Gravy Train to Kashmir

As the Prime Minister aptly described it, the entry of railways into the Kashmir is a “monumental step”. The local political leadership welcomed it, and so did the business fraternity, with industry bodies issuing statements of how transformative it will be. The changeover at Katra, hair in the butter, notwithstanding, the train will open up the floods of opportunity for businesses. The structural handicap of high transactional costs will now get alleviated making the businesses not only more profitable but also cost competitive. At the same time, the level of inflation will also soften since it has always been input-driven inflation.

The impact of railways on the Valley will be more heterogeneous and complex than anticipated or apprehended. The railway tracks are literally the crossroads of transformation: integrating the society, opening up the economy, linking the markets and making the businesses cost competitive.

The entry of railways is bound to have a profound impact on Kashmir’s political, cultural, and geographical landscape. This link of mass transportation to the Valley will be a more powerful force of integration than anything seen thus far. In the quotidian routine of Kashmiris, the consequences of railways will far outweigh the impact of abrogation of Article 370.

Regardless of the objective, railway travel not only has the potential to reproduce ‘nationhood’, but it will also dilute what are nowadays seen as the “divisive notions of identity”. The world over, railways have played a homogenising role especially in small ethnic regions. The mass connectivity dissipates the articulations or assertion of the historically constructed notions of identity and community based on isolation and remoteness. This putative socially transformative role will, in the days to come, become a point of discontent.

Most importantly, outside of the valley, Kashmir will be territorially reimagined as a “homogenous national space” with the notion of remoteness getting replaced by the perceptions of proximity. Only three hours from Jammu an overnight ride from Delhi. By compressing the travel time, railways will annihilate the space between “Hindustan” and “Kasheer”. The mentality that “across the tunnel” is another world will undergo a change. The introduction of railways is about the complete spatial integration of the Valley. Unlike at present the Valley will not be “cut-off” from the mainland now. It is a 24x7, 365 days assured connectivity in a timebound manner.

The opening up of the local market to outside producers or suppliers through connectivity will put the local entrepreneurship to test. Expectedly, having economies of size and scale, outside enterprises will replace the local entrepreneur and capture the market. The size of the Kashmir economy at Rs 2.30 lakh crore is by no means small.

In reality, however, being an export-oriented, import intensive, the home consumption market is not linked to the production spheres of the local economy. An ever-growing segment of the local entrepreneurs are in business intermediation of national and regional businesses. Indeed, intermediation, along with retail trade is perhaps the biggest contributor to the state economy. In business topline terms, it will be larger than horticulture with better bottom lines.

Jammu could bear some adverse consequences. Post 1990, a vibrant business segment thrived in Jammu selling Kashmir products and commodities. For instance, it became, perhaps still is, a bigger saffron trading centre than Kashmir. So too with walnuts and almonds which would get aggregated, processed for onward sale from Jammu. This trade was dominated by Jammu businesses who have been historically connected with the Valley as traders. With the valley more accessible, this layer will get squeezed out to cut transaction costs. Indeed, that the changeover station is at Katra reflects the dwindling importance of Jammu city in the politics of BJP.

Besides these significant business and financial gains for the Valley, railway connectivity has a huge developmental impact. It reduces the logistics cost of the economy. The double-digit logistics cost to gross state domestic product ratio of the Valley must be close to the highest in the country. For the export-oriented import-intensive economy of the Valley, this is a double whammy. It increases costs and reduces margins. Railways biggest contribution will be to exactly counter this twin-trouble by cutting the costs and boosting the margins.

The cost structure of the Vale economy will be reset and gains distributed across all stakeholders. The economy becomes cost-competitive both from the production side as well as from the trade-based market-access perspective. Railways will thus contribute to the state domestic product by dramatically lowering the inland transport costs. The logistic cost will be cut as the freight rates by rail will be a fraction of the freight rates by road. The effects of falling transport costs and cost-effective market access on regional employment structure are obvious.

Any forward-looking developmental strategy that will be formulated should be based around this infrastructural upgrade that the economy has got. The logistics profile of the Valley will change, and this will have a long lasting and broad effect on the structure of the economy, nature of employment and alignment of endowments. Railways will reinforce natural resource advantages and agglomeration economies which will contribute to the spatial divergence in employment. The sector-level greater market access will catalyse the secondary sector growth and output.

As in the economy, will the culmination of the railway project – supported by and contributed to by all previous Union governments – reset the political approach to Kashmir? It can, but it will not. At best, a gravy train narrative will replace the jaded one of “winning the hearts and minds. In Kashmir, on the contrary, coming at the time that the railways have, the locals are more likely to see it as expanding the footprint of central control and domination in the social space of the Valley.

The optics of this will manifest most starkly in the labour market which will see the biggest inflow and ramp up of inward migration. As it is, a sizeable proportion of service labourers as well as an increasing number of farm hands, are from outside the state. Now the floodgates will open. Sooner than later, the entire labour class will be non-Kashmiri. Market forces have already initiated the process. Now it will gain momentum. The relationship between accessibility and labour migration is known to be positive and highly correlated.

The adverse impacts could have been avoided or minimised had the railway project been designed and delivered in collaboration with the local communities. This is an issue all big infrastructure projects have to contend with. The railways cannot be just plonked down, and everybody left to deal with it. It ought to have been designed in a way that enhances local communities, not threaten livelihoods. Even now, the elected government can initiate sustainability and community consultations, beginning with regulating labour inflows, finding ways for biodiversity net gain and introducing ecological compensation.

The author is Contributing Editor Greater Kashmir