Towards strong institutions: A political economy view

Greater Kashmir

“Eternal Vigilance is the price of liberty” was the adage that was frequently used in economic and political parlance during and after the American Revolution in the context of preserving and strengthening the institutions that were established to safeguard their hard-earned democracy. Understanding and being eternally vigilant to the intertwined political and economic arguments that are usually bandied upon in the context of J&K becomes important albeit its cost sometimes being the “liberty” itself.

Guardians of any social set up are its institutions. Institutions and more importantly, the faith in them helps reduce uncertainty by establishing a stable structure to human interaction. Economic Institutions such as property rights and Political Institutions such as democracy versus dictatorship, electoral laws, media among others, and their interplay become important to understand decision making regarding politics and resource allocation. How to model such institutions and how to strengthen them is a question to reckon with. A brief appraisal of institutional set up for the UT of J & K from various vantage points, therefore, becomes important.

Peace, Justice and Strong Institutions

2018 and 2019 editions of the SDG India Index, compiled and released by NITI Ayog, ranked J&K among the worst-performing states and UTs respectively. However, in the context of J&K, the performance of Sustainable Development Goal (SDG) that demands significant emphasis is SDG 16 aiming to attain Peace, Justice, and Strong Institutions. The same goal is one of the two SDGs in the 2019 edition for which the performance of J&K remained unaltered from the 2018 edition. But in reality, is this a true picture?.

The methodology that the United Nations recommends to calculate the performance of SDG 16 should entail three dimensions, namely, access to justice, violence against children, and protection of rights of civil society organizations. In the SDG India Index, even though there are eight indicators that try to cover access to justice and violence against children, there is hardly any indicator that covers the protection of civil society organizations. The reason for the abeyance of the third dimension to be included in the index is the lack of data as per the SDG India Index Report 2019 itself.

UN SDG Index 2020 computes SDG 16 using indicators like unsentenced detainees, Press Freedom Index, property rights, birth registrations with civil authority (% of children under age 5), Corruption Perception Index, exports of major conventional weapons, percentage of population who feel safe walking alone at night in the city or area where they live, among others. For India, some of these indicators have stagnated, few have improved and many worsened. If NITI Aayog earnestly exfoliates and then incorporates these indicators or similar ones in the SDG India Index that is due and then computes the rank that might be attributed to the Union Territory of J & K, the spark may appear as a conflagration. Further, based on the understanding of ground realities, the reader could assign trends and infer where J & K may stand on each of the above indicators.

New economic strategy or Old wine in a new bottle?

What is the economic policy in J&K? Is there a roadmap, a plan? Starting with the recent Rs 28,400-crore Industrial Development Package-2021, even if it manages to show the green shoots, surviving and taking root would necessitate more efficient drivers of private investment.

Private investment, conceived as an exigent element towards realizing the “economic integration” of J&K on account of reorientation of the fundamental economic policy of J&K post dilution of Article 370, seems rather a chimera at the moment by virtue of intermittent investment plans right across the country. What makes this indispensable private investment seem even more far-fetched is the shilly-shally private investment mood that prevailed between the abrogation and the unfortunate emergence of a pandemic.

Moreover, the trend concerning the development via economic integration route, demonstrates that it is not the private corporate sector leading the mission of investment but the Public Sector Enterprises and state agencies in the forefront. Enhanced decision-making powers and the consequent intervention in the markets by government agencies like JKIDC (mostly a facilitator in distributing land parcels) are only illustrative of this shift in underlying economic strategy.

Policy Environment

To be just to the government of the day, because of Covid 19 the development agenda of the valley that was promised has taken a backseat. But as the pandemic is normalizing this face-saving excuse might not hold for long. Post the attenuation of Covid19, even if the government adopts reforms to which it is openly committed, there is no guarantee of success. Other than the lost trust factor there are many tangible aspects that will require rectification.

Firstly, 4G internet has to be restored. Its economic consequences are detrimental. According to Top10VPN, a U.K. based digital privacy and security research group, India lost more than $1.33 billion (approx 9,204 crores) to internet restrictions in 2019. It should be no surprise that the majority of this internet suspension was for J & K and so the major portion of the economic brunt was faced by J&K.

Second, is the administrative capacity. The administration is overburdened, checks and balances are virtually absent, each of the top echelons/advisors in the government are looking after more than one department. For how long can the governed be governed by obscure bureaucracy has to be seen.

The third aspect pertains to the preparation and execution of a proper reform program. If a set of social scientists examine polity, economy, society, security, psephology among others in Kashmir, they might kill each other. Coherence is conspicuous by its absence. For example, look at how the government went back and forth on domicile laws. This incoherence reinforces distrust and perpetrates further hopelessness.

Fourth, coincidentally is the fourth pillar of democracy i.e Media. The gag on both print and visual media has never been a win-win for any democracy. On one hand, to contradict poor ranking in World Press Freedom Index (WPFI) published by Paris-based Reporters Without Borders (RSF), NITI Aayog has written an article “Deciphering The World Press Freedom Index” and questioned its credentials, and on the other hand, The Media Policy-2020 gives approval to the Directorate of Information and Publication Relations to scrutinize the content of almost all the forms of media print, for “fake news, plagiarism and unethical or anti-national activities. This essentially gives Babus the power to decide what might constitute fake news, plagiarism, and unethical or anti-national activities. Its intent cannot be commented upon but its potential misuse must be underscored.

Absence of Data

The importance of data is paramount. Its availability and absence can have perplexing ramifications for the understanding of the Political Economy. The Directorate of Economics and Statistics, Government of J&K compiled annually and periodically published Digest of Statistics, Economic Survey, J&K in Indian Economy, Regional Indicators, National Sample Survey Reports, Vital Statistics Bulletin, Economic Census, Socio-Economic Profile, Price Statics Regional Digest of Statistics, District Statistical Handbook, District at a glance, Village Amenity Directory. Post-2017 these reports were either not published or not made available in the public domain.

Here needs an introduction to the concept of “Intentional Slippage” widely used in the context of the political economy of developing countries. “Intentional slippage” means the authority does not want to implement certain reforms intentionally. Availability of data is perhaps facing this. Whatever little data if available is kept at disparate public offices. And to access this little data, it’s a whole new rigmarole of RTIs that one needs to file.

Packages are constantly being announced, promises of private investments made among others but where are the metrics that show qualitative or quantitative changes. To exemplify this problem, I must quote from the budget speech for Jammu and Kashmir announced from the parliament. The honourable minister claimed, “GSDP for the year 2020-21 has been projected at 2,01,054 crore which shows a growth of 11 % over the previous year”. This was said despite lockdowns in 2019, communication blockade, suspension of the internet, the entire country facing a slowdown at that time among others. These projections must be put to test therefore the availability of basic data becomes imperative to get a snapshot of reality.

Way Forward

A lot of hope is riding on the upcoming budget which is perceived to deliver in terms of policy support for establishing strong institutions in J&K, considering the new realities under the pandemic. Key planning and risk assessment necessitates that decision makers and other stakeholders have access to representative data on indicators such as mentioned above for a transparent environment to prevail in the valley. Easing political activity and ultimately electing the government would be a step in the right direction.

The incidental institutions approach, as described by renowned economist Daron Acemoglu, is to downplay choices and to think of institutions, both economic and political, as the by-product or unintended consequence of other interactions. The new strategies and commitments for J&K, dependent on enhanced government intervention, would result in incidental political and economic institution that are likely to induce feelings of estrangement in the process.

J&K requires mechanisms that can, if possible, prevent such incidental failures and if not possible to prevent, then process such incidental failures in an orderly manner.

Zuhaib Yousuf Mir has pursued MSc Economics from University of Edinburgh, Scotland.