The Economic Future of Jammu and Kashmir
Why has it underperformed at the time when people expected much better, writes Ajaz Ahmad Rather.
Statistics can be misleading. Not because they are wrong but innocent enough and therefore susceptible to be misinterpreted. In an attempt to glean into future on the basis of the data one possesses, the possibility of being accurate is subject to so many factors that to bet is almost to lose. However, the chances one wins cannot be overridden as well. Further the possibility of interpretation is also subject to substantial variations, many times motivated by political persuasions and commitments. In an attempt to make out the comparative and future state of an average citizen of Jammu and Kashmir, it cannot be supposed that one single factor is enough to account for all that emerges. From culture to politics, education policy to diet habits, rise of armed resistance to Indian economic policies, hartals to crackdowns, inefficiency of awqafs to corruption in bureaucracy, and all other factors that are special to the state as well as those factors that are common with rest of the world contribute in developing a culture that results into a particular state of economic well being. That is to say all the factors that influence an economy, directly or indirectly, have roles to play. Yet many factors or institutions are more influential than others, like politics and government, and therefore in need of corresponding consideration.
Economic development is a very comprehensive term involving various indicators to measure or capture it. One of the central indicator or parameter of the same is income per person which can be measured in various ways. For the sake of comparison of economic status it is a very convenient indicator to reveal the comparative position of different communities or geographical regions. While analyzing the statistics of per capita income (per capita Net State Domestic Product), the picture that emerges from a comparative perspective of per capita income of J&K to other states of India is disappointing. An average person in J&K is having an income that is only 70 percent that of an average Indian citizen. An average Punjabi citizen is more than twice well off than us and so is a person from Maharashtra, Gujarat, and Haryana. That is in J&K the per capita income is only 50 percent that of these states.
However, the situation was not always like that. In 1982, average person in J&K had a per capita income 63 percent that of Punjab, 72.5 percent that of Maharashtra, 73.5 percent that of Haryana, and 88.5 percent that of Gujarat. From 1982 to 1992 Punjab, Maharashtra, Haryana and Gujarat witnessed a per capita increase of 35.8 percent, 45.7 percent, 43.7 percent and 34.5 percent respectively. During the same period the increase of per capita income of J&K was a mere 0.9 percent. As a result of almost no increase in per capita income, the relative position of state worsened substantially during this decade. While as in 1982 the state enjoyed 9th position, in the comity of federal units, in per capita terms, the same after a decade was 20th. After the reforms in 1991 at the national level this divergence further widened and many other states overtook J&K in per capita terms and its position further receded to 25th position by 2003. Thus income per capita of Gujarat, which was almost equal to that of J&K in 1982, is now double than ours. J&K is one of the least performing economies of the region.
When one considers the high growth rate of India with J&K growth below the national average the simple projection is that the per capita income of the state is in a continuous recession from better performing states as well as the national average. In other words an average citizen of the state would enjoy substantially lower, as well as progressively decreasing, income than an average Indian and income would fall further below 50 percent of many well performing states. For a period of almost three decades the economy in a phase of substantial malfunctioning which manifests into a lack of sustained and high growth.
If one considers the fact that India is by all means one of the very poor countries in income terms, then the situation is more than obvious. Per capita income for India is almost only one-third ($3800) of the world average ($10218). Therefore, India represents lower extreme of the spectrum of per capita income of the world economy. Considering the fact that the situation of J&K is below Indian average, the level of income from the global perspective, therefore, is significantly abysmal. The per capita income of state is almost $2600, which falls between the average per capita income of south Asia ($3444) and sub-Saharan Africa ($2032)—the two poor most regions of the world.
When a comparison of the state is done with some other developing countries, the picture obtained is again of a gloomy state of living status. An average person in Sri Lanka has twice better living standards than that of our state. In case of China, Iran and Malaysia it is 3 times, 3.23 times, and 4.3 times respectively. Thus these people are significantly richer than J&K. People in Malaysia, for example, have a purchasing power more than four times than ours. Further, the fact that many developing countries, particularly in South and South East Asia, are very fast growing economies, leads again to the same conclusion that the living standards in the state are going to worsen in near future from a relative position. That is low standards of life will increasingly concentrate in the regions which are slow growing like J&K. For example three decades ago, on per capita income basis, China and India were about equal, but now China is twice as rich as India. Thus while China moved significantly ahead of India, it did more so in case of J&K.
One of the central concerns with the existing state of economy of J&K is that it has substantially underperformed in a period which was highest growth phase of the region in its known history. In the past three decades China became the fastest growing economy of the world. It was followed by most East Asian economies, notably four tigers, as well as south Asian countries. After experiencing a moderate growth of almost 6 percent for last two decades of the previous century, in the first decade of the current century India became the second fastest growing economy of the world. South Asia and south East Asia became the growth engine of the global economy during this period. One must keep in mind that this all happened when from 1970s the growth failures in the world economy actually increased. During this period a record breaking number of people came out of poverty, particularly in China, and living standards improved measurably.
Thus at a time when the region has experienced substantial growth and economic transformation the state economy was incapable of following the trend and thus unable to reap the benefits. When the economy is not able to perform in a high growth period, its chances of performing in low growth period or economic stagnation of the region are substantially meager.
Though the political situation in the state has been through very precarious phase yet that has not been particularly special for the state only. Other parts of Asia have also been through very messy times. Yet these have not bowed unreservedly to a potential political excuse. Political turmoil is part of the larger problem but fails to explain the utter failure of the state economy. Even without an overt political crisis and military conflict states have experienced economic failures. This has largely been the result of lack of political commitment to economic development. One of the manifestation of which is lack of accountability and corruption in the state institutions. In case of J&K successive governments have failed to produce an elaborate arrangement for the reorientation of the economy to bring it out of a virtual crisis. The state economy has faced stagnation in both the agricultural as well as industrial sectors which play more vital role in the initial stages of development. There has been no successful agricultural and industrial revolution (particularly in small and medium scale industries) as was witnessed by China and other high growth economies. Unless there is strong emphasis on these fundamentals and open-mindedness to learn from our neighbors the idea of development will remain elusive.
One would like to say no to such a future, but given the unhealthy state of affairs—unless we become conscious of and ready to make institutions, private as well as public, effective, honest, and adaptive—the future of state lies in its past performance and thus in past trends.
[Author is Research Scholar at Deptt of Economics, University of Kashmir. He has used the following three documents to develop comparative statistics to analyze J&K state in Indian and Global context (i) India Development Report 2008. Oxford University Press (ii) World Development Report 2008, the World Bank, and (iii) Economic Survey 2007-08, Directorate of Economics and Statistics Government of Jammu and Kashmir.]
Lastupdate on : Sun, 10 Jan 2010 21:30:00 Makkah time
Lastupdate on : Sun, 10 Jan 2010 18:30:00 GMT
Lastupdate on : Mon, 11 Jan 2010 00:00:00 IST
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