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A State Subject’s Manifesto

This election in J&K is not about governance; it is about the framework of governance which was changed in 2019
05:00 AM Sep 16, 2024 IST | Haseeb Drabu
Photo ANI
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  1. Preamble:
  1. Context:
  1. Approach:
  1. Major issues:

The Kashmiri society will continue to be in liminality of a betrayed past and a threatened future unless some introspective conversations are had publicly on issues such as:

  1. Improving Life, Lives, and livelihood:
    • Alternative Development Strategy: The Kashmir economy is an export-oriented import intensive artisanal and agrarian economy with adverse terms of trade resulting in outflow of capital. The net result is that expenditure in Kashmir is generating more income outside the state than within; a classic case of the “missing multiplier”.
    • Post 2007 global financial crisis, the world over, against the backdrop of deindustrialization and the rise of the service economy, small artisan businesses have been promoted as a liberatory alternative to large-scale enterprise and mass production. But not so for Kashmir.
    • The flawed strategy to bring in manufacturing capital into Kashmir, set up industrial estates, build physical assets is not in line neither with where the world is headed nor aligned with the structure of the local economy. The drivers of today’s economic growth and business prosperity are not physical assets but knowledge products. Value and wealth are being created on digital platforms, not on construction sites.
    • In a world where environment and sustainability rule the roost, where the carbon credit market is offering better returns than the stock markets, Kashmir should stay away from being a manufacturing or an industrial hub for corporate conglomerates. In the age of Fintechs and Regtechs, it makes no sense to put a premium on industrial units by offering fiscal and quantitative incentive.
    • ESG Capital of India: Given the composition of the state domestic product, predominantly sustainable enterprises such as the artisanal crafts sector, and horticultural J&K has the potential to be the Environment, Social, and Governance (ESG) capital of India. This can be done by incentivising farm’s carbon balance, biodiversity, water quality, productive and financial performance so that environmental gains are not only maximised but also monetised. Entrepreneurs in Kashmir should be helped to explore the carbon credit market. Providing access to all by being a government aggregator for carbon credits and share the revenues with the growers. Why should the state incentivise core sector and manufacturing enterprises, be these local or national. The artisanal economy is strong but needs to be made vibrant.
    • De-risking the economy: The biggest weakness of the Kashmir economy is its high-risk profile even though the risk-return is not adverse. Not only have the political risks been very high for the last thirty odd years, but the climate risks also as well business market risks have been a barrier to investments. To de-risk the economy, especially the commercial agricultural sector, introducing, institutionalising and integrating Futures and Options (F&O) trading into agricultural practices is crucial. With a 77 per cent market share in apples, 90 per cent in walnut and 100 per cent in saffron, these commodities are ideal for the F&O market. It can provide a robust mechanism for risk management and income stabilization making it attractive for investors.
    • Like many of the mineral resource rich states, Kashmir should essentially follow a restrictive policy of economic protection, and thereby imputing an economic element to the administrative and political boundaries of a state. The administrative border of a state is being slowly, but surely, converted into an economic boundary.
    • Employability not Employment: The issue is not employment generation if we follow policies aligned to and designed with respect for the structure of the economy which is fundamentally a knowledge based artisanal economy with little or no need of core sector corporates. The issue is of employability, rather than employment.
    • In a knowledge economy, where assets are not as important as skills, the focus has to be on employability and not employment. There is a major skill deficit in the Kashmir economy. Take the case of horticulture. Kashmir Valley is the sixth largest producers of apples in the World. It can power and propel India to be become the second largest apple growers in the world, next only to China.
    • To do so requires diverse professional skills in the operational business combining scientific knowledge, creativity and engagement with the environment. There is need for specific skill sets which range from sustainable agricultural practices to practical skills in planting, pruning, and maintaining plants. Besides these operational jobs, there will be need to get specialist in marketing perishable goods, supply chain professionals as well as logistics managers. Not to forget trained environmental sustainability people to ensure that the growers and the society benefit from the on-farm options for greater efficiency, profitability & sustainability. The entire eco-system will create more jobs than what the current level of unemployment is.
    • Private Capital: National vis-a-vis Local: Since independence, in various political situations and under different policy regimes, India Inc has never invested in Kashmir. There has been no greenfield investment. Nor for that matter have the Central Public Sector Undertakings invested in J&K.  All the states, without exception, have been developed by public investment, especially, investments made through CPSEs. Central PSEs which have invested more than Rs 25 lakh crores and employ more than 15 million people in the country of which J&K’s share is a pittance of Rs 165 crore, less than what many mid-sized local businesses have invested.
    • The government’s policy to incentivise corporate investments has historically ended up being a subsidy for private capital. The practice of incentives without infrastructure, especially logistics infrastructure in a land locked economy is a big barrier. There have been a few national corporates who came in but only to avail of the tax incentives. There should be an active and concerted effort to support local capital more than national capital. While outside investors and investments should be encouraged, preference should be given to financial capital rather than industrial capital. Also, the quality of investors and the sectors in which investment will be encouraged must be decided on the basis of the needs of the Kashmir economy and not the availability of capital.
    • Over the last 50 odd years, the amount that the state government would have forgone in terms of subsidies and fiscal concessions far outweighs the total investment that came in response to these. Is it time to accord full support and protection to the local entrepreneurs. Can there be having a local partner to be able to invest in the valley. Are there merits in following the finance capital route as against the industrial capital route? Get private equity players to invest in local enterprises as against corporate investment.
    • Rebuilding Trade and Business Networks: In the lockdown post August 5, 2019, the long-standing trade and commerce network with the rest of the country was severely disrupted. Besides the product and credit market linkages, this private business network had developed a deep social connect with the local businesses. The vehicles that ply the highway carry not just goods but also trust, bonds of livelihood and shared prosperity. These linkages between valley and the mainland had proved to be very strong are now getting disturbed, if not snapped just yet. With impersonal institutions like NAFED replacing them, the social linkages have considerably weakened. The restoration of the private socio-commercial networks – commission agents, distributors and wholesalers of commodities -- will go a long way in bridging the trust deficit and current chasm in the relationship.
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