax collections andbeen to impart greater sense of full cost recovery of user charges.security and comfort to banks and Could you please enlist achievementsfinancial institutions. I must mention on this front ?here that we have also worked out a

new framework of Debt RecoveryFRBM is in place since April1, 2007. a

Tribunals (DRTs) for the comfort of number of measures have been taken

the banks. This legislation has beenunder FRBM. We require a set of rules

introduced and is presently under the

which have now been finalized inconsideration of the Select Committee.consultation with the Law Department.

Apart from this, we have embarked uponI am sure an honest implementation of

a n a m b i t i o u s p r o g r a m m e o f FRBM will bring about qualitative

entrepreneurship development throughchanges in expenditure and more

a r e - e n e r g i z e d E n t r e p r e n e u refficient management of resources.

Development Institute. At the level of Five Year Plan. You had rightly said that Having said that, let me proceed to saySLBC, design issues are being also being on the doorstep of XI Five year that the story on the tax side isaddressed. Plan, the government needed to reflect extremely positive. Our taxes seem to

I just covered this issue.

The credit deposit ratio in

J&K is around 48% as of

now and is fairly below

the national average of

60%. In the past,meetings have been held

with the Chairmen of

Banks.

Our effort has been to

impart greater sense of

security and comfort to

banks and financial institutions. I must

mention here that we have

also worked out a new

framework of Debt

Recovery Tribunals

(DRTs) for the comfort of

the banks.

I N F O C U S





be increasing at over 16% per annum. of fiscal federalism that work for the We shall shortly go into plan

discuss ions with the Plann ingBusiness India in a recent edition has rest of the country are not necessarily

Commission and Ministry of Finance. Atmentioned that the performance of J&K optimal for this state. In this

the time of the presentation of Unionon VAT has been top-class. Our background, the state government

Budget, we would also get a preciseperformance has been appreciated at had made request to the Gol to frontideas of the Gross Budgetary Supportthe level of Empowered Committee of load the second phase of Prime(GBS) to the state plans. Thereafter,State Finance Ministers who have also Minister's Reconstruction plan in awe will strategize as to how best torates our performance as one of the manner that it takes off during theaccess central resources for thebest. We have made no deviations from first year of the XI plan itself. What issecond phase of PMRP.the Uniform Floor Rate (UFR). At the the progress on this front ?

cost of being seen as a tough and non-The coalition government under therelenting Finance Minister, I have held Your understanding of our requirementdynamic leadership of our Chief Ministermy ground in the larger public interest. is absolutely correct. We have taken upis leaving no stone unturned to maximize

the issue for sanction of second phase of the flow of developmental resources for

The Prime Minister's Task Force on PMRP and front loading of exp0enditurethis state because I sincerely hold, to

Development of J&K headed by under the second phase during thereiterate for the last time in this

Former Reserve Bank of India current year itself. Our wishes involveinterview, my response to the firstGovernor Dr. C. Rangarajan had the resources of the Centra lquestion, “Financing Development in

suggested that systems and processes Government.J&K is financing peace!”

Epiloguebecause t he re i s more t o know

ARE YOU MISSING YOUR

EARLIER STORIES ?

Write [email protected]

December 2007 Forests Foresters

November 2007 Ladakh

October 2007 60 years of J&K Conflict

September 2007 Jammu & Kashmir as

Land of Contact

August 2007 J&K @ 60

July 2007 Policy Failure

I N F O C U S





Indian fiscal federalism is deep-rooted, eighteen hundred crores on any day Financial input and output ratios are

farsighted and highly elastic. The during last two years. This alone is a clear hi gh ly di st urbi ng , unpr oduc ti ve

Finance & Planning Commissions are very expenditures are fast increasing mostly

strong institutions to keep a vigil on because of political considerations

changing economic scenario at regional, ignoring the basic parameters of

national and global levels. The economic requirements having a wide

requirement therefore is to ensure spread dissemination of developmental

sincerity in implementation of the efforts. The outcry of attaining financial

fundamentals of such a fiscal federalism, stability by the state is far from reality.

which are enshrined in accurate

assessments, enforcement of discipline Development of infrastructures for whichand purposeful evaluation of financial the State Government feels proud of,input and output ratios. deserves rethinking to make it devoid of

political considerations. The biggest

Any laxity in application of these basic economic problem of the state is that

requirements is susceptible of producing though gross investment is on a rise, the

negative results. Every scheme of fact remains that production is falling

devolution of financial resources and rapidly. We may be eager to execute

their management has to be under a mega power projects with highest

constant debate, the objective being possible speed, generation from our own

that while the economy at national level sources is declining because of poor

should strengthen, the states should also m a i n t e n an ce o f t h e e x i s t i n g

be allowed a sufficient and durable powerhouses.autonomy in handling its economic While we establish new educationdevelopmental requirements in a institutions and upgrade old ones, verydesirable manner. little is done in providing academic and

other essential facilities for running

them.In spite of liberal funding by the Central

Government, the J&K State continues to

be in the grip of the financial crisis. The result is high drop out of the studentsGeneration of internal resources by the and decline in literacy rate. Our proudstate is on its lowest ebb. The treasury is industrial policy and plans are notnot able to meet even the committed showing desired results. Bureaurocraticliabilities, which are accumulating at a hassles continue to be unmanageable.rapid speed- the present liabilities being

around rupees four hundred croresThe local industrialists as also those

excluding those relating to footing thecoming from outside are getting

bill of power purchases. The level of overfrustrated. Agricultural production is

draft is highest i.e., around rupees twodeclining. Imports of food products

hundred five hundred crores as on dateinto the state are increasing day in

including that relating to power sector.and day out. This is equally true

indicative of improper financial about key materials required by themanagement and fiscal indiscipline.The overdraft has not been below rupees state also.

J&K State in the grip of

financial crises

Abdul Rahim Rather

Development of

infrastructures for which

the State Government feels

proud of, deserves

rethinking to make it

devoid of political

considerations. The biggest

economic problem of the

state is that though gross

investment is on a rise, the

fact remains that production is falling

rapidly. We may be eager

to execute mega power

projects with highest

possible speed, generation

from our own sources is

declining because of poor

maintenance of the

existing powerhouses.

I N F O C U S





rupees thirteen hundred crores. The

Fiscal Management & Responsibilities

Act already passed by the State

Legislature is nowhere in sight. Action

plans in the form of state budget lackin accuracy of assessment and clear

display of the programmes to be under

taken during the year.

The State Government should apply

required correctives, wherever,

called for. While on development

spree, we have not to lose sight of

making accurate assessment,

enforcement of financial discipline,

strict monitoring, which are

essential keys to generate a soundand healthy economic scenario. Our

acts have to be such, which will take

u s f o r w a r d o n e c o n o m i c

development front smoothly and on

sustained basis. Apart from meeting

present requirements, we owe such

commitment to our progeny also.

Perfect economic planning and

financial management, can alone

be a sound foundation for the statesOur budget for the current year

real autonomy. Therefore, while takingenvisages an expenditure of around

optimum advantage of the liberalthirteen thousand crores of rupees,financial assistance given by the central

which is funded to the extend of overgovernment, we should be able to

eleven thousand crores leaving very littledevelop a mind set for harnessing State's

to be arranged by the State from theirown resources. Nature has been generous

own sources i.e. hardly fifteen percent.by giving potential for our growth,

We are not able to lift the centralwhether it is in minerals, hydrology, and

assistance and use the same fully for theforest real crafts menship and above all

purpose for which it is granted.in unparalled natural environment.

Even the direct funding underHow long we can ignore our responsibility

programmes like RHM, PMGSY, and Urbanin taping this potential to make our

Development is grossly under utilized.

selves self sufficient. We should strive toAround six hundred crores are lying inaccomplish this goal without any further

banks on account of such programmes forloss of time.

one reason or the other.

ABDUL RAHIM RATHER is Leader of Power deficit grant of rupees thirteen

Opposition J&K Legislative Assembly. Hethousand crores assured by the centre

has remained J&K’s Finance Ministerhas been availed so far. We have not been

several timesable to raise market borrowing of around

Now

Telling

The J&K

Stories

Epiloguebecause there i s more to know

ABDULLAH NEWS AGENCY Lal Chowk, Srinagar

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I N F O C U S





The Budget 2007-08 has an uphill task at revised upwards to Rs 3787.42 crore. Out clinics, a paltry Rs 25.44 crore have been

hand. Apart from struggling for reining in of this only Rs 1215.36 crore have been spent. The document reveals that only Rs

J&K's fiscal and revenue deficits it has spent so far. 1 crore was incurred on urban self

also to face the continuous challenge of employment as against Rs 26.94 crore

internal revenue mobilization and also reserved under the scheme during lastAs against a provision of Rs 1056 crore forfactor in the challenges which continue year. As if all this was not enough work istransmission and distribution of to dog our public delivery systems, yet to be launched on upgradation of electricity, only Rs 133 crore have beenresulting in poor spending and lapsing of Jammu and Srinagar Medical Colleges forused until 2006. Out of Rs 142 crore keptprecious funds. which Rs 120 cror e each werefor model villages only Rs 44.68 crore

sanctioned.have been spent so far. For upgradation

During the last budget session, it was of nine women's ITIs only Rs 14.91 crorerevealed that out of Rs 848 crore have been spent against the actual outlay The PM's package had also earmarked Rs

released under the PM's Reconstruction of Rs 30.60 crore. Surprisingly, hardly Rs 1741 crore for Greater Srinagar and Rs

Package our State was able to utilise only 17.77 crore have been spent against the 1470 for Greater Jammu for drainage and

Rs 484 crore during that year. Out of the sanctioned amount of Rs 49 crore for 14 sewerage. But the government has not

Rs 4100 crore released last year under new degree colleges, which were billed been able to spend anything despite the

ADB-funded projects and Bharat Nirman to help decongest the existing colleges fact that Srinagar city has witnessed two

Yojana hardly 5 per cent of the funds and help provide quality education. The floods due to lack of drainage facilities

have been spent! dream of electrified villages and quality during the last one year alone.

supply to others has remained unfulfilled

despite a provision of Rs 700 crore asThe dismal state of spending and delayed Government had earlier said that forreportedly until now only tenders haddelivery of public services has been operationalising the new districts ourbeen floated.exposed in a government document itself State needs an investment of Rs 400

which was prepared to argue for time crore. Such projections must not dampen

extension for the PM's Reconstruction Out of Rs 83.62 crore sanctioned for the process of establishing processes and

Package. The ways we have failed to National Rural Health Mission (NRHM), a systems which are not necessarily so

deliver makes interesting reading. mere Rs 8 crore have been used on civil capital-intensive. At the end of the day

works in Community Health Centres these estimates are "drawing board

(CHCs) even as people in our State estimates of our engineering mafia" theThe Package which was scheduled forcontinue to die for want of basic health working ways of whom are very wellcompletion in 2007-08 has alreadyfacilities. known to us. To begin with, thebeen extended to 2009. Our planners

budgetary allocation of Rs 36 lakhs thisare upbeat that the Rs 500 crore whichyear for this task is not too bad, given thewere not released by the centre for Although promotion of tourism continuesfact that basic infrastructure toState sector projects for 2006-07 until to rema in the pet goal of ouroperationalise new districts does exist atJanuary 2007 would not lapse and they governments, nothing could be as ironictheir new locations.will be extended to next financial as the fact that our State has spent only

year. It has been revealed that many Rs 1.64 crore out of Rs 31.50 crore

central projects under the Package approved for development of tourist There are other chal lenges too.

which are to be implemented by State villages. Shamefully, only Rs 3.85 crore According to the Comptroller and Auditor

government agencies, either work is has been used for providing assistance to General (CAG) report for 5005-06, J&K's

yet to be taken up or little progress has Tourism Development Authorities as overall fiscal liabilities have increased

been made over them. against Rs 240 crore sanctioned under from Rs 9224 crore in 2000-01 to Rs

the Package. Out of Rs 201 crore 16,801 crore in 2005-06. Our fiscal deficitUnder State sector projects, the PM'ssanctioned for reh abil itat ion of has increased from Rs. 1311 crore inPackage has Rs 3316.12 crore worth of horticulture and establishment of agri- 2002-03 to Rs. 2,643 crore in 2005-06.projects, whose cost was subsequently

Budget 2007-08 :

The unfinished business

Arjimand Hussain Talib

I N F O C U S





The State also had a primary deficit, instance, for making rural roads is a case public organs about the appalling quality

which increased from Rs. 216 crore in in point. As pointed out in the CAG of works. Time extension of projects in

2002-03 to Rs. 1,528 crore in 2005-06. report, publ ic debt is considered our State has become like a divine norm,

Can we still say we have "zero deficit" sustainable as long as the rate of growth resulting in cost escalations. We do not

budgets? of income exceeds the interest rate or have a coordination platform for publiccost of public borrowings subject to the departments, undertaking development

condition that the primary balance is activities, to plan and coordinate in anThe report indicates that there was noeither positive or zero. integrated fashion. That is the reason inimprovement in the management of cash

spite of spending crores of rupees, mostbalances, as overdraft facilities wereof our public works crumble in no timeused for all 365 days during 2005-06 An analysis of our primary deficit vis-à-and our landscapes look primitivelyrather than on discreet basis with the vis quantum spread clearly reveals thatshabby.J&K Bank. And, as a result, our interest their sum turns out to be negative in

payment on the overdraft has increased each year of the period 2000-06

from Rs 71.57 crore in 2000-01 to Rs indicating rising debt-GSDP ratio and Highlighting this trend the CAG has

138.42 crores during 2005-06. No wonder de te ri or at in g si tu ati on of de bt reported that during the year 2005-06,

we have an outstanding balance of Rs sustainabili ty in the State. It is there were 348 incomplete projects as of

2047.44 crore at the close of the year. incredible that our State is yet to enact March 2006 in which Rs. 1, 716.58 crore

its own law which could put a limit to were blocked. Besides, there was costour borrowings. There is another over run of Rs. 1,718.79 crore in theseThe growth rate of fiscal liabilities wasdimension to it: that is preference to projects as the initial estimated cost of 18.33 per cent during 2005-06 over thecreation of populist and decentralised Rs. 2,319.28 crore was revised to Rs.previous year. The ratio of fiscalpol itical systems to sound fiscal 4,038.07 crore. Nothing could be asliabilities to GSDP also increased fromma na ge me nt wi th ou t r el a ti v e bizarre as this in any governance system.60.37 per cent in 2000-01 to 73.78 peraccountability.cent in 2005-06. That means that theFor instance, the fact that the Ladakhfiscal liabilities had grown faster than The way the Public Accounts CommitteeAutonomous Hill Development Councilthe State's GSDP. Given the fact that the (PAC) of the State Legislature has been(LAHDC) had not prepared its accountsbasis of our GSDP calculations is far from taking up follow up and action takensince its establishment and has indulgedaccurate, it is likely that our actual fiscal issues has always been far fromin over spending of more than 200 perliabilities grew ever faster than what the satisfactory. There is no doubt that it iscent over and above the appropriationCAG has reported. the legislature which in theory has to use

budgets is a case in point. CAG's its moral discretion to take up auditcomment that in the absence of issues for correction and remedy. But weOver the years many of us have been

will have to acknowledge the fact that"accounts" true and fair view of LAHDC'ssaying that high reliance on unproductivethe credibility of our democratic systemassets/liabilities could not be assessed inborrowings, including loans from NABARDhas a long way to go before ourthe audit must be taken serious note of.and Asian Development Bank (ADB)legislature could do it with integrity.We must understand this is the bywhich our governments have been

product of creating a virtual State withinpresenting to people as "heavenly grants"a State, in disregard to constitutional andwould land our State in a despicable J&K State does not need only theother statutory systems without relativesituation. That is what the CAG is saying traditional appropriation and regularityaccountability. Can J&K government nowtoday. It is common sense that the audits, the propriety audit and thebe able to ensure that such quasispiraling debt liabilities often result in a efficiency-cum-performance audits needgovernments ensure compliance to thevicious cycle of deficit, debt and debt primacy. For that to happen we mustState's overall financial policies?service payments, unless suitable have external audit and quality delivery

measures are taken to arrest the appraisals and transparent system of persistent increase in fiscal liabilities. ensuring actions are taken. We also needAnother serious problem dogging ourThe premise that these loans would spur transparency and public information onState, mainly the Kashmir division, is theeconomic growth and hence enhance the the Action Taken Notes by variouslack of accountability of governmentState's ability to re-pay loans has been ministries so that people know about thedepartments and other organs inbased on faulty assumptions, more often outcomes.delivering quality in time. Thanks to ourguided by narrow populist considerations shameful work culture and top-downrather than sound economic logic. The tradition of impunity we don't have a The writer can be e-mailed athuge backlog of NABARD loans, for democratic convention of questioning [email protected]

I N F O C U S





It is commonly agreed that when it comes states in a national milieu that was behind. It provided for income-tax

to industrialization, Jammu and Kashmir getting increasingly liberal and thus holidays as well as generous subsidies

has not done well as it should have. This (e.g. a provision of 90 per cent transport

arguably is not surprising. After given the was made for raw-material and finished

unsettled political climate in the state goods from the railhead to factory site).

after its accession and the licence-

permit Raj that existed in India before The State government's Industrial Policy-1991 was by no means conducive to 2004 was a continuation of its 1998 policyindustrialization efforts. Ironically, the while the central government policy wascentral government started to dismantle

extended till 2015. Great emphasis wasits own economic regime just after laid on reconstructing infrastructuremilitancy hit the state. Thus as India destroyed during the years of militancystarted to unleash itself, the State was to as well as creating new infrastructuresink deeper and deeper into violence. which included harnessing the potentialUnderstandably it was Peace and of hydel power in the state.stability, not economic growth through

industrialization that occupied the mindsThe latter of course is a long-term policy

of the policy makers.given the long gestation periods involved

while the former was supposed to yieldRevival of Economic Policy Making more immediate results. As a result of

these policies, from 2002-3 to 2005-6

As the situation started to stabilize and investment in the Large and Medium

then improve towards end of the Industry was Rs. 2391 crores spread overnineties, economic policy making made a 132 units employing a little over 19,000

comeback in this state. For example in people. This may be compared to

1998, the State government came out Himachal Pradesh's performance where

with the New Industrial Policy which over the same period, over Rs 1400 crores

provided for generous subsidies (in were invested in 160 units employing a

certain cases defraying up to 100% of set- little over 13,000 people. Where small

up costs eg in the case of captive power scale industries or SSIs were concerned,

generation), single-window clearances 1406 units were added in Jammu and

as well as circumvention of the land-laws Kashmir increasing employment by

of the state by the provision of leasing. 10,000 in 2007 while in Himachal this

The aim was obviously to attract figure was 952 creating additional

investment from without and within by employment of similar magnitude.

creating financial incentives aimed at Himachal Pradesh's population it may be

neutralizing the impact of poor pointed out, is 60% of that of J&K. Thus

infrastructure (eg poor and indifferent controlling for populations, the

power supply) as well as overcome the difference in performance, it may be

negative impact created by a long period argued is not significant. There is

of militancy. It took cognizance of the however, one major point of difference.

fact that the state would have to The incentive schemes of HP are not asincreasingly competitive. The Centralcompete for investment with other financially attractive as that of J&K.government too was not to be left

How not to Promote Economic Growth :

The case of Jammu & Kashmir

Dipankar Sengupta

It is commonly agreed that when it comes to

industrialization, Jammu and Kashmir has not done

well as it should have. This arguably is not surprising.After given the unsettled

political climate in the state after its accession and the licence-permit Raj that

existed in India before 1991was by no means conducive to industrialization efforts.

Ironically, the central

government started to dismantle its own economic regime just after militancy hit the state. Thus as India started to unleash itself, the State was to sink deeper and

deeper into violence.Understandably it was Peace and stability, not

economic growth through

industrialization that occupied the minds of the policy makers.

I N F O C U S





Therefore where HP to do away with militancy in the state notwithstanding! In generally seek out niche areas where

these schemes, it may not attract fresh fact, it was during militancy that the customers are willing to pay more as the

investment but it may be argued that handicrafts sustained the Valley during products of these have quality or

existing industries would not go away. militancy with increased employment characteristics unique to them. The best

The same cannot be said for industry in and turnover when every other economic example of a hill economy is obviouslyJ&K. There is reason to believe that activity had closed down. Official Switzerland which produces a range of

without the fiscal incentive packages, estimates which are conservative in very exclusive commodities and services

the small and medium hub that has come nature reveal that handicraft sales from be they processed foods, medicine,

up in Jammu-Samba-Kathua would the state rose from Rs 293 crores in 1996 engineering goods or financial services.

simply disappear. This is because many of to Rs 557 crores in 2000 and touched 900 These goods and services carry a

the industries have been set up merely to crores in 2005 ie turnover more than premium which more than compensates

take advantage of tax concessions and tr eb le d in ni ne ye ar s! Equa ll y for any addition to cost brought about

indeed add very little value in the state significantly the players who drove this high transport costs. In the same vein

and therefore hire few people. Statistics industry were from the state itself. handicrafts from the Valley have a

suggest that fewer units under SSIs in HP Unofficial but knowledgeable experts characteristic unique to them that

established in 2006 generated the same consider these figures to be gross under- cannot be duplicated by other craftsmen

level of employment as a larger number estimates and vouch for higher figures. from elsewhere and thus handicraft

units did in J&K in the same year. The But by any standards, even these under- buyers are willing to a pay a premium foroverall economic scenario in the state is est imated figures are impressive. this particular product which more than

stranger still. Data reveals that asset Coming as they do at a time and place neutralises the high cost of transport that

ownership at Rs 10.7 lakhs per house hold where militancy played havoc with law has to be incurred when transporting

is the highest in the country! This of and order, this performance is even more these for sale outside this state. Clearly

course is primarily a reflection that impressive still. And here lies a lesson. for such products subsidies and tax

transfer of resources both official and breaks are not essential for success!

unofficial have not gone to address The Nature of the State's Economyinfrastructural deficiencies but have When it comes to premium nicheconstituted a massive leakage from an markets, J&K is ideally placed. It is wellThee success of the handicrafts industryeminently corrupt system. known that the state has considerablereveals certain very important facts

market power in a host of horticulturalabout the economy of the state which

But to come back to the question of items and indeed the sole supplier forpolicy makers may ignore to the cost of economic policies, can it be argued that some items like saffron. Endowed as it isthe state. Indeed, a proper industrial orgiven the perceptions about J&K with a spectrum of micro-climates thefor that matter an economic policy may(whether overblown or not) as compared state can grow a variety of items thatbe designed only after the nature of theto HP this is a price that has to be paid enables to be a dominant player in a hostState's economy is ascertained. The J&Kand fly-by-night capitalism a risk that has of markets many of them high-value low-is a hill economy and like all suchto be bourne? volume items. Indeed the Planningeconomies will be a high-cost economy

Commission itself recognizes that theredue to high transport costs brought aboutis sufficient raw material to support anSurprisingly there is a success story so geographical factors. For J&K this isindustry that processes organic fruit andastounding in its magnitude and location compounded by poor infrastructure andfood products for premium nichethat suggests otherwise. It indicates that poor management of public services mostmarkets. Even the documents of the J&Kwhile sectors that have been given notably power. But J&K would remain agovernment identify niche industries butattractive financial incentives at great high cost economy even if infrastructure

propose solutions that have nothing to docost to the central and the state was to improve and power was to bewith the strengths or weaknesses of exchequers may not have actually been optimally managed. But the state wouldthese industries!grow out of their dependency on state be by no means unique in this respect.

largesse, the handicrafts industry that This is a common feature of all hill

has received very little by way of economies nationally or internationally. The problems lie in the areas of brand

financial handouts (with State aid coming c r e a t i o n a n d m a r k e t i n g . A n

only partially through marketing) has appropriately designed industrial orHow do such economies compete? Thedone very well to carve a niche for itself economic policy wou ld seek tofact is that they do not! Such economies

I N F O C U S





accentuate the strengths of the state and security, corporate India does not have to through the extensive use and production

suggest appropriate action in problem. be physically present in the valley to of knowledge. Given the sta te' s

transact business! The success of ITC's e- re sou rce s , t he impor tance o f Thus strengths and weaknesses should be

chaupals in sourcing agro-produce for biotechnology and IT cannot beidentified first and policies should follow

ITC's export arm shows how a supply overstated. That accepted conditionsform an analysis of these. Judged in thischain may be set up even in those areas must be created where local industrylight the present policies in place thatwithout power or telecommunications. prepares itself for an infusion of concentrate on subsidising capital andThis points to the feasible possibility technology and expertise on commercialtransport costs do not address the state'swhere Corporate India markets products lines in the near future.problems nor amplify its strengths.as it owns the brand names but theIndeed it may create an atmosphere forspecific agro-industries are set up byperverse behaviour where the system of A knowledge economy works best when itlocal growers and entrepreneurs.incentives actually mis-allocates is participatory. Thus development of Indeed, the entry of Corporate India inresources and invites fraud. For example local entrepreneurship throughRetail and the entry of major globala 100% subsidy on captive power initiatives in collaboration with bodiesplayers in Wholesale trade promises to dogeneration sets takes away all incentives that secpialise in this field or corporatemuch in this regard. This arrangementto economize on power capacity India would help. The success of thewill of course let the Corporate Indiainstallation costs. crafts clearly indicate that such a class

get a major part of the mark up. But this exists and can function in the mosttoo can be worked around. For this it is adverse conditions. Be it through privateA 90% transport subsidy pushesimportant not to just promote the or statist efforts, the basis of ainvestment in products which arebrand “Kashmiri” but also follow the knowledge economy cannot beunsuited to the state and failing toFrench example and brand sub-regions accomplished by policies of subsidies andamplify its advantages. Such industries as well. tax exemptions that attract “fly-by-would go under the moment such support

night” capitalists, wrong kinds of is removed.Thus the districts or even smaller sub- investment and in many cases phantom

divisions of the State would come to factories created on paper (merely toThe Way Forward represent the specialty of the region. For claim subsidies of non-existent capital

example Rajmash from Bhaderwah could investments) and do nothing to induce

What then is the way forward? The benefit from this exercise. This would sustainable economic growth. They have

Planning Commission of India does take give local growers and local food- instead sapped the State's resources.

note of the problem of marketing and processing industry some leeway if they This is not to say that subsidies arewere to enter distribution on their own. unnecessary.puts forward a 'statist' solution- it

Thus the importance of Geographicallysuggests that the state should take theIndicating products (granting exclusivelead in marketing, set up export zones, Indeed in so far as they removerights to a product from a region withassume lead role in horticulture, push distortions (and the market forcertain unique characteristics to be namedthe brand name “Kashmiri” promote electricity in the state is distorted) theyafter that region) is of utmost importanceresearch and disseminate technology. may be welcome. Indeed a differentif the State is to benefit from its strengths. regulatory regime rather than subsidiesThis is of course in the State's domain while may be the answer where for instanceAlthough few will disagree with thebrand name creation belongs to the the State buys power from the nationaldiagnosis, the solution provided may notprivate sector. The example of grid and sells to local industry at a profit.be the best way forward. The ultimatehandicrafts shows how strong the brand But by and large as Kashmiri artisans haveaim of marketing is to capture shelf “Kashmiri” is. This has to be duplicated

shown the help required is of a differentspace and this is no means best done by for the other regions of the state. kind. The help provided so farthe state. This is best done by corporateunfortunately has not reflected it.India as it is they who control the

To Sum Up...marketing networks as also being most

suited to guide farmers about local

growers and manufacturers about The ultimate goal of the state, no matter DIPANKAR SENGUPTAstandards that are to be met if these how far or distant it may look, is to be a Department of Economicsproducts are to be sold. More knowledge economy where the prime University of Jammuimportantly, from the point of view of source of economic growth will be

I N F O C U S





Participatory policies are highly relevant natural resources problems. The and Rapid Rural Appraisal (RRA) methods

and are consistent with overall e x p e r i e n c e g a i n e d t h r o u g h were used to carry out complementary

development strategy of reducing implementation of IWDP (Hills-I), J&K studies according to specific needs. The

poverty, protecting environment and encouraged the State Government to focus of these studies differed, however,

developing human resources in Jammu extend the watershed development there were three common areas of

and Kashmir. Institutionally sustainable project to other rainfed areas of the research: farming systems research,

rehabilitation and management of State viz. Akhnoor and Ramnagar in environmental analysis, and social

natural resources is possible only where Shivaliks (Jammu region) and Rajwar and surveys.

users act jointly to manage the Rambiyara in Karewas (Kashmir Valley).

resources. In order to prevent and The main objective of the IWDP (Hills-II)

At the beginning of the project, IWDPreverse the degradation process of the was to restore the productive potential (H i l l s - I I ) at tempted to se lectShivaliks and Karewas, integrated of the Shivaliks and Karewas. The focus participating communities according towatershed development project (IWDP), was on improving in-situ moisture strictly technical and managerial criteriaHills-I was undertaken. Originally, the conservation, water harvesting and land and relatively strong communityproject was for a period of 7 years (1990- management practices. An associated organization. In some cases, extension97), but was extended for another year objective of the project was to assist workers made introductory visits of oneup to 1998. The project was supported by with the institutional development and or two days to the communities. On otherthe World Bank. It was initiated in three consolidate the progress already made occasions, these visits continued over asub-watersheds of Devak and Ramkote in under IWDP (Hills-I). longer period of time, often throughShivalik hills (Jammu region) and Dudh informal contacts with communityGanga in Karewas (Kashmir Valley). The Experiences gained members. Based on preliminary studies,overwhelming evidence from natural field visits and the consultant's inputs,

resource management projects is that team members identified specific needsAt the beginning of the project, therewithout people's involvement the to be addressed, which includedwere many unknowns and uncertaintiesbenefits are not sustainable in the long community's population and socialabout the environmental and socialrun. After the funds from the government organization, income generation and thesituation of the selected sub-or donors dry up, conservation structures distribution of wealth, education andwatersheds. Therefore, informationdisappear, committees are disbanded or literacy, gender issues, accessibility andgathering was considered necessaryabandoned and the livelihood base of the use of social services, community'sbefore launching the participatorypeople remains only marginally improved infrastructure, funct ioning andprocess and a few months were devotedat all. Fortunately, these shortcomings productivity of farming systems andto accomplishing these tasks. Gaining anwere taken care of, to some extent management of common naturalunderstanding of the environmental,during the implementation of IWDP resources.social and institutional situation of the(Hills-I).

project area was obviously essential for

identifying the key issues, opportunities A number of participatory research and

and constraints to be considered in action-learning techniques were usedSeeing the physical targets being designing and organizing subsequent including thematic group discussions,achieved, the World Bank decided to phases of the part icipatory and time-line analysis and transect walks tofurther extend the programme in the integrated watershed management explore significant environmentalform of IWDP (Hills-II) in 1999, for five process. The project has hired the features and participatory mapping toyears. This was aimed at providing a services of local consulting firms to carry prepare maps of the community'suniform integrated rural development out complementary studies. To obtain territory or the village, which highlightedplatform to address the social and sounder information, both conventional important environmental, social or

Participatory Natural Resource Management :

Experiences and Lessons Learnt

Dr. Falendra K. Sudan

I N F O C U S





agricultural features. The participatory and the operations of the user groups the formation and development of user

rural appraisal ended with a series of collaborating on the activities. This groups and community organizations.

shorter meetings. The main activities usually involved establishing clear rules The role of user groups in project

carried out during these meetings were for membership, watershed revolving implementation was in general less

feedback of participatory rural appraisal fund, record-keeping systems and direct. However, user groups were ofteni n f o r m a t i o n t o c o m m u n i t i e s , election of a formal leadership body. highly instrumental in coordinating the

identification, analysis and prioritization Fulfillment of these requirements was activities and in providing a local forum

o f p r ob l em s by pa r ti ci pant s , for the exchange of experiences among

identification of solutions and drafting of groups and individuals. The participatory

a tentative action plan. Through development functionaries of the

participatory feasibility analysis, project project played a major role in the

management and field staff reviewed strengthening of user groups. They

participating community members' ideas attended all relevant training activities

for action that were developed during and were part of the participatory

the participatory planning meetings, monitoring and evaluation team, and

with the aim of assessing the feasibility provided constant support to all user

of the proposed action in the light of the groups formed in the project area. They

existing conditions. In most cases, this assisted user groups in such areas asrequired an intensive discussion with organizing and conducting meetings,

community members on technical defining group constitutions and keeping

aspects of the proposed activities, records.

available incentives and subsidies, and

requisites the community should meet Project was committed to supportingfor engaging in a partnership with the activities aimed at meeting basic needsproject. This interaction ensured that not directly related to natural resourcethe proce s s con t inued to be management. This included income-participatory. The purpose of the generating activities and improvementsparticipatory feasibility analysis was to in local infrastructure. To fulfill thiscarry out a rapid and practical analysis need, the project supported andthat would allow for a decision to be

promoted a variety of short-term incomemade on whether or not to implement generating activities. These includedthe activity in question. both on-farm activities (such asVery often, plans prepared during the courtyard animal raising, commercialparticipatory planning meetings were vegetable gardening and agro- forestryredundant and over ambitious, and production) and off-farm activities (suchcertain activities seemed to be as cottage industries, handicrafttechnically unfeasible. Furthermore, production). All of these income-staff often felt the need to focus on those generating activities were small scale,initiatives that best responded to the low budget initiatives targeting the localproject's mandate and operational market (i.e. the exchanges taking placecapabilities, such as activities related to in the local community or, at best, in thethe natural resource, improvements in immediately surrounding area). Becauseoften stated as a condition for working

the efficiency and sustainability of of their small scale, the project andwith the project.farming systems, the diversification of participants were able to start theseincome generation, the empowerment of activities with very limited initialProject staff held a few meetings withrural women and the building of small- investment and risk. However, theirthe concerned user groups to review inscale infrastructure. For the sake of small scale also meant that they onlydetail the village development plans andt ran sparency and to p romote generated a small income. Theseto amend it according to their commentssustainability of the interest groups and activities were useful for satisfying theand suggestions. Project madeto facilitate conflict management, immediate pe r sona l needs o f significant efforts towards facilitatingproject helped formalize the structure participants, especially women, and

Project staff held a few

meetings with the

concerned user groups to

review in detail the village

development plans and to

amend it according to

their comments and

suggestions.

Project made significant

efforts towards facilitating

the formation and development of user groups

and community

organizations.

I N F O C U S





increasing the groups' self-reliance. also promoted the sustainable use of As part of the integrated system of

forestland by testing agro-forestry agriculture, livestock rearing and

techniques for fodder production. Major agroforestry the project promptedMost of the project-supported initiativesadditional reforestation and erosionfor improving farming systems were

control measures of communal interest,developed out of negotiations betweensuch as roadside tree planting and theparticipants who wanted to have betterestablishment of erosion control hedgesyields, earn a higher income and savealong the borders of agricultural fields.time, and the project's core mandate forMoreover, participatory planning exercisespromoting the conservations of water,identified the need to control thesoil and vegetation cover. Therefore,consequences of erosion, such asthese initiatives were 'conservation bylandslides and gullies that were affectinguse' activities that sought a healthycommunal grazing areas and privatebalance between environmental andagricultural plots. To this end, technicaleconomic needs. In the project area,assistance, training and incentives weremost initiatives for managing naturalprovided to the user groups concerned.resources have been more or less directlyActions facilitating better waterassociated with farming systemmanagement were undertaken in theimprovement . The se inc ludedf ramework o f f a rm ing sy s temregeneration of public forests andimprovement initiatives.rangelands, which resulted from

entrusting local communities with the

responsibility for management. This Major efforts were made to allow user

included, 'social fencing' (i.e. restrictions groups to carry out different activities

on land use imposed through regulations, with less project support (i.e. decreased

not physical barriers), fire control and methodological, technical and financial

the introduction of household assistance). Progressive withdrawal of

technologies to decrease fuelwood support to local actors in participatory

consumption, control of the effects of p lann ing, implementat ion and

erosion, such as landslides and gullies, evaluation had a dual objective -

which cause major damage to agriculture promoting the self-reliance of userand property, and management of groups in managing their own decision-

streams, including measures for making and action-taking process, and

controlling water power and down decreasing the costs of support in each

stream erosion or facilitating the site, so that resources could be used to

recharging of the local water table. ex tend the proce s s t o o the r

communities.

During participatory planning, user

groups often identified and then Constraints faced

implemented activities in these areas in

response to a specific need related to During the process of operationalizationtheir livelihoods. On several occasions of participatory natural resourceduring participatory planning exercises, management, several constraints haveparticipants expressed the need for soil been encountered. Some of them were:and water retention measures for inappropriate criteria for communitypreventing landslides, gullies and river selection, community conflicts andfloods from affecting arable land, houses in f ight ing, presence of otherand roads. To address this need, the programmes and projects with softerproject supported forestry plantations eligibility criteria, inadequate training inefforts were also made to sensitizeand smal l - scale env i ronmental accounts and record maintenance, poorpeople to the environmental risks relatedengineering works by providing technical credibility of some executives on userto deforestation and overgrazing.assistance and incentives. The project

Major efforts were made

to allow user groups to

carry out different

activities with less project

support (i.e. decreased

methodological, technical

and financial assistance).Progressive withdrawal of

support to local actors in

participatory planning,

implementation and

evaluation had a dual

objective - promoting the

self-reliance of user groups

in managing their own decision-making and

action-taking process, and

decreasing the costs of

support in each site, so

that resources could be

used to extend the process

to other communities.

I N F O C U S





groups, lengthy project procedures, Agriculture, forestry and other natural be in danger of becoming a replica of

security related problems in some areas, resource interventions have overlooked village panchayat system, which has

political interference and nepotism. User the women beneficiaries. The field been a po li tica l rather than a

groups were not given adequate professionals seemed to be unaware of development body. The exi sti ng

representation on user groups. As a the full level and dimensions to which monitoring and evaluation system seemsresult, user groups may be unable to women contribute to agriculture, to very inefficient in improving the

directly influence the decision making activities of user groups and for effective

process in terms of the watershed administration and control of the

develo pment relate d activ ities project.

undertaken by the user groups. The

project functionaries at sub-watershed Lessons learned level have actively been imparting

extension services in the transfer of The participatory natural resource

technology for watershed management.management implies that those at the

However, their role in strengthening thetop cede decision making power, and (if

user groups and in the integration of well conceived) financial control, to

traditional knowledge with improved

those lower down in the system.technological option was not fullyHowever, due to resistance from within

satisfactory. There have also beenthe implementing agency, the change is

complaints of biased approach towardsnever really operationalized. The user

particular area and community, whichgroups and their committees were

have created a deep sense of mistrust.created but, because they were not given

adequate resources and effectiveThe information flow was also decision-making power, they becameinadequate and project functionaries moribund. The success of participatorywere charged with a tendency to keep natural resource management hinges to athe information hidden, which have great extent on the capacity of thehampered smooth participation of the project functionaries to embrace thevillagers in various activities. The user change and to alter its working practices.

g roups ' members repre sen t ing Even, before reform, it was lack of skillsdisadvantaged groups have complained within the government sector, whichregarding drastic curtailment of resulted in poor management. Theessential survival activities due to operationalization of participatorycreation of enclosures. A widespread natural resource management requiresfeeling of hostility among the members even greater skill levels than thehas been reported due to inadequate previous systems. Due to inadequatebenefits from the resource conservation training and experience in socialand protection activities. Further due to development aspects, the participatorylack of inter-agency coordination, field social development functionaries werefunctionaries have not properly attended forestry and other natural resource unable to form effective and sustainablethe vital issues like institutional building, management activities. The women's user groups. Likewise, the extensionc a p a c i t y b u i l d i n g , f i n a n c i a l role still appears to be marginalized. It is officers were unable to select appropriate

strengthening and income generating desirable to give them a major sites and design and implement theactivities. representation in user groups. In the project interventions. These are critical

planning process, no assessment of the issues, since once local field functionariesind igenous f o rms o f f a rmers 'In the context of natural resource lose credibility with the villagers; it can beorganizations and their traditionalman agement progr amme, gender very difficult to recover it.institutions appears to be made. Thus,relations are quite significant. Naturalfarmers' traditional institutions seem toresource management programme will If the field functionaries are to be in ahave been excluded from the planningonly achieve sub-optimal results if position to elicit and devise programmes,process. Therefore, the user groups maygender relations are not considered.

The participatory natural

resource management

implies that those at the

top cede decision making

power, and (if well

conceived) financial

control, to those lower

down in the system.

However, due to resistance

from within the

implementing agency, the

change is never really

operationalized.

I N F O C U S





which are responsive to local needs, the All these will help create 'a sense of

skill upgrading and capacity building are mission and commitment' among the

also important. Demand articulation is project staff, which is important for

not automatic as might be assumed. project performance. Besides, it will

Significant local level capacity building contribute to teamwork and inculcateneeds to take place, usually through the problem-solving attitude as well as to

formation of effective local resource greater coordination between policy and

“user groups”, before needs can be implementation.

expressed and subsequently prioritized

and addressed. If decentralization within Increasing pressure on natural resourcesgovernment is designed in large part to together with misdirected governmentinstitutionalize responsiveness to local intervention has led to the demise of people's needs, this is the key issue. traditional institutions for natural

resource management. However, a

It is also one that is frequently ignored participatory approach evolved under

wh en p la ns ar e d ra wn up to IWDP (Hills-II), Jammu and Kashmir has

in st it ut iona li ze 'd ema nd dr iven ' played a facilitating role in resurgence of

development process. Many project local resource user groups.

functionaries, for instance, do not have

the social skills required to group The future of sustainable resourcedevelopment. Overcoming such management lies more with local peopleprejudices can be very time consuming, though issues of non-poor dominationbut is usually essential if progress is to be and resource conflict may still ismade. problematic. It is doubtful whether the

few such groups that do exist can

One of the moti vations behind continue to do so without substantial

op er at io na li zi ng pa rt ic ip at or y external support.

approaches has been a desire to reduce

transaction costs. However, there is little At present, resource user groups have

evidence that costs have actually fallen. achieved a degree of success byIndeed, reform has added to project monitoring and enforcing resourcecosts, because the funding requirements protection and conservation activities,for capacity building have increased. and thus enhancing resource productivity

in environmentally and institutionally

Thus, it is unreasonable to expect that sustainable ways. However, most efforts

institutional reforms shou ld have are small scale and heavily subsidized,

proceeded without any setbacks. raising doubts about whether they can be

Nu me ro us co nf li ct s ha ve be en replicated by the project.

experienced at various levels, such as

between individuals, between line

departments, and between sub-sectors.DR. FALENDRA K. SUDAN is Reader,

Department of Economics, University of Clear policy pronouncements from Jammu, Jammu and Editor, Internationalgovernment, combined with bold and J o u r n a l o f E n v i r o n m e n t a n denforceable regulations about the limits Development. He was Consultant toto government involvement, are World Bank funded IWDP, Hills I and II andcertainly a good starting point, if these Principal Investigator of World Bank andconflicts are not to be fatal for the on- Ministry of Environment and Forestsgoing reform. sponsored 'EMCaB Project'.

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I N F O C U S





The State of J&K has faced lot of turmoil Chamber of Commerce & Industry sick units and later for granting the new

and disturbances since country has Jammu realizing the need to have a package of incentives on the pattern of

att ained indep endence in 1947. sustainable consistent Industrial policy North Eastern States. Chamber's

Infiltration from across the border in the delegation met the then Hon'ble Prime

guise of Kabaili invaders, Indo Pak War of Minister Sh. Atal Behari Vajpayee and

1965, again Indo-Pak War in the year sought his intervention for formulating a

1971, the impact of militancy in Punjab consistence Industrial Policy for the

and a very long spell of militancy in our development of Industry in the State Mr.

State since 1989 has taken a strong toll of Vajpayee, his ministerial colleagues,

Industrial Development and Economic Minister of Industries and Commerce &

upliftment. Further our state being at Industry which was also strongly

the extreme end of the country has a supported and recommended at par with

peculiar locational disadvantage and the North Eastern States which included

shortage of marketing for the product 15% COIS, Excise Exemption, Income Tax

which could be produced in the state Holiday, 3% interest subsidy on Working

itself. Due to all these reasons the Capital, State of J&K also announced its

required Industrial Culture could not be own Industrial Policy on the persuasion of

development and no Industrial activity Chamber of Commerce & Industry and

worth mentioning could be started in the announced similar type of package

state till June 2002. Chamber of containing VAT remission, 100% subsidy

Commerce and Industry which is a 72 on Power Generator, allotment of land on

year old organization realized the fact subsidized rates etc. Later the present

that in absence of Industrial activities Union Government headed by Dr.and private investments from outside the Manmohan Singh endorsed the same

state our economy, Industrial culture and policy and the Industrial culture started

substantial generation of employment picking up and as a result outside

can not be possible. investment started pouring in which

totaled upto Rs. 4000 crores. To promote

further Indust r ia l izat ion manyIn the early years of 50's the stateprestigious units like CIPLA, CADILA, Sungovernment also realized the importancePharmaceuticals, Berger Paints,of establishment of manufacturing unitsSamsung, Hitachi, Phillips, Jindalfor which certain steps were taken toIndustries, United Phosphorousestablish some units under public sectorincentives. The Chamber's delegationand also the private entrepreneurs weremet the Hon'ble Prime Minister Dr.encouraged to start their Industrial units

Manmohan Singh and impressed upon himby providing them liberal import quotasto extend the period of Income Taxand certain tax concessions. But theseHoliday and Transport Subsidy whichmeasures could not prove to be

stwere expiring on 31 March 2007. It wassustainable and when the value of importalso pleaded that the specific Khasraquotas went down in the market all suchnumbers for establishing the units isunits which were established at that time persued vigorously with the state as wellcreating a lot of problems because therestarted going sick and the purpose for as Central Government for takingis acute shortage of land for furtherwhich these units were encouraged got necessary steps initially for revival of theexpansion of Industry so it is imperativecompletely defeated.

An economy in

disadvantaged position

Ram Sahai

The State of J&K has

faced lot of turmoil and

disturbances since country

has attained independence

in 1947. Infiltration from

across the border in the

guise of Kabaili invaders,

Indo Pak War of 1965,

again INDO PAK War

in the year 1971, the

impact of militancy in

Punjab and a very long

spell of militancy in our

State since 1989 has

taken a strong toll of

Industrial Development

and Economic upliftment.

I N F O C U S





that the entire state should be notified as of the Mughal Road Project connecting realizing that Government of India and

industrially backward area to overcome the districts of Rajouri and Poonch with Pakistan have taken the initiative to

the shortage of land. Chamber also the Valley. For further development of resume bilateral dialogue for resumption

requested the Prime Minister for handing Industry and trade in the state Chamber of normal Trade and People to People

over the Dul Hasti Projects to the state of of vociferously pursuing with the contact. The bilateral Trade between theJ&K so that the problem of Power Government that : two parts of Kashmir and Pakistan is

shortage could also be taken care of extremely important. To enhance the

Chamber's pleading got positive response bilateral trade, Chamber of Commerce &1. The entire state should be notifiedfrom the Prime Minister Dr. Manmohan Industry took an opportunity to lead aas industrially backward area.Singh and the period of Income tax delegation of 10 members of Jammu

2. To provide adequate Power toHoliday and Transport subsidy got Chamber jointly with the delegation of

Industrial Sector.extended for another 5 years. Not it is PHDCCI to visit seven cities of Pakistan.

3. To entend the new incentives forhoped that these provisions will help a lot While interacting with the Chamber's of

the old existing units also who havein attracting further substantial Lahore, Gujranwala , Rawalpind i,

braved the impact of militancy.investments from outside the state. Islamabad and Karachi we found their

4. To renew the central packages at keen desire to have bilateral trade withpar with the latest announced our Country. India and Pakistan enjoyAs already mentioned the economy of thepackage for North Eastern States several complementarities. There arestate had been based on tourism andin which the incentives have been advantages of geographical proximity,trade as the state was primarily aextended to Industry as well as common language and cultural bonds,consumer state and not a producer state.health, tourism and service sector which are important facts for fosteringSo chamber has always been pleading foralso for another 100 years. closer economic relations between Indiaformulating a trade policy to give proper

5. To formulate a policy regarding and Pakistan. The due removal of earlierdirection towards systematic andaugmentation of power and tourism re s t r i c t i on s , i n a c l imate o f sustainable trade activities. Chamberinfrastructure with public-private reconciliations of mutual interests andhas presented a paper in this regardparticipation. liberal realignments, can help flourishwhich has been deliberated upon in

free private sector trade between thecouple of meetings and has beentwo countries and indeed open an arrayFor making Jammu as an independentappreciated by all the concerned.of possibilities for peace between thetourist destination, various suggestionsBesides pleasure tourism and adventuretwo neighbouring countries. To openhave been made for the proper

tourism the pilgrim tourism has proved to new routes for Indo-Pak Trade andregulation of traffic and parking etc.be the backbone of Tourism Industry.people to people contact across the lineBesides early completion of Cable CarEver growing number of Mata Vaishnoof control. In this connection ChamberProject from Mubarak Mandi Bahu FortDevi Shrine, Baba Amarnath Shrine andmade strong demand for opening of and Mahamaya Temple, developmentother places of pilgrimage provide lot of S u ch e t g a rh - S i a l k o t r ou t e an dalong the banks of river tawi and creationpotential for economic upliftment of ourNowshera-Mirpur route as these routesof lake in the Tawi river and also making itstate. Chamber has identified manyhave great scope for exchange of Trade.pollution free by diverting all the Nallasbeautiful v irg in areas for theSialkot has advanced Sports Industryand drains entering into the main river,development of pleasure tourism whichwhich needs our willow clefts as theirestablishment of planetarium alongsidehas been brought into the notice of raw material. All the items have a greatthe present Kala Kendra, creation of Central as well as State authorities anddemand in that country which if allowedamusement park and internationalimplored upon them to undertake theto be exported from our state to Pakistanstandard golf course etc. Theinfrastructure development of those

and Pak directly would cost much lesserdevelopment of present exhibitionareas for the perculation of tourists inthan what they are getting right now.ground to make it an international Tradedifferent parts of the state. Similarly,Similarly in tradable items which can becentre and certain fly-overs, sub-ways,Chamber has prepared and presentedbeneficial for both of us. These tradeover head bridges and creation of walk-various papers and presentations toroutes once opened will bring a greatways are some other points which havemake Jammu an independent touristleap in the economic development of thebeen taken up with the Government. Thedestination to save it from the adverseState.steps when implemented will definitelyimpact, it is likely to face after the train

boost the economy of the state. RAM SAHAI is President, Chamber of goes to Katra and beyond and also toCommerce & Industries, Jammu.Chamber of Commerce & Industry whilenegate the set-back after the completion

I N F O C U S





Among the six basic principles of the Industry will not only play a significant through which the state is passing during

governance underlying the National role in providing employment to a large these days, and also would contribute to

Common Minimum Programme of the raising per capita productivity.

Govt. of India, sustained “economic

growth in a manner that generates We are aware that ours is a Land Lockedemployment” has a pride of place. It also State and is severely handicapped due todescribes the small scale industries as locational disadvantages. This results in“the most employment - intensive increase in the cost of production assegment”. compared to our neighboring States. In

order to offset this additional cost, theThis is indeed so. The small scale State Govt. and Govt. of India has

industries have a long history of provided special package of incentives to

promoting economic growth that is the industrial sector so as to make it

employment-oriented and spatially competitive. However the effect of

widespread, and hence inclusive. The these concessions cannot be presumed as

contribution of this segment to the direct addition in profits.

economic sinews of the country is no less

significant. Nearly 39 percent of the ØWhen State Industrial Policy wasstgross manufacturing output and 34 introduced w.e.f 1 Feb. 2004,

percent of the exports of India arise from some new elements werethese enterprises. During the last four introduced:

thyears of the 10 plan, the output of theØDeve loping Wor ld C lass

segment has recorded a real growth rate Infrastructure for speedyof 8.87 percent annually. Over six

industrial development.thousand products manufactured by

ØEncourage industrialization of these include several sophisticated items

the backward blocks of theused in high technology areas like

State.nuclear power, missile and space

ØEncourage existing industrialprogrammes, information technology,units to modernize.biotechnology, etc. The level of exportsØProvide incentives on brandby this segment also testifies to its overall

promotion keeping in view thecompetitiveness in the global markets.role of brands in promoting

sales.While examining the characteristic

features of the economy of J&K State,Concentrate on thrust areas forone comes to the conclusion that thedevelopment as per the list of CentralState is economically backward asGovt. This spirit behind this was tocompared to the other States of theencourage and sustain the existingCountry. In view of this state of affairs, itstruggling industry of J&K out of red andis highly essential to diversify itssimultaneously attract new investments.economic structure by developingBut unfortunately the desired resultsnumber of educated youth, it will alsoindustries so that the socio-economiccould not be attained and we couldgive solution to the unemployment crisisconditions of the State are improved.muster only 3000 Crores of new

A lot still needs

to be done

Annil Suri

While examining the

characteristic features of the

economy of J&K State, one

comes to the conclusion that the State is economically

backward as compared to the

other States of the Country.

In view of this state of

affairs, it is highly essential

to diversify its economic

structure by developing

industries so that the socio-

economic conditions of the State are improved. Industry

will not only play a

significant role in providing

employment to a large

number of educated youth, it

will also give solution to the

unemployment crisis through

which the state is passing

during these days, and also

would contribute to raising

per capita productivity.

I N F O C U S





investments in comparison to 50000 Øprovision of venture capital funds, of these economic parameters for the

Crores by Himachal Pardesh during the firm and the industry on a regular basisØtax reduction for capital funds,same period. would help in decisions regardingloans at low interest rates,

production planning, human resourcesØloans for modernization of

management, marketing and strategicHowever, we are convinced that J&K equipment, and others.decisions like diversification, etc.Small Scale Industry has a future. But

while looking at the future, certain 4. Opening of trade routes withconsiderations will need to be kept in 10. The SSI's should undertake ISO 9000Pakistan like R.S.Pura Sialkot,mind. The most important is the diversity and other quality managementRajouri Mirpur routes.in the small scale sector. We do realize system certifications to achieve

that there are still some speed breakers the level playing field. Further5. Setting up “SAARC Knowledge

on our super-highway to success. The entrepreneurs should initiatePlatform” including areas like e-

rationalization of the tax structure is one efforts towards global success andnetworks, energy, water,

such example. A good deal of reforms has ul ti ma tel y a im at g lo ba lhealthcare, agriculture, food

already taken place and some are under leadership.processing and capacity building -

way. Even today the single-man unit iswhich will meet the unique needs

subjected to a minimum of 37Thus, the J&K Small Scaleof regional development and helpinspections, 52 laws and 116 forms and Industries can successfully meet theframe a road map for its time

registers. The govt. should try to frame a challenge of globalization.bound implementation.single legislation for the small scale

sector which would reduce proceduralANNIL SURI is president Bari6. Govt. Mind set has be changed fromhassles and do away with the

Brahmana Industrial Association.red-tapism to red carpet welcomeInspectorism. An environment should beto entrepreneurs which will inspirecreated where the accent is on trustinvestor confidence and in returnrather than mistrust ; on facilitationboost industrial activities in J&K.rather than regulation ; and, on

togetherness rather than on division,

where the words 'you' and 'I' are replaced 7. For competing internationally, the

by 'ourselves'. firms and the entrepreneurs

should develop pro-active attitudeThe foregoing discussion leads to severaland approach, and should upgradeconclusions:-technology used in their SSI's and

also focus on upgrading skills andThe role of the government and itscompetence of their personnelagencies is very important in promotingthrough appropriate training bycompetitiveness of the industry indeveloping competence forgeneral and small scale industries intraining needs identification.particular.

8. Entrepreneurs should analyzeInnovative and tactical ways of implications of all internationalprotection needs to be devised foragreements and treaties as well asproviding a period of adjustment to SSI'sother international developments

and also lending them some breathing in the country, industry and ownspace.enterprise.

The govt. should take some financial and

tax measures to assist SSI'S such as :9. Entrepreneurs should be vigilant on

the changes in the factors thatØprovision of subsidies for R&D

affect the product demand, rawcosts,

material supplies and their pricesØguarantee of loans when extended

and fluctuations in the same. Forecastingby the Credit Guarantee Association,

I N F O C U S



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TRADE

End October, there was a protest processes relevant the bilateral Second, more than the political impact,

movement in Muzaffarbad and Chakothi between India and Pakistan, and the psychological and emotional implications

in Pakistan occupied Kashmir led by All internal between New Delhi and J&K. of cross-LoC trade is immense. Today, the

Parties Nationalist Alliance, demanding Kashmir Valley is connected with the rest

truck service between Muzaffarabad and of the world through Jawahar tunnel.Besides, politically, cross-LoC trade willSrinagar. Though there have not been any The route via Kargil and Leh intodent the hold of extremists and militantsdemonstration in Kashmir Valley or in Himachal, is really circuitous and opened

Jammu region, both the Kashmir only for three months. The Mughal route

Chamber of Commerce and Industry linking the Valley with the rest of India

(KCCI) and Jammu Chambers of through Poonch and Rajouri districts,

Commerce and Industry (JCCI), besides cutting across the Pir Panjal is being

numerous other groupings such as the planned, but a long way to materialized.

apple industry in Kashmir, for long have Historically, Kashmiris are connected to

been pressurizing the governments of the outside world through the Jhelum

J&K for cross-LoC trade. river and the Srinagar-Muzaffarabad-

Rawalpindi road.

This demand is likely to increase further,

especially after the first colorful truck The fact that, today, the linkage to

from Pakistan entered India via the outside world is only through a tunnel

Wagah. Pressurizing Pakistan to open the and an unstable mountainous road,

LoC for trade is in India's interests and is psychologically have a negative impact in

important for the following political, Kashmir Valley. In 2007 itself the Jammu-

psychological and economic reasons. Srinagar road was closed more than oncedue to land slides. Even the air traffic

becomes a problem during the winters,First, politically, allowing cross-LoCas happened during the last weektrade will be the biggest political CBM, inOctober; the flights were cancelled dueterms including the Kashmiris in theto poor weather conditions. Closure of peace process. The current level of cross-Jammu-Srinagar road even for two daysLoC interactions is seriously limitedand the subsequent traffic jam causestowards addressing the concerns thehuge economic losses, creating adivided families, mainly in Rajouri,psychological fear.Poonch and Baramulla districts; thus the

current level of cross-LoC interactions

mainly address the concerns of three Finally, opening the LoC has a significant

districts in J&K. Since, there are not potential to improve the economic

many divided families in Kashmir Valley, si tuat ion in side Kashmir Vall ey,

the bus service between Srinagar and depending on the nature and extent of such as Syed Ali Geelani and SyedMuzaffarabad, unlike that of Poonch- trade. Kashmir Valley, though lacksSalahuddin over the Kashmiri society.Rawlokot, is not a big success. Today, the industry, its main livelihood comes fromOnce the trucks cross, the Kashmir ValleySrinagar-Muzaffarabad bus does not the fruits industry, including apples,will ignore any political maneuveringsenthuse the Kashmiris and new political almonds and walnuts. Besides, Kashmiragainst cross-LoC interactions by the

Time for trucks

D. Suba Chandran

This demand is likely to

increase further, especially

after the first colorful

truck from Pakistan

entered India via the

Wagah. Pressurizing

Pakistan to open the LoC

for trade is in India's

interests and is important

for the following political,

psychological and

economic reasons.

CROS S LOC I NTE RA CTI ON

epilogue magazine, january 2008

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