What ails J&K Economy

Do We Lack Resources, Big Investments or Sound Policies?



This write up is the outcome of recently held interactive session at the University of Kashmir between the big Indian business tycoons and the students of Kashmir University. The event was organised with the expectation that these industrialists can provide employment opportunities by way of placement of our students in various Indian companies and to explore investment opportunities in different sectors of the J&K economy to kick start the process of development and employment generation. However, what emerged out of this interaction was the reluctance of these industrialists to invest in an atmosphere of instability and unrest within the region. The condition that peace and stability is the prerequisite for producing a conducive environment for investments and economic development apparently seems to be a rational argument from the private sector viewpoint, but a preposterous preposition from the social standpoint. One cannot expect stability and peace to emerge unconditionally from a situation of social unrest, assuming the underlying cause being economic backwardness and mass unemployment. This implies getting trapped in a vicious circle. Now even if we make another assumption that the region somehow becomes stable and expect big investments to fillip up the process of growth and development; to what extent is this true? It all depends whether we are the believers of “trickle down” theory and expect Adam Smith’s “invisible hand” to play its role in promoting the social welfare. I can’t dare to challenge this idea; after all this principle is the underlying factor of all the advanced countries of the world. But surely in our circumstances one can observe that the so called invisible hand has either developed arthritis or has turned into ‘invisible handshake’. Business tycoons are always in search of profits. They are more concerned about their own gains than social welfare. And secondly, amidst inappropriate policies and weak institutional framework, the impact of private sector big investments would be to invite exclusive growth- nothing less than a social disaster. Under such a situation it primarily becomes the responsibility of the local government to frame appropriate development policies, keeping in view the regional specificities. As far as possible the development policies should be designed to provide a solution within the system itself before asking for any external help. This should not be viewed as a conservative approach in the era of globalisation. After all, preserving and strengthening the fundamentals of any economic region, before opening it up, is a sure recipe for achieving self- reliance and sustainable development. 
For the growth and development of any region two conditions, in an orthodox conventional sense, are important to be satisfied. First, that it must have a strong material resource base and second, to exploit these material resources it must be endowed with human resources possessing appropriate skills in tandem with material resources. Economic backwardness and unemployment is the inevitable outcome of mismatch between skill formation and resource potential. In such a situation, the type and quality of education should provide the necessary correcting mechanism to remove this mismatch. If done, this is expected to expand employment opportunities within the system itself and spark growth and development.
The state of J&K, although bestowed with substantial physical and human resources, furnishes a typical example of this mismatch. Due to its inappropriate policies, especially in the education sector, it has produced unemployment on a massive scale. Broadly speaking, there are two major repercussions of educated unemployed that need to be reckoned with. First, it may lead to brain drain depriving the region of valuable human services, and secondly, it can produce an environment of unrest in different forms and manifestations.
The moot question is, is it not possible for the state planners to devise the education policy as a tool to address the issue of unemployment? The solution is possible. Fortunately our economy comprises such sectors in which we have natural and comparative advantages, such as, horticulture, handicrafts, tourism, live-stock, water resource sector etc. Although the state produces about 20 lakh metric tonnes of fresh fruit every year(including 50 thousand C- grade prefalls and culled apple), it is astonishing to see that the state completely lacks a network of small scale agro - processing units that could convert the fresh fruit into a number of bi-products with value additions. Is it not possible to promote specialised courses like food processing, preservation and marketing of horticulture produce? Handicraft is another important sector, engaging about 4 lakh artisans, in which we have peculiar advantages. In addition to being environment friendly, the activities in this sector do not require large investments. It is labour intensive with large employment absorption potential. It has the ability to penetrate the international markets. But, unfortunately, no serious attempt has been made to link this sector to our curriculum. We have not been able to produce graduates and post graduates with business management degrees in the handicraft sector. Alternatively, provision of vocational education at the primary levels could be a feasible proposition in order to familiarise our youth about this important traditional activity. Similarly our tourism sector, with a tourist inflow of 95 lakh recorded in 2010, has the capability to absorb huge manpower, provided they are professionally trained. Institutions such as hotel management, catering, hosting, mountaineering, trekking and travelling, winter and water sports and many more that could improve the service quality in accordance with the international standards are miserably missing.
Water resource nowadays is considered to be the subject matter of prosperity. Someone has rightly predicted  that one of the world wars would be fought on water resources. Our state has the unique distinction in this regard. Our water resources are comparable to the underground hydrocarbon resources of the Middle East and Central Asia. While the energy produced from the hydrocarbon fossils fuel pollutes the environment and is an exhaustible resource; the energy produced from water is eco-friendly and non- exhaustible. With a capacity to produce almost 20,000 MW of power (with an employment potential of 1 lakh sixty thousand jobs) that can light up the whole northern India, the state of J&K faces worst power crises - thanks to its lackadaisical policy. Out of the total installed capacity of about 2500 MW, the state power projects account for a meagre 900 MW. According to statistics the state government expenditure on power purchase amounts to about 2000 crore rupees annually, accounting for half of the total tax and non-tax revenues. Management and preservation of water resources in our state and education policy hardly requires any emphasis. There are other areas which are equally important as well such as live- stock rearing given the plenty of meadows and green pastures; commercial floriculture; medicinal and aromatic plantation, saffron cultivation (in which our state enjoys monopoly at the national level, producing the second best quality in the world and with a huge demand and supply gap), organic farming etc. In all these spheres education has a very vital role to play in the development of human resource base to manage all these resources and sectors of our economy on modern scientific lines.
It is noteworthy to mention here that state does not require making investments to create such a climate, but rather state has the responsibility to devise such policies in order to induce the local economic agents to make investments themselves. It is not the business of the government to do the business but to create a suitable climate for the local private sector to emerge and flourish. The right approach to provide such a business climate is very well possible if our curriculum is aligned to our resource potential.
All said, it is really appreciable that certain steps have recently been initiated in this direction by offering certain flagship courses relating to tourism and handicraft sectors. But what is needed is a comprehensive programme, by setting up separate and full-fledged institutions and departments producing professional and qualified personnel capable to handle all the potential sectors of our economy. After availing professional degrees in all these areas, one should genuinely expect the business activities to get started with entrepreneurial spirit, manageable amounts of capital, and a minimum government concern. If still it doesn’t happen, one should conclude that unemployment in our state is voluntary (rather involuntary) which doesn’t have any cure and need not to be taken seriously. 

(The author is Sr. Assistant Professor in the Department of Economics, University of Kashmir and can be reached at : imtiyaz786haq@gmail.com)

Lastupdate on : Thu, 25 Oct 2012 21:30:00 Makkah time
Lastupdate on : Thu, 25 Oct 2012 18:30:00 GMT
Lastupdate on : Fri, 26 Oct 2012 00:00:00 IST

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