Part I|Development and Growth of J&K Economy

Prolonged uncertainties and COVID-19 are behind the sluggish growth
Part I|Development and Growth of J&K Economy
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While major human development parameters and sustainable growth indicators in Jammu and Kashmir have been relatively better than many states in the country, the prolonged uncertainties have been dragging the economy in to the downswing in the process of growth despite the broad economic and human development parameters being relatively robust. One of the critical areas of growth processes has been an emerging adverse agrarian structure leading to shrinking uneconomic average size of holding unable to provide subsistence to rural households. The share of primary sector (agrarian economy) in the Gross State Domestic Product, GSDP is touching to irreducible minimum, from era of agrarian reforms to present. However, the human development parameters and fiscal performance in the recent past have proved better than the contemporary period.

Development and Growth: NSDP

The Jammu and Kashmir economy has been growing, on an average, at an annual rate of 5-7 percent per annum over a secular period, despite bottlenecks and uncertainties. Growing uncertainties over the period of three decades, the robust human development parameters of this region have been better than many states in the country. In a comparative analysis of the current period and the recent past, the economic growth has decelerated, possibly due to uncertainties generated by lockdowns, COVID-19, etc. The Net State Domestic Product (NSDP), at current prices, has risen from Rs 67274 crore in 2011-12 (the year of change in base price level) to Rs 129891 crore in 2018-19, demonstrating an annual growth rate of 13.29 percent. It is realistic to estimate the growth of state income at constant prices since it accounts for inflation to convert nominal state income into real state income. The Net State Domestic Product (NSDP) at constant prices has increased from Rs 67274 crore in 2011-12 to Rs 91666 crore in 2018-19, registering an annual average growth rate of 5.18 percent. On the other hand, if we compare the period under reference to immediate past and estimate the growth of state income and per capita income in Jammu and Kashmir, it is observed that the performance of the economy is relative better than the contemporary period. Prior to 2011-12 the base year has been changed in 2004-05 and it would be realistic to compare the period from 2004-05 to 2010-11 to compare the annual growth rates with contemporary period. The net state Domestic Product (NSDP) has risen from Rs 23293 crore in 2004-05 to Rs 46740 crore in 2010-11, at current prices, registering an annual rate of growth of 16.78 percent, while at constant prices, the NSDP has increased from Rs.23292 crore to Rs.32256 crore during the same period demonstrating an annual growth of 6.41 percent. Therefore, the economic growth performance has been superior in the immediate past than the current period under reference. The per capita income during the same period has increased from Rs.21734 to 40089, at current prices, registering an annual growth of 14.07 percent, while at constant prices; the per capita income has risen from Rs. 21734 to Rs.27666, registering an annual growth of 4.55 percent.

On the other hand, the NSDP, at current prices, shows an increase from Rs.67274 crore in 2011-12 to Rs.129890 in 2018-19, registering an annual growth of 13.29 percent and NSDP at constant prices shows an increase from Rs. 67274 crore in 2011-12 to Rs.91666 in 2018-19, registering an annual growth of 5.18 percent. The per capita income, at current prices, increased from Rs.53172 to Rs.92357 during 2011-12 to 2018-19 registering an annual growth of 10.52 percent and at constant prices from Rs. 53173 to 65178 during the period under reference demonstrating an annual growth of 3.23 percent respectively. Thus, in terms of absolute state income and per capita income, the period of 2004-05 to 2010-11 demonstrates relatively better performance when compared with 2011-12 to 2018-19 for which the official data is in public domain.

Development and Growth: GSDP

The Gross State Domestic Product (GSDP) data is in public domain up to 2018-19 fiscal (first revision estimates) and our analysis for the period 2004-05 to 2010-11, with base year 2004-05, and for period 2011-12 to 2018-19 with base year 2011-12 are analyzed to compare annual growth rate both at current prices and constant prices. While the GSDP has gone up from Rs. 27305 crore in 2004-05, at current prices, to Rs. 58072 crore in 22010-11, registering an annual average growth of 16.10 per cent and has further increased from Rs. 78255 crore in 2011-12 to Rs.155970 crore in 2018-19, registering an annual growth of 14.18 percent. As against this the GSDP, at constant prices, has risen from Rs.27304 crore in 2004-05 to Rs.38270 crore in 2010-11, registering an annual average growth of 6.70 percent, while it has risen from Rs 78255 crore in 2011-12 to 112755 crore in 2018-19, registering an average annual growth of 6.30 percent.

Similarly the per capita GSDP, at current prices, has risen from Rs. 25478 in 2004-05 to Rs.49809 in 2010-11, registering on an average the annual growth of 15.91 percent, while for the period 2011-12 to 2018-19 it has risen from Rs 61852 to 110900, registering an annual growth of 11.33 percent. The per capita income, at constant prices, has increased from Rs 61852 in 2004-05 to Rs.80173 in 2010-11 registering an annual growth of 4.94 percent. During the period 2011-12 to 2018-19 the per capita GSDP, at constant prices, has increased from Rs 61852 to Rs. 80173, registering an annual growth of 4.23 percent. Therefore, the economic growth performance has been relatively better prior to 2011-12 than during post 2011-12 periods.

Sectoral Share and State Income

As a result of adverse changing agrarian structure and adverse man-land ratio, the share of agrarian economy or primary sector has been consistently declining from 67.55 percent in 1960-61, at current prices, to 57.66 percent in 1970-71, 47.40 percent in 1980-81 to 30.06 percent in 2004-05 to 20.65 percent in 2012-13 and 18.40 in 2018-19. On the other hand, the share of industrial sector ordinarily must increase with time, but stood 8.84 percent in 1960-61, 15.12 percent in 1970-71, 12.90 percent in 1980-81, 27.06 percent in 200-05, 24.53 in 2012-13 and 22.59 percent in 2018-19. It is in fact the tertiary sector, mostly services sector, that demonstrates consistent increase over the period from 23.61 percent in 1960-61 to 27.61 percent in 1970-71, 39.70 percent in 1980-81, 42.73 percent in 2004-05, 54.82 percent in 2012-13 and 59.01 in 2018-19.This has resulted in loss of gainful economic opportunities, employment and income generation in the primary sector without corresponding augmentation of employment and income generation in the economy particularly in industrial sector. That is why the farm lands are mostly under distress sale and retail outlet business and trading on rise without value-addition creation in the economy.

Disclaimer: The views and opinions expressed in this article are the personal opinions of the author. The facts, analysis, assumptions and perspective appearing in the article do not reflect the views of GK.

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