Jammu and Kashmir ’s Monthly Magazine

Now
Telling
The J&K Stories
Epilogue
because there is more to know
Jammu, January 1, 2008 / Vol 2 / Issue 1 || Price Rs. 40 || Postal Registration No. JK-350/2007-09 || www.epilogue.in

ECONOMY
&
OTHER IDEAS
S T E P P I N G I N TO 2 0 0 8
INTERVIEWS
Lt Gen (Retd) S.K. Sinha

.
Tariq Hameed Karra
Prof. Amitabh Mattoo

COLUMNS
Abdul Rahim Rather
Prof. Nisar Ali
D Suba Chandran
Ram Sahai
Arjimand Hussain Talib
Annil Suri
Dipankar Sengupta
Falender K Sudan
Sameer Suryakant Patil

Special Report: INSIDE Market :

2007 : The Year in Review Epilogue Calendar - 2008 Raghunath Bazar

CMRD Publications and Communications

 Baba Ghulam Shah Badshah University, Rajouri
Keeping our steady march forward and celebrating

On our 3 rd Annual Day

on
Dec 15, 2007
Hon’ble Chief Minister of J&K State
was the Chief Guest
Special features of the University He inaugurated : Facilities we provide :
t The only fully residential university s College of Engineering and t
Interaction with Guest faculty.
of the state. Technology t
100% Placement.
t State of art Laboratories. s University Health Centre t
Coaching for personality
t Well equipped and modernized
s Univesity Cafeteria development.
Library with DELNET s Placement Cell
t 24 hrs Internet facility for t
Scholarships to 60% of the total
s Parent’s Lodge Students enrolled in a session.
students and staff.
t Proactive Placement Cell with full s Centre for Biodiversity Studies t
Newspapers to all boarders free of
Release of University Publications: cost
time Placement Officer.
t A fleet of vehicles facilitating s University Calender 2008 t
Provision for indoor and outdoor
mobility of residents. s Information Bulletin for Academic games
t Sab-rang Square - the Session 2008-09 t
Camp offices at Jammu & Srinagar
shopping hub, a place for s MBA Placement Brochure 2007-08 for the convenience of students.
meaningful socialization. s MCA Placement Brochure 2007-08
t
Conduct of National Seminars and
t Health Centre with resident s Newsletter Annual (November) paper reading for unleashing the
Doctor, Technician and nursing Special events of the Annual Day : potential of young professionals in
Staff. s Obeisance at Shahdara Sharief the making.
t Bank, Post Office and Book Stall. s Talawat/Quran Khani t
MoU with leading institutions for
t Comodious Hostel facilities for s Cultural activities arranging an interface between our
Boys and Girls. s Sports activities students and their experienced
t Salubrious ambience. s Prize distribution faculty.

Schools
t
Management Studies t
Mathematical Sciences & Engineering t
College of Engineering & Technology
t
Bio-Sciences & Bio-technology t
Islamic Studies

Centre for Biodiversity Studies Parent’s Lodge Cafe

Café

Buildings for Inauguration the Annual Day

Rajouri Head Office : 01962-262616. Jammu Camp office : 0191-2466892/264402

Regional Office Srinagar : 941901144
webside : bgsbuniversity.org e-mail: bgsbu@rediffmail.com
 Epilogue
because there is more to know

www.nag.epilogue.in CONTENTS

Letters to the editor 2

Editor in Chief
Zafar Choudhary
Prologue 3
Consulting Editor
D. Suba Chandran Column

Associate Editor
Eye Witness 4
Irm Amin Baig
Special Report
Executive Director 2007 : The Year in Review
Mohammad Yasmeen
No Progress On Peace Process 6
Mailing Address
PO Box 50, HO Gandhi Nagar, Volume 2, Issue 1, January 2008
Interviews
Jammu Lt. Gen (Retd.) S.K. Sinha 11
Phones & email IN FOCUS Prof. Amitabh Mattoo 16
Editorial: +91 94194-80762 ECONOMY & OTHER IDEAS
Administration:+91 9419631610
Cross Loc Interaction
editor.epilogue@gmail.com
info.epilogue@gmail.com Buoyancy in J&K Economy and Budget
Trade 45
subscription.epilogue@gmail.com
19
2008-09

Edited, Printed and Published by “Financing Development Report

23
Zafar Choudhary for CMRD in J&k is Financing Peace” Wiscomp Workshop 47
Publications and Communications
29 J&K State in the grip of
Published from ‘Ibadat’, Madrasa financial crises Neighbours
Lane, Bhatindi Top, Jammu, J&K
Budget 2007-08 :
Burma 48
31
Printed at The unfinished business
Dee Dee Reprographix, Jammu
How not to Promote Economic Growth : Market
33
Disputes, if any, subject to jurisdiction The case of Jammu & Kashmir Raghunath Bazaar 50
of courts and competitive tribunals in
36 Participatory Natural Resource Management :
Jammu only. Experiences and Lessons Learnt Opinion

An economy in
Kashmir Today 51
41
disadvantaged position
Price : Rs 40
Columns
43 A lot still needs to be done
Tareekh 52
Jest Ponder 54

Epilogue Ø
1×
January 2008

Letters
Mail your letters to editor.epilogue@gmail.com
Make Book Reviews A Regular Feature
I congratulate you on bringing out a
quality monthly magazine within one
year of its launching. I don't have any
major comments on its improvement
except that there is a need to label
pictures in the magazine. One book
review in each issue may also help in
promoting reading habit among the
readers.
C PHUNSOG
Advisor to Government
Jammu and Kashmir
Conduct Some Research on Brahmin
Sikhs
In Kashmir, the sizable population to the
tune of few lakhs is of Brahmin Sikhs,
scattered in Jammu, Poonch, Baramula
and earlier in Muzaffrabad and Mirpur
areas. I wonder if EPILOGUE could throw
some light on these original natives of the
state- may of their history, race and
culture. Or some of your research staff
could take up this task in hand for the
benefit of posterity.
RAVINDAR SINGH SASAN SOMI
Council For Social Development
New Delhi
M A I L B O X
LETTERS TO THE EDITOR
I Look Forward To Reading It Regularly
Epilogue is quite interesting and
objective source of information on
Jammu and Kashmir. I look forward to
reading it regularly.
SANJAYA BARU
Media Advisor to Prime Minister of India
Epilogue Has Filled Up The Vacuum
Print media has registered a huge growth
in Jammu and Kashmir over last one and
half decade. It is still growing. While
there is a wide array of newspapers to
choose from every morning, there was
always a need of a serious journal which
looks beyond the run of the mill and
bring about some indepth stories. We are
happy that Epilogue is playing that role
quite professionally.
MIR HILAL AHMED
University of Kashmir
Continue To Look At Ladakh
The growth of press in Jammu and
Epilogue Ø
2×
January 2008
Kashmir has surprisingly not reached
Ladakh the way it should have.
Epilogue's special issue on Ladakh
(November) issue had come as a
pleasant surprise for us. We were
happier to see a follow up in December
issue. Should we expect that this
magazine will continue to look at
Ladakh and tell our stories to other
readers of Epilogue?
SONAM ANGMO
Leh
Special Issue On Gujjars
On reading Epilogue I find out that every
month you deal with one particular
issue besides writing on other subjects.
I suggest that one special issue is
brought out on Gujjars. This tribe has
many issues which are required to be
brought to the public domain for
generating an objective debate.
JAVED RAHI
Secretary TRCF
Jammu

We are celebrating
Zafar Choudhary
It is the New Year eve and the world is in
festive mode. In this restive part of world
too celebrations are taking center stage.
It is New Year revelry every where
around. When looked at from other parts
of world, Jammu and Kashmir is seen as a
country lost in violence and unrest. The
violence and unrest have though become
more or less a legacy of this state but love
for peace and prosperity is
unprecedented here. One can gauge the
trend from the New Year party rush. It all
begins from the Christmas Day and
continues till people step into the next
year.
The Christian population in Jammu and
Kashmir is quite miniscule but still the
Christmas celebrations are most visible
here particularly at Gulmarg where
people from across the country pour in. It
is this dominating urge for peace and a
life full of joy which is giving a run to the
elements hostile to peace. Coming to a
personal front, to be very honest to my
readers, I never like partying. I have
never found myself a part of New Year
celebrations until recently when a
realized something worth celebrating.
B r a v i n g a l l o d d s … l i t e r a l l y, a l l
odds…'Epilogue' has completed its one
year of well noticed existence. When
first issue of this magazine hit the stalls
in January 2007 there was little
skepticism which has over a period of 12
months turned into confidence. We have
been quite careful in being confident of
our role and not become over-confident.
A good deal of effort goes into making
improvement over the previous issue.
P R O L O G U E
FROM THE EDITOR
Today Epilogue has arguably become a
first choice of intellectuals and the
influential readers. Outside the state,
this journal is now being seen as most
authentic and objective source of
information on Jammu and Kashmir.
No wonders that the leading social
science journals of the country like
Economic and Political Weekly, leading
national newspapers like Hindustan
Times and the news agencies like Indo
Asia News Service have often quoted
Epilogue in their reportage and analysis
on Jammu and Kashmir. This calls for
celebrations and we are celebrating this
success. Our way of celebrations is,
however, little different. Instead of
partying we are focusing on further
improvements both qualitative and
quantitative.
In our review of year 2007 we have
pointed out that the year was certainly
not that of Jammu and Kashmir (see page
6) but when we look at each issue of this
magazine we easily sum up that 2007 was
a momentous year for Epilogue. As we
step into 2008, it is going to be another
defining moment in the history of Jammu
and Kashmir.
The state is up for assembly elections.
The real test is not in seeing as what kind
of arrangement returns to power it is
actually about seeing as how the
democracy behaves. For the forthcoming
year Epilogue too has set out an agenda
which seeks to empower the readers with
knowledge.
Epilogue Ø
3×
January 2008
Epilogue
because there is more to know
EPILOGUE aims at providing a
platform where a meaningful exchange
of ideas, opinion and thoughts can take
place among the people and about the
people of Jammu & Kashmir. The
attempt is to research, investigate,
communicate and disseminate
information, ideas and alternatives for
the resolution of common problems
facing the state and society of Jammu &
Kashmir and in the context of their
significance to South Asia as a whole.
We welcome contributions from
academics, journalists, researches,
economists and strategic thinkers. We
would also like to encourage first-time
writers with the only requirements being
a concern for and the desire to
understand the prevailing issues and
themes of life in Jammu & Kashmir
Contributions may be investigate,
descriptive, analytical or theorectical.
They may be in the form of original
articles or in the form of a comment on
current events. All contributions have to
be neatly types in double space and may
be sent to the address given alongside or
e-mailed to the editor.
While the editor accepts responsibility
for the selection of the material
published, individual authors are
responsible for the facts, figures and
viess ithe tier articles.

Some basic facts about
J&K economy
Balraj Puri
There is very little public debate on
economic issues of J&K State. Partly
because political leaders are engaged in
what they consider higher issues of the
state's future. And partly because the
state government does not involve
economic experts and intellectuals, for
less the public in general, in evolving
economic policies. The annual pre-
budget discussion that the finance holds
is confined to chambers of industrials and
commerce, which represents only a
sectional interest.
The first step that the government should
take to create wider public interest in
the economy of the state is to make the
entire economic data available on
internet and arrange a consideration of
all the comments and suggestion it
receives.
A formidable difficulty in getting full
data at many levels at which the
economy operates. Firstly it is about the
internal economy of the state ie revenue,
expenditure and capital budget from
internal sources. Secondly the central
aid under different heads namely
contribution to the revenue account of
the state, capital budget, under state
component of the aid, directly operated
by the centre, security related
expenditure, aid for relief and
rehabilitation and so on. Thirdly
remittances by the state subjects
working outside the state.
But a far bigger component of the
economy of the state is its invisible part,
hawala money estimated to be Rs 100
crore a year, smuggling, expenditure by
the Indian army and by the militants etc.
C O L U M N
EYE WITNESS
If one starts going through the entire
maze of data on all these accounts, one
would get more confused than
enlightened. Therefore only a broad
summary of its lessons are attempted
here (only visible part of the economy).
Net state domestic product has been
increasing in the state from 7.91% in
2002-03 to 12.67% in 2003-04 11.33% in
The first step that the
government should take to
create wider public
interest in the economy of
the state is to make the
entire economic data
available on internet and
arrange a consideration of
all the comments and
suggestion it receives.
2004-05, 13.82% in 2005-06 against the
maximum national average of 8% and
expected to reach 9% in the current year.
Ratio of total revenue expenditure
(Revenue expenditure is mainly on
administration of which there is no
return). to gross state domestic product
at 39.20% is more than twice that of the
average of all states (vide 12th Finance
Commission). Per capita capital
Epilogue Ø
4×
January 2008
expenditure of J&K State at Rs 2285 is
thrice the national average of Rs 626.
(capital expenditure is on productive
activities). Total per capita revenue plus
capital expenditure of J&K State is 9661
which is more than thrice average of all
states of Rs 3969.
The contribution of the centre to the
higher rate of growth GSDP and higher
revenue expenditure than the national
average is mainly due to the higher rate
of aid. Ratio of central aid to the
revenue of J&K State is 78.6% ie twice the
average of all states which is 38.5%. As
against total contribution of J&K State of
Rs 257 crores to the centre under direct
taxes like income tax, corporation tax
and wealth tax, it received Rs 719 crores
in 2006-07.
Under Prime Minister's Economic
Reconstruction Package announced in
November 2004, the state is entitled to
receive Rs 24000 crores of which Rs 3781
crores was to be spent by the state
directly (only 1352.44 crores could be
spent till 2007). The state was paid by
the centre under security related
expenditure and for Relief and
Rehabilitation Rs 159 crores + Rs 140
crores in 2005-06.
On the whole the state is spending from
various sources Rs 28 crore per day
against Rs 19 crore spent by Delhi (as
Economic Advisor to the state was
reported to have told the state cabinet).
The actual annual expenditure exceeds
Rs 1200 crores supposed to be beyond the
absorbing capacity of 11 million
population of the state.

The level of money being spent in the
state by invisible sources could be
anybody's guess. If mounting expenditure
on all these accounts is added, it is bound
to be reflected in the incomes of the
people. One such outlet of such incomes
is of the rich class which is reflected in an
increase of 14 times on vehicular traffic
since 1982, from Rs 36,500 to Rs
5,23,549. Every year seven lakh new
vehicles are entering the state.
Increasing liquidity is being used to land
speculation and higher bank deposits.
J&K bank is the fastest growing bank in
the country. Its share value crossed Rs
1000 on new year day. But its deposits are
mostly invested outside the state. Thus
J&K is perhaps only state of the country
which its exporting its capital.
Again while large number of Kashmiri
labourers used to go to the plains in the
neighbouring states to earn their
livelihood, now 2 to 3 lakh labourers from
far off states like Bihar, Orissa, and UP
annually visit the state to work for menial
jobs and masons as construction
workers.
The people below poverty line in the
state had fallen to 3.48% according to the
last NSS round when it was 26% in the
country as a whole. Encouraged by
economic indicates available in 2003, the
renowned economist M.S. Swamnathan
had declared, on October 7, 2003, that
“the state is in an excellent position to
ensure that no one is below the poverty
line by August 15, 2007.” At a high level
national consultation on the Agenda
2007: A Food Secure and Poverty Free
Jammu and Kashmir, “organized by M.S.
Swaminathan Research foundation and
attended by representatives J&K
government, Sher-e-Kashmir University,
National Bioresources Development,
government of India and Sir Dorabji
Trust, he proposed “ a 15 point action
plan to ensure a sustainable and
profitable farming system, happy rural
C O L U M N
EYE WITNESS
and farming families, balanced diets and
safe drinking water for all.” It required,
for its success, synergy among
technology, public policy and people's
participation.”
There are many other factors, besides
exceptionally favourable fiscal
indicators, that made Swaminathan
optimistic about the future of the state's
economy. They include rich natural
resources, hydro-electric potential of
15,000 KW, forest wealth, mines of
precious stones, art and craft and human
talent.
But happened to the 15 point plan and its
objectives? Why is the state far from the
targets he had fixed for August 2007?
Despite heavy central aid, debt burden
on the state is mounting. Every single
person is indebted to the tune of Rs
10,655. The state government had taken
an overdraft of Rs 1500 crores in 2006
from the J&K bank to balance its budget.
Even though agriculture is the mainstay
of the population, the state is deficit in
food grains by 45 per cent. Despite a
large number of nomadic tribe of cattle
rearers, the state is a big importer of
meat and dairy products. There are
about 2 lakh unemployment persons
registered with the state Employment
Exchange. Most of them are educated
youth, including graduates, post
graduates, engineering degree holders.
The government service is the main
source of employment for the people
which already has 3.14 lakh employees,
largest number in the country in
proportion to the population. The state
spends Rs 2570 crore on salaries and Rs
620 crores on pensions every year. The
state government has proposed to
increase the police strength thrice to its
present strength which is already at
around one lakh. Apart from making it
the most highly policed state of the
country, which has its own implications,
it would be on extra financial burden on
Epilogue Ø
5×
January 2008
the state most of which is entirely
unproductive.
The objective of a sound economic policy
should, be to gradually reduce its
dependence on central funds, apart from
what it is entitled to according to federal
norms, reduce its revenue expenditure
and top heavy administration, raise
saving and investment capacities of the
people, with adequate incentives
through appropriate institutions,
increase employment avenuesin public
and private sectorsimprove social sector
like education (including job oriented
courses) and health, raise power
potential through micro projects, keep in
view specific needs and capacities of
different regions and sub-regions and
their balanced growth, provide facilities
to improve skills of artisans, at district
and rural levels. The present policy of
sanctioning project at highest level, in
response to knee jerk reactions to the
more vocal demands and agitations or
canvassing by political leaders should be
replaced by a well thought out long term
plans prepared by experts in consultation
with decentralized democratic
institutions. The economic policy should
also aim at maximum utilization of its
natural resources.
A full plan for the achievement of all the
above objective would make this article
too long. But surely it should not be
beyond the resourcesof expertise with
bureautic assistanceof the government
and with the help of nonofficial
agenciesto plan such an exercise. The
government should appoint a planning
commission, which is a pre-requisite of
framing economic policies in developing
economies, to do the requisite job with
largest possible consultations. Above all,
the administration of the state, which
has the dubious distinction of being the
second most corrupt state of the country,
should be radically reformed to be able to
perform the historic role that awaits it.

2007 : The Year in Review
No Progress On Peace Process
Epilogue Research Bureau
2007 was certainly not the year of Jammu
and Kashmir. There were noises, hues and
cries but nothing substantially moved on
the ground. Writing a year-end review for
Jammu and Kashmir particularly means
an assessment of the progress made on
peace process at home and with
neighbours. This year the peace process
was nearly a dud except that the Prime
Minister Dr Manmohan Singh convened
the third Roundtable Conference and
recommendations of four of the five
Working Groups constituted by him in
May 2006 were adopted. The fifth
Working Group which deals with the
“bone of contention” center-state
relations was yet to arrive at a conclusion
till the end of this year. Precisely on
peace front the year remained a non-
starter. This lack of progress on the peace
process can be primarily attributed to
the internal disturbance in Pakistan.
Interestingly, on the peace dialogue front
the year had indeed began at a very
enthusiastic note but all this enthusiasm
fizzled out as scheme of thinks unfolded
in Pakistan in the subsequent months. At
the beginning of the year, it appeared for
a while that some basis consensus among
New Delhi, Islamabad and the Kashmiri
separatists has been arrived at and its
unfolding is just a matter of time. No
wonder that J&K Chief Minister Ghulam
Nabi Azad told a meeting of his Congress
party legislators in first week of January
that 2007 will set a milestone in the
history of Jammu and Kashmir. “The issue
which has been hanging balance for
decades is now all set to get settled
down”, he had said. The same month
Mirwaiz Umar Farooq, the chairman of
the moderate faction of All Parties
Hurriyat Conference traveled to Pakistan
where he met President Musharraf
SPECIAL REPORT
THE YEAR IN REVIEW
besides some other leaders as also he
called on separatist and militant leaders
in Pak administered Kashmir. Mirwaiz's
Pakistan visit was widely believed as an
exercise with full concurrence of the
Government of India to have a word with
the leadership in Pakistan. His statement
from Pakistani soil that gun has lost its
relevance and dialogue is the only way
forward gave credence to the opinion
that the peace process may be reaching a
defining moment. His opponent in the
separatist camp, Syed Ali Shah Geelani
then said that Mirwaiz was making bids to
seek a role in power structure of Jammu
and Kashmir by entering into a deal with
New Delhi. Since then the entire course
of dialogue has been into a pause.
Continuing with precedence of the past,
the separatists refused to join the third
Roundtable Conference chaired by the
Prime Minister Manmohan Singh in April.
Since then neither the Government of
India invited them nor did they send any
visible feelers for talks with New Delhi.
Later, in September Prime Minister
Manmohan Singh expressed his regrets
that the separatists did not come for a
dialogue despite a commitment. Hours
after Prime Minister's remarks a quick
reaction came from Mirwaiz Farooq and
Mohammad Yasin Malik of JKLF “we had
never made any such promise”.
Political observers believe that internal
disturbance in Pakistan and President
Musharraf loosing authority had a major
impact on the course of Kashmir
dialogue. A section of separatists here
follow the course of dialogue in sync with
the vibes coming from Islamabad.
Pakistan embroiled in the internal
problems for almost entire year put the
separatists on back foot. Dialogue
Epilogue Ø
6×
January 2008
between New Delhi and Islamabad too
could not pick up the pace. In New Delhi
avoided talking Kashmir with Islamabad
as sustenance of such a process was
doubtful owing to disturbance in
Pakistan. It was a thoroughly wait and
watch policy for return of normalcy in
neighbouring country and the position
which President Musharraf assumes at
the end of the day. However, with each
passing day the things turned from bad to
worse culminating into a chaos with the
assassination of leading political leader
Benazir Bhutto. Though the disturbance
in Pakistan cast its imminent shadow on
the Kashmir peace process but at the
home front the Central Government in
India too remained faced with the threat
of instability. The controversy over
Nuclear Deal with America had a near
escape for the UPA government which
appeared falling at several occasions. A
multitude of reasons kept the Kashmir
dialogue process at a backburner. It is
pertinent to mention here that 2007 was
the most important year lost in Jammu
and Kashmir. 2008 is the election year
and the dialogue may not pick up at all
waiting for the new government to be in
place.
Finally, Government Survives
Since 1990s, it has been the separatist
politics making headlines in Jammu and
Kashmir. However, 2007 was the year
mainstream politics with separatists
looking at the factional fight within
ruling alliance. The government survived
at the end of the day that is the biggest
news of the year.
One important feature of 2002 assembly

elections was that it threw up a rag-tag
alliance of various parties and individuals
to form the government Congress and the
Peoples Democratic Party being the lead
players agreed to work under a three-
yearly power rotation arrangement.
Everything went smoothly till PDP was in
the driving seat. However, Congress'
Ghulam Nabi Azad took over as Chief
Minister in November 2005, the politics
of one-upmanship begin to churn. Azad
would often say that he has taken over a
corrupt and inefficient system. On the
contrary, the PDP leadership accused
Aza d of d e ra i l i n g th e p osi ti ve
atmosphere of reconciliation
consolidated post-2002 elections. In
February 2007 the war of words broke out
in open. Azad ridiculed PDP's demand for
troop reduction. The government came
close to a collapse when the Prime
Minister intervened to defuse the crisis.
Government got a breather on March 30
with constitution of a central committee
to study the troop reduction demand but
parties rushed to the field for campaign.
For next two months there was hardly
any work in the secretariat as parties
entered into an undeclared poll
campaign putting the entire state into a
political uncertainty.
Some semblance of order returned in
summer but the ruling coalition boat
rocked once again when Chief Minister
stripped a PDP Minister of his portfolio.
Qazi Mohammad Afzal, who enjoys the
stardom for defeating NC's Chief
Ministerial candidate Omar Abdullah in
Ganderbal constituency, resigned as
Minister in protest after loosing his Forest
department. PDP upped ante against
Chief Minister and the government once
again appeared falling.
The by-elections to Poonch assembly
constituency held on December 12,
however, settled down the animosity
between coalition partners. Taking cue
from a resolution adopted by a one-day
session of All India Congress Committee
SPECIAL REPORT
THE YEAR IN REVIEW
favouring continuation of the present
ruling alliance in Jammu and Kashmir,
the PDP desisted from fielding its
candidate in Poonch constituency.
Congress got the reading correct. Few
days later Chief Minister Azad called on
PDP leader Mufti Mohammad Sayeed at
his residence. A little later Muzaffar
Hussain Baig was re-inducted in the
cabinet and the embittered Qazi
Mohammad Afzal resumed duties in his
Civil Secretariat office and the Forest
department was returned to him. Now
PDP and Congress leaders don't want hear
that there were differences between
them as strategies are being working out
for a future electoral alliance.
Panthers Party Pulls Out
The Jammu and Kashmir National
Panthers Party of Bhim Singh having its
four members in the State Legislative
Assembly walked out of the coalition
government. Panthers Party had been a
part of the ruling coalition ever since its
formation in November 2002 and it had
two ministers in the government till
November 2005 when Ghulam Nabi Azad
took over the reigns from Mufti
Mohammad Sayeed under power sharing
Epilogue Ø
7×
January 2008
arrangement. Since then the Panthers
Party had been sulking and taking on the
government on one or the other issue.
While announcing its decision to
withdraw support from the government,
the party chairman Bhim Singh said that
the Congress led coalition has failed to
serve interests of Jammu region which
his party espouses.
Forces Maintain Edge, Militants on Edge
Security forces, including the local Police
and the paramilitary forces, maintained
a clear edge over the militants in almost
all parts of state throughout the year.
Even though the organizations like Hizbul
Mujahideen, Lashkar-e-Toiba, Jaish-e-
Mohammad and Harkat-ul-Jehad-e-
Islami suffered the most at the hands of
security forces, neither the political
leadership nor the top security bosses
could give an objective analysis of the
situation. The other outfits which
suffered major losses were: These outfits
Al-Badr, Tahreek-ul-Mujahideen, Al-
Umar, Jamail-ul-Mujahideen.
The main reason for the contradictory

figures on the militancy and security
situation was that the ruling coalition
partners were engaged in a war of wits on
demilitarization.
To call the bluff of Peoples Democratic
Party's demilitarization demand, the
Defence Ministry, state government and
various heads of the security forces
maintained that the militancy was
maintaining a steady trend with no
positive change in the situation.
However, security analysis took an
interesting turn when the outgoing Chief
of Army Gen JJ Singh said that the
situation in Jammu and Kashmir was fast
returning to normal. However, the next
day his predecessor Gen Deepak Kapoor
pointed out that the situation was far
from normal and it called for stern
measures.
The contradiction of analysis
notwithstanding, the militants suffered
hugely this year with Hizbul Mujahideen
suffering the maximum loss of its cadres
and top commanders. The HM lost 34 top
commanders and 307 cadres in
gunbattles with security forces this year.
As a result, Kashmir militancy's backbone
has been broken and Hizb cadres have
gone into hibernation after getting
demoralized. Hizb tops the list of 13
terror outfits whose top commanders
were among those killed.
A total of 77 top militant commanders
have been killed by security forces till
November this year and Hizb tops the list
followed by LeT, JeM, HuJI, Al-Badr, HuM,
JuM, TuM, HeI and Al-Barq, according to
police data.
The list of militants killed includes 17
commanders of LeT, 13 of JeM, 10 of HuJI
and three of Al-Badr. During past two
years of Congress rule in Jammu and
Kashmir, 182 commanders were killed
and of these 75 commanders were of Hizb
SPECIAL REPORT
THE YEAR IN REVIEW
followed by 49 of LeT, 18 of JeM, 11 of Al-
Badr and 20 of HuJI.
In 2006, out of 105 commanders killed,
Hizb lost 41, LeT 32, HuJI 10, JeM five
and Al-Badr four. In 2005, Hizb lost 31 top
commanders, followed by 12 of LeT, nine
of Al-Badr, seven of JeM, two
commanders each of HuM and HuJI,
besides one each of TuM, JuM, HeI and Al-
Barq.
This year Hizb lost one operation chief
c o m m a n d e r, f o u r d i v i s i o n a l
commanders, seven district
commanders, nine tehsil commanders,
12 area commanders and company
commander, the officers said.
Top among those killed in 2007 include
Bilal Afghani, chief commander of Al-
Badr on December 3 in Budgham followed
by Qari Umar (deputy chief of HuJI for J-
K), Abu Hamza (chief operation
commander of JuM), Qasim Bhatti (chief
operation commander of LeT), Iajaz
Ahmed Chopan (chief operation
commander of HM), Aby Tallah (operation
commander of LeT's Jammu region),
Mohammad Younis (commander-in-chief,
HMPPR) and Mohammad Khalid-ur-
Rehman (LeT's India operations head).
With forces continuing to enjoy an edge
over militants, the overall security
situation in the state improved
considerably with the number of
militancy related incidents, killings of
civilians and security force personnel
coming down as compared to previous
years.
The number of militancy - related
incidents came down by 33 per cent in
2007, confirmed an official spokesman.
During the year, the killing of civilians by
militants and in the cross - firing between
security forces and ultras also registered
a 59 per cent decrease. Similarly, the
security force killing fell by 28 per cent
Epilogue Ø
8×
January 2008
over the corresponding period of the
previous year. During the same period,
security forces foiled more than 50
infiltration bid and killed about 100
militants immediately after they
sneaked into this side from Pakistan -
administered Kashmir. However, the
infiltration from across the border also
decreased as compared to previous
years.
More than 100 militants and their
families also surrendered before the
security forces near the border after
their return from PoK during the past two
years. Security forces and police
eliminated over a dozen top commanders
of different militant outfits during the
period.
Cell Wars Hot Up
Registering a customer base of eight lakh
in Jammu and Kashmir, Bharti Airtel
claimed to have become lead player in
the State, ahead of BSNL. Aircel is third in
the line but is improving with its new
schemes and BSNL believes that it is a
temporary setback.
Celebrating the achievement at end of
the year, Airtel introduced Super Life
Time Validity (SLTV) recharge at Rs. 499,
less than half the standard price of Rs.
999. “The milestone of eight-lakh
customers in a short span of three years
clearly reflects the conviction of people
of the State in the services being
provided by Airtel,” said Bharti's Chief
Operating Officer, Vishal Sehgal.
Sehgal said the network was operating
with 1,100 cell sites and hoped to scale it
up to 1,300 cell sites by the end of the
current financial year.
With the huge customer base, Airtel
accounted for 44.34 per cent of the
State's 1.8 million telecom market. BSNL

enjoys 43.32 per cent while Aircel has
10.77 per cent share.
Jammu and Kashmir has emerged as the
third best market for Airtel after Delhi
and Mumbai and Kashmir valley
contributes a major share to this.
Though the BSNL authorities are worried
about the emerging growth of its main
competitor, they maintain that it is a
temporary phase. “We have stopped
sales for sometime but we are reviving
and will be back in our position” said a
senior BSNL official.
Likewise, Aircel is confident of having its
pie in the market. “We are not that old
but our share is also rapidly improving,”
says and Aircel official. The coming year
is likely to witness intense competition
between telecom players.
War against corruption
Audacity of loud slogans may have slowed
down owing to political reasons, but
tirade against corruption continued in
2007. During the year the Vigilance
registered 81 cases against 109
government officials (including 44
gazetted officials) and 18 private
persons. These included 41 trap cases in
which 46 officials were caught red-
handed while accepting bribe.
Of the 81 cases registered in 2007, 43
related to districts other than Jammu
and Srinagar. And of the 41 trap cases, 21
pertained to rural areas. Besides, the
Vigilance filed challans in 88 cases in
court against 154 officials (including 58
gazetted officers) and 164 private
persons like businessmen, middlemen
and beneficiaries of graft.
Seventy-nine cases against 166 officials
(including 69 gazetted officials) were
SPECIAL REPORT
THE YEAR IN REVIEW
last year referred to the government for
accord of sanction for prosecution.
Sanction for prosecution was accorded in
68 cases against 105 officials (including
30 gazetted officials).
Under the amended provisions of
Prevention of Corruption Act, the
Vigilance officials said properties of six
officials valued over Rs 1 crore have been
attached. The total number of
attachments of property cases increased
to 12 and the attached property was
valued at Rs 4.48 crores, they said.
“We registered cases against 19
government servants for acquisition of
assets through corrupt means.
Disproportionate assets worth Rs 4.27
crores have been detected in these cases
so far,” the officials said.
They added that a number of cases
related to misappropriation of
government funds in works, awarding of
contracts and purchases were also
registered, and according to
conservative estimate a loss of over Rs 15
crores was caused to the state exchequer
in these cases.
“Our objective of quality investigation in
a specific timeframe recorded further
success in 2007. The success of proved
cases during investigation increased to
over 90 percent in 20062007 as against 65
percent during 20032005,” the officials
said.
The Vigilance Organization during
investigation detected a loss of Rs 77.40
crores to the exchequer since January
2005 mainly due to corrupt practices by
the officials. The amount includes
misappropriation of Rs 58.05 crores and
possessing disproportionate assets worth
Rs 12.61 crores
Epilogue Ø
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January 2008
Some More Wait For Baglihar
Like several years in the past, the
Baglihar hydro-electric project the
controversial yet most prestigious power
project of J&K failed to keep a date with
this year. It had been ambitiously
announced that Baglihar will begin
generation of electricity by December
31, 2007 but that did not happen. The
project has overrun the deadlines several
times in the past.
Now finally the government has officially
announced that the hydroelectric
project will start partial operations by
next June, supplying much needed
power.
Pakistan has said it fears the one-billion-
dollar project could deprive its wheat-
bowl state of Punjab of vital irrigation
water. It says the dam violates a decades-
old water sharing treaty brokered by the
World Bank.
But India says the Baglihar hydroelectric
project on the Chenab River does not
violate the pact and could go a long way
to ending routine 12-hour blackouts
plaguing the Himalayan state.
"The first phase of the 450-megawatt
Baglihar Hydel power project will
become operational by June, 2008,"
Chief Minister Ghulam Nabi Azad said
after a visit to the project site. "The pace
of work on the project had slowed,
meaning the target date for completion
was missed," Azad said, referring to
objections raised by Pakistan. The
second phase would be completed in the
"near future." The project will
"considerably improve" the power
position in the Himalayan region, he said,
giving no details on how much electricity
would be generated by the initial start-
up. The work on the project began in
April 1999.

Jammu and Kashmir has the potential to
generate 20,000 megawatts of power,
but less than 10 percent of it has been
exploited. Massive power theft has
compounded the state's electricity woes
with people refusing to pay power bills.
An expert appointed by the World Bank
ruled earlier this year that the dam India
is building in the disputed Kashmir region
did not violate the water-sharing treaty
with Pakistan.
The 1960 Indus Water Treaty governs the
sharing of common river waters. Pakistan
said it would be deprived of its rightful
share of water from the Jhelum River.
At Pakistan's
request, the World
Bank in 2005
appointed Professor
Raymond Lafitte, of
the Swiss Federal
Institute of
Te c h n o l o g y, t o
address differences
with India over the
dam being built in
southern Indian
Kashmir. Under the
terms of the 1960
treaty, the decision
was final and
binding on both parties, according to the
World Bank.
An Year of Honour for Jammu
University
For Jammu University and its Vice
Chancellor, 2007 was a year of glory. The
world class and majestic General
Zorawar Singh Auditorium this year saw
Prime Minister of India Dr Manmohan
Singh receiving an honour from the
University of Jammu. Prime Minister on
July 15 receive an honorary doctorate of
letters (D. Litt) from Jammu University,
the latest in the many academic honours
SPECIAL REPORT
THE YEAR IN REVIEW
conferred on him in his long public
career. Jammu and Kashmir Governor
and university chancellor S.K. Sinha
conferred the doctorate degree on
Manmohan Singh - the first from an Indian
university after he became prime
minister in May 2004.
Manmohan Singh has been the recipient
of honorary doctorates from numerous
universities both in India and abroad.
This long list includes honorary degrees
of D. Litt from Panjab University, Guru
Nanak University, Delhi University, Sri
Venkateshwara University, Panjabi
University, University of Mysore, Osmania
University and Italy's University of
Bologna. He has received other honorary
degrees - a Doctor of Laws from the
University of Alberta, Edmonton,
Canada; and a Doctor of Social Sciences
from the University of Roorkee among
others.
Prime Minister getting an honorary
degree from the University of Jammu
was indeed a rare honour for entire
Jammu and Kashmir state. On receiving
the degree, the Prime Minister
remarked, “I have received similar
honours before but your gesture is
special for me”. The Prime Minister also
placed on record his deep appreciations
for the Vice Chancellor Prof Amitabh
Mattoo for making the University an
Epilogue Ø
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January 2008
institution of excellence. He said, “let
me say, at the very outset, that I have
been impressed by the remarkable
strides that the University of Jammu has
made in recent years. I compliment you
all, especially your dynamic Vice
Chancellor Prof Amitabh Mattoo. The
steps taken by your University to
establish itself as a center of excellence
are impressive. I commend the
University's achievements in teaching
and research, especially in fields like
high energy physics, glaciology,
biotechnology and strategic studies. I am
also happy that the University has
actively participated in extension work,
in partnership with civil society, in
disaster management, empowerment of
rural women and
the efforts at
strengthening the
region's culture of
tolerance and
peace. It is
precisely this blend
of academic
excellence, social
relevance and
a e s t h e t i c
sensibility that our
Universities must
n u r t u r e ” .
the year was
equally momentous
for the Vice Chancellor at the individual
level. Prof Mattoo was nominated to the
board of directors, India Afghanistan
foundation (IAF), for an duration of two
years.
The 10-member board has five members
each from India and Afghanistan. It was
constituted during the Afghan President
Hamid Karzai's visit to India in April.
Mattoo is an expert in India's foreign
policy and as a member of the IAF board,
he is expected to foster the civil society
links and academic and scientific contact
between the two elected as the member
of governing council of Pugwash, the
Nobel Prize winning NGO, this year.
 D I A L O G U E
J & K S I T U AT I O N

We need a J&K-centric solution

and not Kashmir-centric
Interview with Governor Lt Gen. (Retd.) S.K. Sinha

LT. GEN (RETD.) S.K. SINHA’S association with Jammu & Kashmir has completed 60 years. He was a part of the
first contingent of Indian Army to touch ground in Kashmir in October 1947. In 2003 he returned to the state
as Governor. In an Exclusive Interview, Gen Sinha share with Epilogue’s Editor-in-Chief ZAFAR CHOUDHARY his
assessment of the prevailing situation. Here are excerpts :

You came to Jammu and Kashmir in
2003. That was 56 years after you had
come first as part of India's first Army
deployment to Kashmir. You have seen
the developments from different
levels. What difference do you find in
the situation of 1947, 2003 and now?
When I came here in 1947, the feeling
was that the Army has been given almost
impossible task to accomplish. All odds
were against us. On the afternoon of
October 26 we were told to go to
Kashmir; that Maharaja has acceded and
the Army has to be in Srinagar. About
enemy: the Pakistani side comprising
over 5000 tribals and also regular soldiers
was led by Gen Akbar Khan. They had
opened an attack from Baramulla. We
were just 300 soldiers. I was a Major and
the only Indian Army officer at the
Controlling Headquarters where all other
officers were the British. The British
Government had decided that none of
their officers will go to Kashmir. For me
the task was stupendous, I did not
actually know what happens next. It was
a miracle that we succeeded.
We were able to defeat the Pakistani
raiders as we enjoyed enormous goodwill
of the local people of Kashmir. They
looked at us as savours. Sheikh
Mohammad Abdullah was the undisputed
leaders of Kashmir; he had a secular
outlook and had opted to with India. I still
remember the popular slogan those days:
Hamlewar Khabardar, Hum Kashmiri
Hindu, Muslim, Sikh Hain Tayyar…. This
was quite an unusual scenario for me.
The previous year I was in Calcutta where
In 2007, there was
optimism. Things are
moving forward. The level
of violence is reducing;
ceasefire is holding well on
the Line of Control for
fourth year now. Peace
process is moving on and
dialogue with Pakistan is
also taking place. There is
a general change in the
attitude for peace,
development and
prosperity.
Army was dealing with the communal
violence following selective killings. The
bottom-line is that despite all the odds
against us, in 1947 secularism was at its
best in Kashmir.
Though I had worked in J&K for over ten
years as an Army officer in between also
but in 2003 when I landed at the same
airfield of Srinagar where I had landed
first 56 years back, my thoughts went
back to the same situation. I could mark a
stark difference. In 1947 Kashmir stood
an example of secularism while in 2003
the element of fundamentalism has
badly crept in the Kashmiri society. The
Kashmiri Pandit minority had been driven
out of the Valley. I can recall when I was
sworn in as Governor on June 4, 2003
there were rifle fires quite audible in
Srinagar City. There was violence.
But I was more confident of the situation
moving forward. For me the
fundamentalism was a more serious
concern than violence. I had dealt with
similar situation earlier also particularly
during my term as Governor in Assam.
In 2007, there was optimism. Things are
moving forward. The level of violence is
reducing; ceasefire is holding well on the
Line of Control for fourth year now.
Peace process is moving on and dialogue
with Pakistan is also taking place. There
is a general change in the attitude for
peace, development and prosperity.
For Jammu and Kashmir, the year 2007
had begun at a very enthusiastic note.
Mirwaiz Umar Farooq going to Pakistan

Epilogue Ø
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January 2008

and condemning the use of gun from
Pakistani soil. General Pervez
Musharraf declaring that the elements
supporting violence have no role in the
peace process. But slowly every thing
came to a halt. How do you analyze the
progress on peace process over this
year?
This problem is here for 60
years now. There are so many
ramifications. Expecting
results in matter of months is
unrealistic. We are moving in a
situation where expecting
matching response from
Pakistan is difficult. Political
situation in India too has been
untenable this year. At one
point of time one could have
expected fresh elections in the
country; there were some signs
of instability. Let's keep moving
in a direction and wait for the
final results.
Shortly ahead of the internal
disturbance in Pakistan it was
widely rumoured that New
Delhi and Islamabad were
close to a deal on Kashmir. Can
you imagine…?
No don't think so. I don't think
there can be a deal on the issue.
I too had read about this but I
don't find anything substantial.
How do you see the internal
disturbance in Pakistan
casting an impact in Kashmir?
In Jammu and Kashmir there is a lobby
sympathetic to Pakistan. This lobby was
miniscule in 1947. Those who wanted to
go to Pakistan had gone. But now over the
years this lobby has become stronger. In
1989 when the militancy erupted, the
popular slogan in the Valley was
“Kashmir Banega Pakistan”. However,
after 2002 there has a definite change in
D I A L O G U E
J & K S I T U AT I O N
the mindset. People are getting
disillusioned with Pakistan. You must be
knowing Lord Averbury of UK, a renowned
protagonist of Pakistan. His organization
conducted an opinion poll in Kashmir the
MORI survey, its results were quite
interesting -61 percent of the
interviewed people wanted to stay with
India, 6 percent wanted to be with
Pakistan and 37 per cent were
undecided. I believe, today even the 6
percent figure too has come down.
As the internal picture of Pakistan comes
out, people don't want to be a part of
such a place. Apart from the instability,
there is sectarian violence, the terror
machinery pumped into Afghanistan and
Kashmir is now working at home too,
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January 2008
there is complete lack of democracy. The
Punjabis are the dominant class;
Pathans, Baluchs and Sindhis come in the
second category. Still worst, the
Kashmiris fall in the third category of
people there. Given this situation, in
Kashmir the element of sympathy for
Pakistan is becoming negligible.
There have been many models
and proposals in discussion for
resolution of Kashmir issue.
What do you suggest as a
workable way forward?
See, in Kashmir Valley there is a
feeling of a separate identity.
Some want to be totally
independent. This sentiment for
independence needs to be
understood. In Jammu and
Ladakh regions opinion is not the
same. There is a question of
managing contradictions. There
has to be a “Jammu-Kashmir
centric solution” and not the
“Kashmir centric solution”. This
has to be ensured that none of
the identities is compromised
with. Realignment of the lines of
division is unthinkable. We have
enormously suffered on this
account and such experience can
not be repeated. While moving
forward towards a solution, care
has to be taken that all
aspirations are accommodated.
We are living in an era of
globalization.
The national boundaries are melting and
the economy is taking the center stage.
You see, the concept of nation state was
first evolved in Europe and now it is
Europe taking lead in blurring the
national boundaries towards achieving
economic empowerment of the entire
region. What I propose is a South Asian
Economic Union. In such an arrangement
all the existing animosities will get a back

seat and the economic prosperity of the
people. Jammu and Kashmir, including
the areas under occupation of Pakistan
and also the Northern Areas can make a
beginning in this direction and soon there
can be a South Asian Economic Union.
One can also take a cue from the South-
East Asian countries the ASEAN has
emerged as powerful economic bloc.
It is widely believed that the prolonged
standoff between the ruling coalition
partners in Jammu and Kashmir spanning
over a year now contributed in blocking
the peace process, particularly the course
of dialogue between New Delhi and
Kashmiri separatists. My point is that the
role of state government is seen as a
facilitator in the peace process with the
separatists.
I don't known if there was any lack of
effort at the part of government. The
person, you are talking about, has
worked more for the dialogue. In fact he
has been the driving force. There is no
reason to believe that the government
and leaders of the coalition lacked any
effort in this direction. It was during this
time that we had the roundtable
conferences. If you understand what a
roundtable conference means, its idea
was conceived in 1930s. What British did
was that they held roundtable
conferences in 1930s and 1940s. That
time Mahatma Gandhi was a widely
accepted leader with no rivals. The
British invited many to the roundtable
conference and Gandhi too would get
invitations. There can be differences but
when all parties sit together it makes the
understanding better.
Therefore, the state government can be
a facilitator and this role they have
played well. If separatists don't come to
join the roundtable conference no body
can be faulted for this.
Differences between the Congress and
D I A L O G U E
J & K S I T U AT I O N
the Peoples Democratic Party seem to
be over, for the moment. There have
been signs of bonhomie but debate on
The national boundaries are
melting and the economy is
taking the center stage. You
see, the concept of nation state
was first evolved in Europe
and now it is Europe taking
lead in blurring the national
boundaries towards achieving
economic empowerment of the
entire region. What I propose
is a South Asian Economic
Union. In such an
arrangement all the existing
animosities will get a back
seat and the economic
prosperity of the people.
Jammu and Kashmir,
including the areas under
occupation of Pakistan and
also the Northern Areas can
make a beginning in this
direction and soon there can
be a South Asian Economic
Union. One can also take a
cue from the South-East
Asian countries the ASEAN
has emerged as powerful
economic bloc
the contentious issue still remains.
There has been relocation of some
troops from some hospitals and school
Epilogue Ø
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January 2008
buildings in the Valley. But in its report
the expert panel constituted by the
Prime Minister, it is learnt, has not
spoken of downsizing the troop
strength. How do you comment on the
situation after having witnessed a
raging conflict of ideas between the
ruling coalition partners over the year?
In fact the very word “demilitarization”
was ill conceived. Pakistan's Pervez
Musharraf used this word and some
people in Kashmir starting echoing. In
places where there separatist violence
or other forms of violence, the troop
strength has to be maintained.
However, the strength or positioning
can be reconsidered depending upon
the evolution of situation. Therefore,
there can be three things:
? Return of troops to the barracks,
? Reduction in strength or
? Relocation of position
In first case there has to be an
appreciation of the situation prevailing
on the ground. The need for
politicization does not arise at all. People
who have been talking loud about the
demilitarization must realize the
situation assuming in Pakistan.
The terror infrastructure is still intact.
Reduction in the troop strength is
unthinkable without getting convinced
about dismantle of terror infrastructure.
As far as relocation of the position of
troops is concerned, this process is a
continuous. Relocation has been going
for several years and it is going to
continue.
Jammu and Kashmir enjoys a special
constitutional position in India. The
Chief Minister too enjoys special
powers and authority as compared to
his counterparts in other states. Does
this difference extend to the Raj
Bhawan too?

No, the Governor does not have any
special or extraordinary powers or
position which is not available to his
counterparts in any other state. His
powers emanate from the Constitution of
India which have been endorsed by the
Constitution of Jammu and Kashmir.
You remained Governor of Assam. How
do you put the difference in your
experience at two places?
The problem of insurgency is almost the
same at both places. But in Jammu and
Kashmir the serious dimension of
problem is the religious fundamentalism
which was not in case of Assam. The
separatist movement in Jammu and
Kashmir would not have been called as
fundamentalist if the people involved
were mix of all in the state. In Assam the
ULFA was not confined to any particular
religion. Moreover, the Assam problem
did not have international dimension
which is a history of Jammu and Kashmir
due to involvement of Pakistan.
At more than two occasion, particularly
during the demilitarization debate
when you raised the security concerns,
a part of ruling alliance issued
statements asking you not to speak on
the political matters. Is this something
the Jammu and Kashmir Governor
should not speak about?
I never spoke on the political issues.
However, upholding the constitution of
India and expressing concerns on the
issues of national security is a part of my
right and responsibility. I admit that I
have been proactive in some matters. I
have been proactive in reviving
Kashmiriyat, I have been proactive in
maintaining the national integrity, I have
been proactive in upholding the
constitution of the state and country.
Besides being Governor I have been
assigned (by the legislature) some other
responsibilities too. Therefore, as
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J & K S I T U AT I O N
Chancellor of Universities I have been
proactive in promoting the Higher
Education and as Chairman of the two
Shrine Boards I have been proactive I
It is just a matter of
public perception both
were my Chief Ministers.
Once there were some
differences of opinion with
one Chief Minister on
Amarnath Yatra. People
asked me a lot of questions
but I never criticized the
Chief Minister. Today no
one asks such questions.
After all it is my
government and they are
my Chief Ministers. If I
returned the Panchayati
Raj Bill during the tenure
of the previous Chief
Minister in case of the
present Chief Minister's
tenure I have recently
returned the Right To
Information Bill. Both
have respected my opinion.
have been proactive in reviving and
promoting the pilgrimage and utilizing
the resources for the common good. The
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January 2008
Shri Mata Vaishno Devi University and the
upcoming state-of-the-art Cancer
Hospital are the initiatives for the
common good.
You have vast experience of serving in
the Armed Forces, Public Life, and
Diplomacy and at Raj Bhawans. How do
you compare the political maturity in
Jammu and Kashmir with other parts of
the country?
There may be religion bias among some
sections of people but Kashmir as a
community is not fundamentalist.
Politics here is quite seasoned and its
heritage is Kashmiriyat.
During your present term as the Jammu
and Kashmir Governor two Chief
Ministers have worked with you. Public
understands the differences of
relations both maintained with the Raj
Bhawan. Could you please tell us who
was (or is) more comfortable working
with you.
It is just a matter of public perception
both were my Chief Ministers. Once there
were some differences of opinion with
one Chief Minister on Amarnath Yatra.
People asked me a lot of questions but I
never criticized the Chief Minister. Today
no one asks such questions. After all it is
my government and they are my Chief
Ministers. If I returned the Panchayati Raj
Bill during the tenure of the previous
Chief Minister in case of the present
Chief Minister's tenure I have recently
returned the Right To Information Bill.
Both have respected my opinion.
When last time I had interviewed his
Excellency in March 2006, the
functional democracy in Jammu and
Kashmir was described as best form of
self rule. President Pervez Musharraf
and other protagonists of self rule were
advised to learn from the Jammu and
Kashmir experience of democracy. But I

believe in Jammu and Kashmir the
democracy in real sense has been
denied to people by keeping the
Panchayati Raj Institutions in perpetual
limbo. His Excellency's comments…
Democracy has to be all levels. In Jammu
and Kashmir we enjoy democracy to a
greater extent than many parts of the
world but there may be some problems in
the actual operation of the system. If
there are certain shortfalls, they are not
constitutional.
The shortfalls may at the level of the
people who are supposed to implement
the constitutional provisions. There are
various levels of democracy. At state level
the democracy in Jammu and Kashmir is
better than many other states. I agree the
real democracy is not percolating down to
the grassroots in Jammu and Kashmir as it
is the case with many other states in the
country. we must understand that the
provisions do exist but the people
responsible for implementation may not
have been able to implement. I hope the
Panchayat elections are held soon and the
democratic system is devolved to the
grassroots levels.
What is His Excellency's vision about
the economic development of Jammu
and Kashmir?
For sustainable economic development
self sufficiency in all spheres is most
important. Let's take the example of
meat.
The majority in Jammu and Kashmir has a
non-vegetarian way of life. To meet the
basis requirements a big chunk of meat
and eggs has to be imported. Here we are
not self sufficient to meet the
requirements. I had invited the
legendary Agricultural Scientist MS
Swaminathan to Kashmir.
He prepared a roadmap for economic
D I A L O G U E
J & K S I T U AT I O N
development of the state this year. He
said that 3.7 per cent of the state's total
population lives below the poverty line
and he wanted this to be close to Zero.
He prepared three vision papers for the
state. Since the agricultural terrain is
different in Kashmir, Jammu and Ladakh,
therefore he suggested different set of
mechanism.
In 2007, my government
has done tremendous work
for development. One can
see the coming up of Hajj
House in Srinagar in a
record time. The Hajj
House has emerged as first
of its kind in the country.
Works on many important
projects are being executed
in double shifts.
The vision paper has been forwarded to
the government and I am sure its
implementation will bring in a revolution
and make the state self sufficient in
almost all spheres. Education is the key
to economic prosperity. Our state is
making huge strides in the higher
education. There are seven Universities
in the state which by all accounts reflects
a better picture than other states in the
Epilogue Ø
15 ×
January 2008
country. Two newly found Universities
the Mata Vaishno Devi University and the
Baba Ghulam Shah Badshah University
are have done exceptionally well in a
very short span of time. Now the need is
to enhance the quality of education. I am
of the opinion that better standards of
higher learning certainly lead to
economic development.
In Jammu and Kashmir working at
bringing peace and ushering the state
into an era economic prosperity every
day counts its own significance. How do
you rate the present year in terms of
achievements on different fronts?
In 2007, my government has done
tremendous work for development. One
can see the coming up of Hajj House in
Srinagar in a record time. The Hajj House
has emerged as first of its kind in the
country. Works on many important
projects are being executed in double
shifts.
There is a new work culture which sets
high standards. The government has
been trying to fight corruption in the
system. As far as the peace front is
concerned, results can not be expected
overnight but there have been definite
developments.
Your message for the new year…
In the year which is about to end we have
done well. Whether on restoring peace or
economic development all fronts have
seen huge activity. The concerted efforts
have contributed in improved economic
conditions and better education
facilities. We need to carry on with this
and make Jammu and Kashmir more
vibrant in 2008. With such sincere
efforts, I believe our state can be a model
state in the country.

At peace process there is a comma
and not the full stop
Interview with Prof. Amitabh Mattoo
The Vice Chancellor of the University of Jammu, PROF AMITABH MATTOO plays the role of a strategic analyst and social
scientist which stretches far beyond the Campus. In an exclusive interview with EPILOGUE, he shares his opinion about
The peace process, educational scenario and possibilities of his joining politics. Here are excerpts:
The beginning of year 2007 was quite
enthusiastic on peace dialogue. But the
enthusiasm thinned down in
subsequent months. How do you see
the peace process moving?
Yes if we look back, the year 2007 had
begun full of promises and expectations
on carrying forward the peace process. I
agree that the year has ended at a note of
pessimism. There were some positive
developments too. Path-breaking reports
of four of the five Working Groups
constituted by the Prime Minister were
p r e s e n t e d a t t h i r d Ro u n d t a b l e
Conference. The process of
implementation is on. We can say there is
a pause or comma but not the full stop at
the end of the peace process. There were
internal problems in Pakistan due to
which the course of dialogue between
the Prime Minister Manmohan Singh and
President Pervez Musharraf could not be
strengthened and sustained as it had
been going on. On the internal front, the
dialogue between the separatists and the
Government of India too turned out to be
a non-starter this year. I, however,
remain convinced that the Prime Minister
is fully committed to using his term as the
Chief Executive of the country to bring
sustainable peace in Jammu and Kashmir.
Now what shape the South Asian politics
takes has to be seen.
How do you see the impact of internal
disturbance in Pakistan on New Delhi-
Islamabad relations and on the course
D I A L O G U E
J & K S I T U AT I O N
of peace process in Jammu and
Kashmir?
The immediate impact is that one
separatist group has lost the idea as what
Situation is much better
than any year in past 15
years. It is still getting
better. There is a climate
of change and the waves of
peace can be clearly seen
on the horizons. The
major reason for this fast
emerging atmosphere of
peace is that there is an
all pervasive feeling
among the people of
Jammu and Kashmir that
violence is not the
instrument of achieving
the political ends.
negotiations they should take on. There
is a degree of confusion between several
Epilogue Ø
16 ×
January 2008
groups. The situation assuming Pakistan
has a definite impact on New Delhi-
Islamabad relations also to the extent
that there is no positive development on
a wide range of issues. In long term it is
important that Pakistan emerges as a
stable and healthy democratic society. It
is in the interest of India for being the
immediate neighbour.
What is your analysis of the latest
security situation in Jammu and
Kashmir?
Situation is much better than any year in
past 15 years. It is still getting better.
There is a climate of change and the
waves of peace can be clearly seen on the
horizons. The major reason for this fast
emerging atmosphere of peace is that
there is an all pervasive feeling among
the people of Jammu and Kashmir that
violence is not the instrument of
achieving the political ends.
What is your idea of economic
development of Jammu and Kashmir.
Our state has the lowest rate of poverty
(little over three percent) but still it is
projected as one of the poor states in
the country.
This is a stark paradox. People are
generally not poor but the state is poor in
terms of its resources and production.
There is a general feeling that people
lack the due empowerment. There has to
be a clearly defined objective of making

people empowered through education
and better governance. I believe that the
present Chief Minister has a vision for the
future to see Jammu and Kashmir
emerging as prosperous and
economically empowered state. CM has
been trying to improve the system of
governance but unfortunately the
instruments are still caught
in a time warp. The
bureaucracy needs to gear
up to meet the challenges
of governance. In this
connection, two critical
areas for improvement are
the Panchayati Raj and the
infrastructure building
apparatus.
How do you look at the
ch a n g i n g edu cati o n al
profile of Jammu and
Kashmir? There are seven
Universities, two deemed
Universities. 40 new
government degree
colleges have recently
come up. How do you
make comparative analysis
with other parts of the
country?
Despite this massive
infrastructure development,
Jammu and Kashmir still lags
behind in higher education.
What were witnessing today
in terms of expansion are the
revolutionary steps to put
the state at part with other
parts of country. We are
going through a phase which can be
described as a real inquilab in enhancing
the educational profile. This needs to be
sustained and strengthened.
Could you please describe the Jammu
University the way it existed on the day
when you had taken over as Vice
Chancellor?
D I A L O G U E
J & K S I T U AT I O N
It was provincial university with huge
potential. Located in a tense and conflict
ridden state it was looking towards
future but there was no line of action in
place. Some of the departments were
doing quite well but the talent was not
fully exploited. The campus was lacking
in terms of infrastructure.
Where does the University of Jammu
stand today?
Well, today the University of Jammu is on
the radar of higher education map of
India. Potential of its students is fully
booming and is being appropriately
exploited. Concerted attempts at
excellence have made the University one
of the best in the country.
Epilogue Ø
17 ×
January 2008
Which department of the University do
you rate as number one in terms of
academic excellence?
I would rather talk about two
departments. One is new and the other is
older with a new outlook. I am talking
about the department of biotechnology
and microbiology as the new
emerging faculties making
excellence in the discipline.
The older one is the
department of Management
studies which was given a
new outlook, a new branding
and a new name as the
'Business School'. The
department was refurbished
and put under a dynamic
leadership which has made
it among the top ten
business schools in the
country.
Your ISO certification has
often been laughed at by
the critics. How do you
explain the advantages of
this quality certification?
We are the first University in
the country with ISO
certification which simply
means quality satisfaction.
The ISO certification is an
assessment of level of
satisfaction expected by the
stakeholders. There are
periodic assessments and
each time the University
comes true up to the expectations of the
stakeholders. It is a statement of
constant improvement in all spheres
including academics, discipline, delivery
and infrastructure.
Of late, there have been some cases of
indiscipline on the campus. What do
you see as provocation?

I have always pursued a liberal approach
to student politics. But unfortunately, in
liberal atmosphere students sometimes
fall prey to some vested interests. It was
a difficult situation. In such
circumstances, the Vice Chancellor is
seen as the only person who can provide
some relief. Every body looks up to the Vice
Chancellor who comes across the real test of
leadership. There were some external
influences but we were able to resolve the
situation, of course, with the support of an
overwhelming majority of the students for
whom this University is a pride.
During this disturbance at the Campus,
somebody accused you of being
communal. How to you react to this?
That was the biggest shock. There have
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D I A L O G U E
J & K S I T U AT I O N
been several attempts to destabilize me
with several ways but the most hurting
word was “communal”. In fact the
community and caste consideration is an
anathema to me. I see myself as
religiously blind.
Can you enlist some persons or other
influences which contributed to the
making of your secular outlook?
My mother, Jawahar Lal Nehru University
and Oxford University
You were selected for Indian Police
Service but you preferred to pursue your
career as an educationist or social
scientist. What would you have preferred
to become if not an educationist?
Epilogue Ø
18 ×
January 2008
I would have a become a journalist
It has been widely speculated that you
may join politics after your present
stint as Vice Chancellor. Media reports
have often suggested that two
important political parties in J&K have
approached you for a role in
organization and government. Is there
something like this on cards?
(Laughs) Well, honestly speaking, I never
had the time to think on anything like
this. I may think once I am free from the
present responsibilities.
Is it true that political parties have
approached you for joining them?
Yes that is true!
June 2007
Looking Beyond “K”
May 2007
Peace Process
April 2007
PDP-Congress Coalition
Schism
March 2007
Baglihar
February 2007
The Promise Ahead
January 2007
Book of the year
 I N F O C U S
ECONOMY & OTHER IDEAS

Buoyancy in J&K Economy and

Budget 2008-09

As the Finance Minister prepares to present the last annual budget of the present PDP-Congress coalition
government. PROF. NISAR ALI analyses the achievements of previous year and projects expectations
For the future planning.

The budget 2008-09 of Jammu and position of the state since there is no situation. The sales tax/vat seem to be
Kashmir State is in its making and has to effective monitoring so that quarterly potential area of revenue generation as
be linked with the previous historical data could be made available. during the 2005-06 fiscal year the
budget presented by Finance Minister Mr revenue was around Rs.1015 crore and
Tariq Hameed Karra in January 2007. It The international resource mobilization we estimated the same for the fiscal year
becomes historical for the reason of on account of tax revenue seems to show Rs 1422 crore.
being preceded by presentation of first upward trend primarily due to expected
ever pre-budget Combined with power
Economic Survey to tariff and service tax
enlighten public the levied first time we
state of economy and should be able to
the state of mind and estimate our tax
also becomes now an revenue in the ensuing
annual feature of budget 2008-09 Rs
budget presentation 3000 crore and non tax
in the legislature. revenue Rs 1000 crore
One has to view the to generate Rs 4000
ensuing budget from crore as internal
its prescriptions of resource mobilization.
innovations to be Comparing the own tax
presented and revenue-gross state
responses thereafter, domestic product ratio
expectations raised during 2002-03 to
and objective 2006-07 one finds the
functions realized or ratio not has been very
likely to be realized by low but increasing
the termination of the marginally from 0.047
next fiscal year. In the in 2002-03, 0.052 in
present paper an 2003-04, 0.0577 in
increase in value added tax and power
attempt is be made to predict the 2004-05, 0.0640 in 2005-06 and 0.0653 in
tariff. Assuming effective tax
possible outcomes of the budget and its 2006-07.
administration, the revenue on account
focus areas.
of service tax is also likely to augment
internal tax revenue. We estimated tax A similar trend is observed when we
Fiscal Position revenue to be realized by the end of compare non-tax revenue-gross state
current fiscal year around Rs 3112 crore domestic product ratio which stood 0.017
If we look at current budget completing , excise and sales tax/vat is likely to in 2002-03 and 0.020 in 2006-07.
its three quarter of execution it is perform well given the increase in
difficult to ascertain existing fiscal volume of business and relatively better This demonstrates potential buoyancy in

Epilogue Ø
19 ×
January 2008

tax and non-tax revenue and both
vertical and horizontal increases in
internal resource mobilization are
justified. But one has to exercise a
caution in advocating this because of
the ensuing elections the Finance
Minister may not be in a mood to do so.
It would be a land mark budget as in
Jammu and Kashmir fiscal history the
internal resource generation has been
at snails pace as compared to previous
decade. The additional revenue
generation would be from tax on
vehicles, passenger
goods, service tax, etc
mostly coming from
higher income brackets.
Between 2002-03 and
2006-07 the states own
revenue has increased
by 88.65 per cent.
Similarly the non-tax
revenue of state has
increased by 75.3 per
cent during the
reference period which
shown buoyancy and
needs to be sustained.
The own tax revenue
realization need to be compared with
capacity in the economy and consumer
capabilities and the statistics of the
reference period shows that the per
capita income during the 10 th plan
period,2002-03 to 2006-07, in the
state demonstrate a rise from Rs 19219
to Rs.24830 at current prices and a
year earlier 2001-02 it was just Rs
17543, that is an annual growth of 7.2
per cent. The per capita income has
been sharp particularly during 2004-05
2006-07, hence additional resource
mobilization on account of tax
revenue is justified.
Budgetary Management and Fiscal
Responsibility
Much of the revenue augmentation
I N F O C U S
ECONOMY & OTHER IDEAS
depends on effectiveness of tax
administration particularly during the
last quarter of the current fiscal year.
The budget management much depends
on the fiscal discipline. If we look at the
revenue expenditure of the current
budget estimated at Rs 10763 and
primary revenue expenditure mainly
comprising salaries, wages and pensions
estimated at Rs 8606, that is, 80 per cent
of the total revenue expenditure and 53
per cent of the total budget or 84 per
cent of the central devolution (share in
central taxes +resources from centre),
the state has to exercise a great care in
nits disbursements. According to
schedule of establishment, there are
3,14,125 employees depending upon
current budget for their wages and I
believe there are another 100 thousand
so-called employees and in
administrative language casual labour
engaged in State establishments,
budgetary supported corporate and local
bodies with annual financial implication
of Rs 250 crore. It remains a serious
question whether these official organs of
state and corporate bodies have
legislative mandate to incure the
expenditure on account of the said wages
comprising disbursements at operational
level.The lack of discipline here may end
up the current budget with
unmanageable deficit or will off-set the
Epilogue Ø
20 ×
January 2008
gains realized on the revenue realization
front. We need to exercise budgetary
discipline in case of over-head
expenditures at this stage of fiscal year
to minimize the public expenditure.
Macroeconomic Aggregates and Priority
Areas
Before we analyze the impact of current
budget on the economy and the focus
required in the ensuing budget we need
to know the pressing problem areas of
the economy. One such
area is the backlog
unemployment of
educated manpower as
a stock and the net
addition to annual
unemployment as a
flow.
Unemployment
The economy is trapped
in a paradox. It imports
labour more than 300
thousand of various
skills who remain
gainfully employed
across the districts in all economic
pursuits. The estimates are based on
observations and not any official
estimates and seem to be realistic. On
the other hand the government
appointed a few times Cabinet
Committee to look into the problem as
serious area of concerned. The official
estimates reveal that there are about 109
thousand (2006) educated youth
unemployed on live register of
employment exchange. Therefore, it looks
a paradoxical as labour importing
economy is crying for unemployment.
Assuming its seriousness, it works around 1
per cent of the population and 5 per cent
of the active labour-force. According to
NSS 60 the Round the unemployment rate
in the State is 4.21 per cent which means
400 thousand roughly.

This is to be viewed in terms of
identification of unemployed, a youth
seeking state sector job or a youth
working in a private school as under-
wage teacher/employee or an educated
youth working in a private sector seeking
state sector job or a casual labour/ daily
wager in the state establishment in the
queue for permanent state sector job. To
avoid business uncertainties and to cover
entrepreneurial initial risk and business
risks a provision was made in the current
budget for Rs 100 crore as venture capital
fund. It was created to facilitate small
and medium commercial enterprises to
re-equip themselves to carry on
activities. But it looks that the takers of
venture capital benefits have not made
their presence felt when only a quarter
of the current fiscal year is left.
This has got to be moved forward in the
ensuing budget by reactivating High
Power Employment Mission proposed in
the current budget. The budget 2007-08
is committed to launch new self-
employment ventures and schemes for
upgradation of skills, trainings and drive
towards entrepreneurial ability. The
other areas in self-employment ventures
include service sector ventures, export
promotion programmes, new emerging
areas like floriculture, fish farming,
apiculture and rural transport. In this
connection the capital subsidy was raised
fro 5 per cent to 10 per cent of the unit
cost and the ceiling also is doubled fro Rs
7500 to Rs 1500 in each case. The debt
servicing or interest subsidization is
extended to other sectors in addition to
handlooms and handicrafts. How far
these incentives have been fully availed
of by entrepreneurs is not known as yet.
Similarly the motivitational incentives
for urban entrepreneurs in establishing
integrated communication Kiosks, or
specialized marketing cells for processed
food products were proposed
particularly for educated urban women
and I do not think the potential
entrepreneurs have been driven to the
I N F O C U S
ECONOMY & OTHER IDEAS
incentives. Only a few success stories
have come on to the surface. The State
government Entrepreneurship
Development Institute needs to re-orient
itself and carry out the budgetary
proposed programmes on innovative
lines and purposeful mode. Their thrust
needs to be on workshops of specific skill
and specific venture rather than
conventional lecturing to relevant
clintale with focus on motivation. As a
A self-employment
motivational drive, skill
formation and skill
upgradation has to be
made a “movement and a
mission” to initiate
investment climate and
small scale industrial
base in the state
particularly in
the valley
result of this the budgetary proposals do
not meet the desired results at the
conclusion of the fiscal year. A self-
employment motivational drive, skill
formation and skill upgradation has to be
made a “movement and a mission” to
initiate investment climate and small
scale industrial base in the state
particularly in the valley
The ensuing focus of the budget needs to
be for the said mission with EDI skill and
motivational workshops at district and
Epilogue Ø
21 ×
January 2008
block headquarters. The post-workshop
trainee and trained potential
entrepreneur must be subjected to
evaluation and monitoring with exit-
feed-back to EDI. This would enable the
Honble Finance Minister to keep a track
of the extent to which mission proposed
in the budget is successful and the extent
to which his budgetary incentives realize
the desired end.
Resurgence of Tourism to Generate
Income and Employment
The tourism industry today is different
than what it was in the past. It is not
Gulmarg or Pahalgam but with new
initiatives and state interventions the
new tourist destinations have been
identified. There are 50 tourist villages
identified and 5 villages have been
identified in the phase I at the cost of
Rs250 crores. The new road connectivity
is initiated to make potential areas
accessible to tourists. More than 6 lakh
tourists visited the valley in 2005 and
more than 29 thousand to Ladakh in 2006
up to July. The pilgrim tourists to
Amarnath cave in 2005 stood 3.88 lakhs
and in 2006 2.55 lakhs. Thus more than 10
lakh tourists visited in the valley and
another 62 lakh pilgrim tourists visited
Jammu and Katra. In 2005.There are
some new pilgrim and heritage sites like
“Buddha Amarnath” in Poonch, “Baba
Ghulam Shah Badshah,” in Rajouri which
need to have tourist infrastructure so
that these sites could be exposed to
visitors. We also need to prepare
heritage and tourism Atlas for both
vertical and horizontal expansion of
tourism industry. The resurgence of
tourism industry needs to be viewed in
terms of development of infrastructure
and new thrust in the industry.
Therefore, the greater thrust need to be
for promotion of winter tourism eco-
tourism away from Pahalgam-Gulmarg
tourism hence warrants greater
allocation for the sector. Shift away from
Gulmarg-Pahalgam would have greater

tendency to generate income and
employment.
Agricultural Growth & Economic Leakages
Agrarian economy presents a dismal
picture for last two and a half decades.
The average size of holdings is declining
very fast reducing state's arable land to
irreducible minimum.It was 0.93
hectares in 1971 with about 50 per cent
of holdings less than 0.5 hectares and
about 75 per cent holdings less than just
1 hectare. As per Agricultural Census
2001 the average size of holding is
reduced to 0.66 hectare with about 78
per cent holdings less than 1 hectare.It
means means most of the state arable
land is economically unviable and does
not give bare subsistence to cultivating
households.We need to make a law on
the floor limit for size of holding.There
are more than 2 million agricultural
workers dependent on farming and if size
of holding gets reduced at such an
alarming rate, the State may get into
insurmountable crisis. Therefore, farm-
based supplementary self-employment
projects must find a focus in ensuing
budget. The net area sown was 732
thousand hectares in 1985-86 and has
just increased to 734 thousand hectares
I N F O C U S
ECONOMY & OTHER IDEAS
in 2005-06.This means that the irrigation
capacity building is stagnant for last two
decades hence foodgrains production is
stagnant during the reference period.
Therefore, we need to re-focus our
agricultural development policy in the
ensuing budget
Education and Human Resource
Planning
Access to education has been a primary
interest of the Government in its policy.
That is precisely why the literacy rate has
gone up from 12.95 per cent in 1961 to
55.52 per cent in 2001. The number of
secondary education institutions and
below has increased from 10265 in 1980-
81 to 19735 in 2005-06 with student
enrolment from 7.98 lakhs to 20.73 lakhs
during the reference period. There are
number of state intervention
programmes outside the budget to make
education accessible in the state. The
ensuing budget needs to focus on
restructuring education by more
allocation for need-based professional
and skilled based education and also
withdraw the budgetary allocation for
primary/middle school education in
districts where enrolment is below
threshold level. The private schools can
be aided to cover poor and under-
Epilogue Ø
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January 2008
privileged children accessing education
in private schools.
Power Economy and Fiscal Management
Power economy is a political-economy
problem. The state economy is power
scarce economy with generation
potential of 20 thousand MWs. Ironically
the state imports power worth Rs 1608
crores estimated 2006-07 and realizes
revenue Rs 266.36 crore estimated
2006-07 thus reducing the power
budget deficit Rs 1372 crore. The
projected power expenditure for 2007-
08 is Rs 2069 crore.
It is the power budget which makes the
state budget deficit and the state is
unable to overcome the problem in the
short run. The people are entitled to
low tariff power because of plenty of
states own water resources. Secondly if
power sharing from centrally sponsored
projects is on 50:50 basis the state is
able to reduce its deficit and
industrialize for higher growth.
CONCLUSION
The ensuing budget of the state is likely
to be partly sweet and partly growth
stimulating. It seems the additional
resource generation may be put off due
to elections approaching. However, the
allocations for infrastructural
development may increase in the
proposed budget to stimulate growth.
The state needs to implement service tax
on a large scale because it has a lot of
potential to generate revenue.
A member of the Editorial Board of
Epilogue Magazine, Professor Nisar Ali is
Dean Faculty of Social Science,
University of Kashmir. He is also member
of J&K State Finance Commission.
The views expressed here are personal
and not attributed to J&K Govt or State
Finance Commission.
 I N F O C U S
ECONOMY & OTHER IDEAS

“Financing Development
in J&k is Financing Peace”
Interview with Tariq Hameed Karra

On January 16, the Finance Minister TARIQ HAMEED KARRA will present in the legislative assembly the annual budget for the year 2008-09.
This budget being the last of the present coalition government, being presented in an election year and the first of the Eleventh Five Year
Plan raise is huge expectation. In an exclusive interview with Epilgoue Editor-in-Chief ZAFAR CHOUDHARY, the Finance Minister makes an
elaborate account of the achievements of previous year and hints at What should be expected from his forthcoming budget.

While presenting your first budget this
year, you had said something very
peculiar “Finance Department is
financing peace in Jammu & Kashmir”.
How far have you been actually able to
finance peace in its real sense ?
Firstly, I would like to make a correction
here for the purpose of record. I never
said something to use your phrase, as
“peculiar” as “Finance Department is
financing peace in J&K”. In fact, in the
first part of my budget speech for the
year 2007-2008, I referred to the context
in which my budget proposals were
anchored. Under the caption “The
Context”, I talked of peace budget
proposals echo the peace through
development agenda of the coalition
Government. After all, financing the
country and the region. Therefore, my
budget is about development through
more efficient and judicious application
of resources and utilization of such
resources especially human resource.”
As you will appreciate, there was no
reference to Finance Department per se.
However, the central idea behind what I
said is that the budget is all about
development through more efficient and
judicious use of resources. I sincerely
hold the view that financing
development in J&K is financing peace,
not only in J&K but across the country.
Developmental initiatives such as Prime
Minister's Reconstruction Plan (PMRP)
should also be seen in such a context.
The comparison of budgets for the two
years will vouchsafe the fact that we
have committed more resources for
The comparison of budgets
for the two years will
vouchsafe the fact that we
have committed more
resources for development.
For the year 2006-07, the
capital component of the
plan amounted to Rs.
2737 crore and for the
current year the same is
Rs. 4016 crore i.e. an
increase of around 47% in
capital expenditure which
is entirely for
development.
development. For the year 2006-07, the
capital component of the plan amounted
to Rs. 2737 crore and for the current year
the same is Rs. 4016 crore i.e. an
increase of around 47% in capital
expenditure which is entirely for
development.
Besides certain qualitative changes,
the annual budget 2007-08 set a
different precedence that it was
presented in the month of January.
Once again you are up for maintaining
the precedence of advancing the
budget. Did this shift in timing of
presenting budget bring the desired
results?
There were many reasons for early
budget presentation. One of the
objectives is to optimally utilize the
learn winter months for seeking
legislative approval of the budgetary
proposals much ahead of the norm so as
to help maximize the limited working
season for implementing and monitoring
plan schemes. As the wintery climatic
conditions improve in the months of
February and march, the progress in
implementation of various development
works can be accelerated. Budget
sessions held earlier in February/March
would not leave time for various
executing agencies and officers to
supervise and/or monitor both pace and
quality of execution of developmental
works particularly towards the close of
the financial year. Further, earlier on the
budget used to be passed by the
Legislature around last week of March. It
would normally take the executive two
to three months to prepare various

Epilogue Ø
23 ×
January 2008

estimates/plans in pursuance of budget
announcements/ allocations. Once our
budget for the next year is in place two
months ahead of the start of financial
year, it gives ample time for the
executives to prepare estimates, seek
approvals including technical approvals
and release allocations so as to ensure
execution of developmental
works and schemes right from
day one of the new financial
year. I may add here that so
far as non-plan allocations are
concerned, 75% of the
provision for the current year
in most cases was released of
March 30 itself.
Even after years of “Zero
Deficit” budget, a majority
of people yet do not
understand the term in the
practical terms. The leader
of opposition, Mr Abdul
Rahim Rather, who has to his
credit presentation of nine
budgets, ridicules the “Zero
Deficit' as fudging the
figures and postponing
liabilities. Could you please
explain the features of 'Zero
Deficit' budget ?
I am glad that you have asked
this question, as there is a lot
of misunderstanding with
regard to “Zero Deficit
Budget”. In fact, I get amused
when many people use the
term incorrectly and call the
budget as “Zero Budget”! t has been
made clear a number of times that “Zero
Deficit Budget” means that our
estimated receipts and estimated
expenditures are equal. It mean that no
part of expenditure is being budgeted for
without identifying the resources to fund
the same.
At the end fo the day, the position may
I N F O C U S
ECONOMY & OTHER IDEAS
slightly vary due to some receipt
identified earlier not coming through or
due to some expenditure budgeted for
earlier not taking place or due to some
extra ordinary expenditure on account of
some extra ordinary situations like
natural calamities, etc. arising during
the course of the year. If you look at my
budget proposals for the current year in
detail, the total receipt were projected
at the level of Rs 16,117 crore. The total
expenditure has been estimated at the
level of Rs 16,267 crore.
Thus, very clearly, there was a resource
gap of about Rs 150 crore. The
amount/deficit was to be met through
Epilogue Ø
24 ×
January 2008
ARM and the trends show that we will
exceed this target.
The growth during the last financial
year was estimated at 5.75%. For the
financial year 2007-08, the annual
growth rate was pegged at 6.5%. You
are about to present the second
consecutive budget, could
you please explain the
Jammu and Kashmir growth
story.
As you are aware, the growth
story of J&K is extremely
positive. Gross State
Domestic Product (GSDP),
which measures the growth in
the economy without
accounting for the
component on consumption
of fixed capital (CFC), has
increased from Rs. 15,660
crore in 1999-00 to Rs. 29,115
crore in 2006-07. Net State
Domestic Product (NSDP) or
State Income, which
demonstrates the behaviour
of the economy in real terms,
was estimated at Rs. 24,836
crore in 2006-07 as compared
to Rs. 13,533 crore during
(1999-00) prices, the NSDP
estimates of J&K stood at Rs.
13,533 crore in 1999-00
whileas it is estimated at Rs.
18,516 crore in 2006-07. At
constant (1999-00) prices,
the Per Capita Net Income for
the state is estimated to
record a growth of 3.04%
during 2005-06 over the previous year
2004-05 and 3.19% during 2006-07 over
the year 2005-06. The average annual
growth rate of Per Capita Net Income
during the period 1999-00 to 2006-07 was
2% at constant prices and 6.37% at
current prices.
In short, what I am trying to convey is
that, so far as economic growth is

concerned, we are on tract.
Your budget had painted rosy picture of
expectations. In your speech, you had
raised expectation son rise in receipt
and decrease in expenditure. At the
end of the year, what picture do you
obtain on this account ?
Our revenue receipts for the current
financial year are estimated at Rs. 7,950
crore as against Rs. 7,359 crore last year.
Similarly our plan receipts are estimated
at Rs. 4,755 crore as against Rs. 3,921
crore last year besides the receipt under
Centrally sponsored Schemes (CSS). So,
there is a trend of increase in receipts
and hope and expectations is that such a
trend will continue.
When I say decrease in expenditure, it
does not mean that our expenditure will
go down as decline in expenditure would
mean lesser developmental activities.
The focus is to restrict growth in our
revenue expenditure; not hat there
ought to be no growth in revenue
expenditure. We have to pay salaries,
wages, pensions and meet our
maintenance requirements, service debt
and interest. All this points out that
increase in expenditure is inevitable. The
only issue in our focus is to increase
developmental expenditure and restrict
growth in revenue expenditure. This we
have achieved but much remains to be
done still. Let us look at the position in
the last three years. During 2005-06, the
revenue expenditure was Rs 9,921 crore
as compared to capital expenditure went
up to Rs. 3,365 crore. In the current year,
it is estimated that capital expenditure
will go as high as Rs. 4,643 crore, while
the revenue expenditure will be at the
level of Rs 10,615 crore only.
Therefore, we are in a situation where
growth rate in revenue expenditure is
much less than that of growth under
capital expenditure. This is an
I N F O C U S
ECONOMY & OTHER IDEAS
achievement, as more and more
expenditure is getting committed for
development of the State.
What is the deficit position? For the
recent few years the government has
been trying hard to ensure the fiscal
discipline but still the burden of loans
and overdrafts has been rising. How do
you put the present situation ?
Our revenue receipts for
the current financial year
are estimated at
Rs. 7,950 crore as against
Rs. 7,359 crore last year.
Similarly our plan
receipts are estimated at
Rs. 4,755 crore as against
Rs. 3,921 crore last year
besides the receipt under
Centrally Sponsored
Schemes (CSS). So, there
is a trend of increase in
receipts and hope and
expectations is that such a
trend will continue.
Much depends upon what type of deficit
we are talking about. As I said earlier, our
budgetary deficit during the current
financial year is estimated to be zero. So
far as our fiscal deficit is concerned, we
have been trying contain its growth. It
cannot be zero as that would mean
Epilogue Ø
25 ×
January 2008
stagnation in our developmental
activities. Some part of plan has to be
funded by raising loans and the budget
also provides for subsequent repayment
of these loans. Hence the budget takes
care of loans that are being raised for
developmental activities.
A realistic picture with regard to our
deficit, based on the actual level of
expenditure will emerge only after our
accounts are fully reconciled with the
books maintained by the Accountant
General. I am happy to share with you
that, for the first time after many years,
we have reconciled our expenditure for
2006-07 with the books of Accountant
General to an extent of 100%. It is my
hope that Finance Accounts for the year
2006-07 will bring out the correct
expenditure situation. The trend is
continuing and for the current year, we
hope to reconcile revenue numbers also
to the full extent. We are moving-in a
professional consultant to take stock of
the state's finances and, thereafter, work
out a roadmap for better expenditure
and debt management.
The increase in the non productive
expenditure would hamper the growth
of the State. How efficiently have you
been able to check the non-plan
expenditure this year ?
You had admitted while presenting last
budget that non plan expenditure has
increased and there was storage of Rs.
200 crore in the non plan productive
expenditure during 2006-07. As I
spoke about just a while ago, the growth
of revenue expenditure is under check.
At the same time, the assets that are
created through developmental plan
have to be maintained and hence the
growth in revenue expenditure cannot be
zero. Besides, capital expenditure
excludes the salaries that being paid for
carrying out the developmental
activities. It means that increase in

developmental activities will definitely
add a small percentage to the revenue
expenditure as well. I would also like to
mention that a substantial portion of our
plan was accounted for by revenue
component including the salaries under
the plan. It is first time during the year
2006-07, we took a very bold decision to
shift plan revenue component to the non
plan side aggregating Rs. 450 crore.
During the current year also, plan
revenue component amounting to Rs. 400
crore has further been taken on to the
non plan side. All this obviously creates a
pressure on the non plan side. Yet, this is
the most logical way to go forward. We
must transfer liabilities on the plan to
non plan and made the plan more and
more capital intensive. Further, our
interest burden is showing an increasing
trend. In the past, we have contracted
liabilities for which interest provisions
have to be made.
In our pre-budget economic survey you
had categorically pointed out that the
time for offering amnesty has gone.
However, your budget proposed
amnesty for trade and industry but
against with a categorical condition
that this was the last opportunity. Did
the amnesty scheme bring desired
results ? If yes what was the quantum ?
I am still committed to eh budget
announcement made in the budget. We
propose to bring legislation in the budget
session for removal of the provision that
allows amnesty so that the recently
concluded amnesty scheme would be the
last and final. I had accepted that the
amnesty scheme would bring in
additional resources. I am not
disappointed with the outcome of that. I
shall talk about in detail at the time of
presentation of the budget in the state
legislature.
Many had said that your budget was
entirely based on presumptions. In
I N F O C U S
ECONOMY & OTHER IDEAS
your budget speech you had clearly
mentioned that the Government of
India had decided to give Jammu and
Kashmir a plan of Rs. 4000 crore. It was
also said that the Government of India
will finance the power reforms grant of
Rs. 1300 crore. There were fears that if
the grant did not come the entire
budget proposition will go haywire.
Could you please allay those fears as
the year comes to en end ?
Budgets can't be prepared on
presumptions. Every decision is based on
inputs that are received from various
departments, Government of India and
Planning Commission of India. Some
estimates are based on the
recommendations of Finance
Commission. Our plan size has been fixed
by the Planning Commission. Of India at
Rs. 4,850 crore for the current financial
year and we expect that Government of
India will fulfill all its commitments :
there are still more than three months to
go before the current financial year
comes to a close.
Having said that, I do recognize your
specific question on the Power Reforms
Grant. I have no hesitation in admitting
that this has been a tough task. Power
reforms are easier said than done. We
have taken up an ambitious programme
of electronic metering, electronic billing
etc. We have introduced energy
accounting at the sub-transmission level.
Huge investments under Prime Minister
Reconstruction Plan, roughly of the order
of Rs 1,000 crore and similar flows under
APDRP, are being made in the
transmission and distribution section.
This should leader to reduction in
Aggregate Technical and Commercial
(ATC) losses. Efficiency gains would not
only improve availability of power but
also effectively reduce the outgo in
terms of payment by the consumers.
However, all this will take time. We are
convincing the Central Government to
Epilogue Ø
26 ×
January 2008
agree to the Power Reform Grant
dispensation for a period of minimum 3
years. The current year has been year
number two. Various other issues like
t r a n s f e r o f D u l H a s t i H E P, a s
recommended by Dr. Rangarajan
Committee, have also got linked up to
the larger question of Power Reforms
grant for the State. In the Scheme of
Financing (SOF) approved by the Planning
Commission of India for the current year
annual plan, Power Reforms Grant of Rs.
1300 crore has been specifically
committed. However, it is true that there
are problems with regard to flow of this
money. We are sorting out the matter
with the Union Ministry of Finance and
Planning Commission of India and it is my
hope and expectation that the money
would come before the close of the
financial year.
Employment was the major thrust area
of your budget this year. There is no
perceptible change in the scenario.
Unemployment still remains a major
concern and seen as assuming alarming
proportions. Could you please
elucidate the achievements on this
front ?
I draw your attention the “challenges of
unemployment” that I incorporate in my
budget speech for the current year. A
plain reading of para 73 onwards clearly
demonstrates the State Governments'
will and commitment for tackling the
issue of unemployment. It is my belief
that one of the principal reasons for the
poor off-take of self-employment
schemes is the fault in the design of
financing of employment schemes across
the country, and more particularly in a
state like J&K. Debt financing of
employment has not worked.
May it be on account of faulty selection
process or poor post-disbursement
monitoring of the project and general
risk awareness on the part of banks, debt

financing has simply not worked.
Therefore, in my budget speech, I talked
of venture capital funding of self-
employment schemes. This is a new
concept and I do not claim final
understanding on this concept. But
building on this concept, during the
course of the year, A draft Employment
Policy document has been prepared by
the Economic Advisor in consultation
with Planning and Development
Department and Finance Department.
This draft is currently under the active
consideration of a Cabinet Sub-
Committee. We are looking at review of
the existing employment schemes and
also up-scaling of the subsidy component
so to make the existing self-employment
schemes more attractive.
The Banks in J&K are charged with not
keeping up their social obligations of
giving loans to raise self-employment.
Does the Finance Department have any
details on how many youth had applied
for loans before the banks this year and
how many cases were sanctioned ?
I just covered this issue. The credit
deposit ratio in J&K is around 48% as
of now and is fairly below the
national average of 60%. In the past,
meetings have been held with the
Chairmen of Banks. Our effort has
been to impart greater sense of
security and comfort to banks and
financial institutions. I must mention
here that we have also worked out a
new framework of Debt Recovery
Tribunals (DRTs) for the comfort of
the banks. This legislation has been
introduced and is presently under the
consideration of the Select Committee.
Apart from this, we have embarked upon
an ambitious programme of
entrepreneurship development through
a re-energized Entrepreneur
Development Institute. At the level of
SLBC, design issues are being also
addressed.
I N F O C U S
ECONOMY & OTHER IDEAS
Another significant aspect of the
present year's budget was its
presentation at the last year of Tenth
I just covered this issue.
The credit deposit ratio in
J&K is around 48% as of
now and is fairly below
the national average of
60%. In the past,
meetings have been held
with the Chairmen of
Banks.
Our effort has been to
impart greater sense of
security and comfort to
banks and financial
institutions. I must
mention here that we have
also worked out a new
framework of Debt
Recovery Tribunals
(DRTs) for the comfort of
the banks.
Five Year Plan. You had rightly said that
being on the doorstep of XI Five year
Plan, the government needed to reflect
Epilogue Ø
27 ×
January 2008
on lessons of the past and make
strategies for the future. What cues
have you picked from the past and what
are the major strategies for the future ?
Yes. Indeed, there are a number of
lessons that we have learnt. I would just
give one example. Our efforts on the
maintenance side leave much to be
desired. Our motto should be “public
constructs and private maintains”.
In other words, public investment should
create infrastructure and maintenance
of such infrastructure should be done by
private players under Public-Private
Partnership mode. Based on this
learning, a separate sub-plan for
maintenance of assets is being
conceptualized so that the flow of
resources under non plan maintenance,
plan maintenance and allocation under
Twelfth Finance Commission could be
clubbed together and the challenge of
maintenance of assets is met in a more
focused and synergized manner.
The J&K Fiscal Responsibility and
Budget Management legislation is in
force since April 1, this year. This
legislation was expected to put in
place stringent policy measures for
mobilization of additional resources,
better tax and non-tax collections and
full cost recovery of user charges.
Could you please enlist achievements
on this front ?
FRBM is in place since April1, 2007. a
number of measures have been taken
under FRBM. We require a set of rules
which have now been finalized in
consultation with the Law Department.
I am sure an honest implementation of
FRBM will bring about qualitative
changes in expenditure and more
efficient management of resources.
Having said that, let me proceed to say
that the story on the tax side is
extremely positive. Our taxes seem to

be increasing at over 16% per annum.
Business India in a recent edition has
mentioned that the performance of J&K
on VAT has been top-class. Our
performance has been appreciated at
the level of Empowered Committee of
State Finance Ministers who have also
rates our performance as one of the
best. We have made no deviations from
the Uniform Floor Rate (UFR). At the
cost of being seen as a tough and non-
relenting Finance Minister, I have held
my ground in the larger public interest.
The Prime Minister's Task Force on
Development of J&K headed by
Former Reserve Bank of India
Governor Dr. C. Rangarajan had
suggested that systems and processes
Epilogue
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I N F O C U S
ECONOMY & OTHER IDEAS
of fiscal federalism that work for the
rest of the country are not necessarily
optimal for this state. In this
background, the state government
had made request to the Gol to front
load the second phase of Prime
Minister's Reconstruction plan in a
manner that it takes off during the
first year of the XI plan itself. What is
the progress on this front ?
Your understanding of our requirement
is absolutely correct. We have taken up
the issue for sanction of second phase of
PMRP and front loading of exp0enditure
under the second phase during the
current year itself. Our wishes involve
the resources of the Central
Government.
Epilogue Ø
28 ×
January 2008
We shall shortly go into plan
discussions with the Planning
Commission and Ministry of Finance. At
the time of the presentation of Union
Budget, we would also get a precise
ideas of the Gross Budgetary Support
(GBS) to the state plans. Thereafter,
we will strategize as to how best to
access central resources for the
second phase of PMRP.
The coalition government under the
dynamic leadership of our Chief Minister
is leaving no stone unturned to maximize
the flow of developmental resources for
this state because I sincerely hold, to
reiterate for the last time in this
interview, my response to the first
question, “Financing Development in
J&K is financing peace!”
December 2007
Forests Foresters
November 2007
Ladakh
October 2007
60 years of J&K Conflict
September 2007
Jammu & Kashmir as
Land of Contact
August 2007
J&K @ 60
July 2007
Policy Failure

J&K State in the grip of
financial crises
Abdul Rahim Rather
Indian fiscal federalism is deep-rooted,
farsighted and highly elastic. The
Finance & Planning Commissions are very
strong institutions to keep a vigil on
changing economic scenario at regional,
national and global levels. The
requirement therefore is to ensure
sincerity in implementation of the
fundamentals of such a fiscal federalism,
which are enshrined in accurate
assessments, enforcement of discipline
and purposeful evaluation of financial
input and output ratios.
Any laxity in application of these basic
requirements is susceptible of producing
negative results. Every scheme of
devolution of financial resources and
their management has to be under a
constant debate, the objective being
that while the economy at national level
should strengthen, the states should also
be allowed a sufficient and durable
autonomy in handling its economic
developmental requirements in a
desirable manner.
In spite of liberal funding by the Central
Government, the J&K State continues to
be in the grip of the financial crisis.
Generation of internal resources by the
state is on its lowest ebb. The treasury is
not able to meet even the committed
liabilities, which are accumulating at a
rapid speed- the present liabilities being
around rupees four hundred crores
excluding those relating to footing the
bill of power purchases. The level of over
draft is highest i.e., around rupees two
hundred five hundred crores as on date
including that relating to power sector.
The overdraft has not been below rupees
I N F O C U S
ECONOMY & OTHER IDEAS
eighteen hundred crores on any day
during last two years. This alone is a clear
Development of
infrastructures for which
the State Government feels
proud of, deserves
rethinking to make it
devoid of political
considerations. The biggest
economic problem of the
state is that though gross
investment is on a rise, the
fact remains that
production is falling
rapidly. We may be eager
to execute mega power
projects with highest
possible speed, generation
from our own sources is
declining because of poor
maintenance of the
existing powerhouses.
indicative of improper financial
management and fiscal indiscipline.
Epilogue Ø
29 ×
January 2008
Financial input and output ratios are
highly disturbing, unproductive
expenditures are fast increasing mostly
because of political considerations
ignoring the basic parameters of
economic requirements having a wide
spread dissemination of developmental
efforts. The outcry of attaining financial
stability by the state is far from reality.
Development of infrastructures for which
the State Government feels proud of,
deserves rethinking to make it devoid of
political considerations. The biggest
economic problem of the state is that
though gross investment is on a rise, the
fact remains that production is falling
rapidly. We may be eager to execute
mega power projects with highest
possible speed, generation from our own
sources is declining because of poor
maintenance of the existing
powerhouses.
While we establish new education
institutions and upgrade old ones, very
little is done in providing academic and
other essential facilities for running
them.
The result is high drop out of the students
and decline in literacy rate. Our proud
industrial policy and plans are not
showing desired results. Bureaurocratic
hassles continue to be unmanageable.
The local industrialists as also those
coming from outside are getting
frustrated. Agricultural production is
declining. Imports of food products
into the state are increasing day in
and day out. This is equally true
about key materials required by the
state also.
 I N F O C U S
ECONOMY & OTHER IDEAS

rupees thirteen hundred crores. The

Fiscal Management & Responsibilities
Act already passed by the State
Legislature is nowhere in sight. Action
Now
plans in the form of state budget lack
in accuracy of assessment and clear
display of the programmes to be under
Telling
taken during the year.

The State Government should apply

The J&K
required correctives, wherever,
called for. While on development
spree, we have not to lose sight of
making accurate assessment,
Stories
enforcement of financial discipline,
strict monitoring, which are
essential keys to generate a sound
Epilogue
and healthy economic scenario. Our because there is more to know
acts have to be such, which will take
us forward on economic
development front smoothly and on
sustained basis. Apart from meeting Contact
present requirements, we owe such
commitment to our progeny also.
ABDULLAH NEWS AGENCY
Perfect economic planning and
financial management, can alone
Lal Chowk, Srinagar
be a sound foundation for the states 9419074859
Our budget for the current year
real autonomy. Therefore, while taking
envisages an expenditure of around
optimum advantage of the liberal
thirteen thousand crores of rupees,
financial assistance given by the central RAINA NEWS AGENCY
which is funded to the extend of over
government, we should be able to
eleven thousand crores leaving very little Residency Road, Jammu
develop a mind set for harnessing State's
to be arranged by the State from their
own resources. Nature has been generous
own sources i.e. hardly fifteen percent.
by giving potential for our growth,
We are not able to lift the central
whether it is in minerals, hydrology, and ABC STATIONERS AND
assistance and use the same fully for the
purpose for which it is granted.
forest real crafts menship and above all DISTRIBUTORS
in unparalled natural environment. Leh
Even the direct funding under
How long we can ignore our responsibility
programmes like RHM, PMGSY, and Urban
in taping this potential to make our
Development is grossly under utilized.
selves self sufficient. We should strive to
CENTRAL NEWS AGENCY
Around six hundred crores are lying in New Delhi
accomplish this goal without any further
banks on account of such programmes for
loss of time.
one reason or the other.

Power deficit grant of rupees thirteen

ABDUL RAHIM RATHER is Leader of OXFORD BOOK STORE
Opposition J&K Legislative Assembly. He New Delhi, Mumbai,
thousand crores assured by the centre
has remained J&K’s Finance Minister
has been availed so far. We have not been Calcutta, Bangalore,
several times
able to raise market borrowing of around Chennai & Goa

Epilogue Ø
30 ×
January 2008

Budget 2007-08 :
The unfinished business
Arjimand Hussain Talib
The Budget 2007-08 has an uphill task at
hand. Apart from struggling for reining in
J&K's fiscal and revenue deficits it has
also to face the continuous challenge of
internal revenue mobilization and also
factor in the challenges which continue
to dog our public delivery systems,
resulting in poor spending and lapsing of
precious funds.
During the last budget session, it was
revealed that out of Rs 848 crore
released under the PM's Reconstruction
Package our State was able to utilise only
Rs 484 crore during that year. Out of the
Rs 4100 crore released last year under
ADB-funded projects and Bharat Nirman
Yojana hardly 5 per cent of the funds
have been spent!
The dismal state of spending and delayed
delivery of public services has been
exposed in a government document itself
which was prepared to argue for time
extension for the PM's Reconstruction
Package. The ways we have failed to
deliver makes interesting reading.
The Package which was scheduled for
completion in 2007-08 has already
been extended to 2009. Our planners
are upbeat that the Rs 500 crore which
were not released by the centre for
State sector projects for 2006-07 until
January 2007 would not lapse and they
will be extended to next financial
year. It has been revealed that many
central projects under the Package
which are to be implemented by State
government agencies, either work is
yet to be taken up or little progress has
been made over them.
Under State sector projects, the PM's
Package has Rs 3316.12 crore worth of
projects, whose cost was subsequently
I N F O C U S
ECONOMY & OTHER IDEAS
revised upwards to Rs 3787.42 crore. Out
of this only Rs 1215.36 crore have been
spent so far.
As against a provision of Rs 1056 crore for
transmission and distribution of
electricity, only Rs 133 crore have been
used until 2006. Out of Rs 142 crore kept
for model villages only Rs 44.68 crore
have been spent so far. For upgradation
of nine women's ITIs only Rs 14.91 crore
have been spent against the actual outlay
of Rs 30.60 crore. Surprisingly, hardly Rs
17.77 crore have been spent against the
sanctioned amount of Rs 49 crore for 14
new degree colleges, which were billed
to help decongest the existing colleges
and help provide quality education. The
dream of electrified villages and quality
supply to others has remained unfulfilled
despite a provision of Rs 700 crore as
reportedly until now only tenders had
been floated.
Out of Rs 83.62 crore sanctioned for
National Rural Health Mission (NRHM), a
mere Rs 8 crore have been used on civil
works in Community Health Centres
(CHCs) even as people in our State
continue to die for want of basic health
facilities.
Although promotion of tourism continues
to remain the pet goal of our
governments, nothing could be as ironic
as the fact that our State has spent only
Rs 1.64 crore out of Rs 31.50 crore
approved for development of tourist
villages. Shamefully, only Rs 3.85 crore
has been used for providing assistance to
Tourism Development Authorities as
against Rs 240 crore sanctioned under
the Package. Out of Rs 201 crore
sanctioned for rehabilitation of
horticulture and establishment of agri-
Epilogue Ø
31 ×
January 2008
clinics, a paltry Rs 25.44 crore have been
spent. The document reveals that only Rs
1 crore was incurred on urban self
employment as against Rs 26.94 crore
reserved under the scheme during last
year. As if all this was not enough work is
yet to be launched on upgradation of
Jammu and Srinagar Medical Colleges for
which Rs 120 crore each were
sanctioned.
The PM's package had also earmarked Rs
1741 crore for Greater Srinagar and Rs
1470 for Greater Jammu for drainage and
sewerage. But the government has not
been able to spend anything despite the
fact that Srinagar city has witnessed two
floods due to lack of drainage facilities
during the last one year alone.
Government had earlier said that for
operationalising the new districts our
State needs an investment of Rs 400
crore. Such projections must not dampen
the process of establishing processes and
systems which are not necessarily so
capital-intensive. At the end of the day
these estimates are "drawing board
estimates of our engineering mafia" the
working ways of whom are very well
known to us. To begin with, the
budgetary allocation of Rs 36 lakhs this
year for this task is not too bad, given the
fact that basic infrastructure to
operationalise new districts does exist at
their new locations.
There are other challenges too.
According to the Comptroller and Auditor
General (CAG) report for 5005-06, J&K's
overall fiscal liabilities have increased
from Rs 9224 crore in 2000-01 to Rs
16,801 crore in 2005-06. Our fiscal deficit
has increased from Rs. 1311 crore in
2002-03 to Rs. 2,643 crore in 2005-06.

The State also had a primary deficit,
which increased from Rs. 216 crore in
2002-03 to Rs. 1,528 crore in 2005-06.
Can we still say we have "zero deficit"
budgets?
The report indicates that there was no
improvement in the management of cash
balances, as overdraft facilities were
used for all 365 days during 2005-06
rather than on discreet basis with the
J&K Bank. And, as a result, our interest
payment on the overdraft has increased
from Rs 71.57 crore in 2000-01 to Rs
138.42 crores during 2005-06. No wonder
we have an outstanding balance of Rs
2047.44 crore at the close of the year.
The growth rate of fiscal liabilities was
18.33 per cent during 2005-06 over the
previous year. The ratio of fiscal
liabilities to GSDP also increased from
60.37 per cent in 2000-01 to 73.78 per
cent in 2005-06. That means that the
fiscal liabilities had grown faster than
the State's GSDP. Given the fact that the
basis of our GSDP calculations is far from
accurate, it is likely that our actual fiscal
liabilities grew ever faster than what the
CAG has reported.
Over the years many of us have been
saying that high reliance on unproductive
borrowings, including loans from NABARD
and Asian Development Bank (ADB)
which our governments have been
presenting to people as "heavenly grants"
would land our State in a despicable
situation. That is what the CAG is saying
today. It is common sense that the
spiraling debt liabilities often result in a
vicious cycle of deficit, debt and debt
service payments, unless suitable
measures are taken to arrest the
persistent increase in fiscal liabilities.
The premise that these loans would spur
economic growth and hence enhance the
State's ability to re-pay loans has been
based on faulty assumptions, more often
guided by narrow populist considerations
rather than sound economic logic. The
huge backlog of NABARD loans, for
I N F O C U S
ECONOMY & OTHER IDEAS
instance, for making rural roads is a case
in point. As pointed out in the CAG
report, public debt is considered
sustainable as long as the rate of growth
of income exceeds the interest rate or
cost of public borrowings subject to the
condition that the primary balance is
either positive or zero.
An analysis of our primary deficit vis-à-
vis quantum spread clearly reveals that
their sum turns out to be negative in
each year of the period 2000-06
indicating rising debt-GSDP ratio and
deteriorating situation of debt
sustainability in the State. It is
incredible that our State is yet to enact
its own law which could put a limit to
our borrowings. There is another
dimension to it: that is preference to
creation of populist and decentralised
political systems to sound fiscal
management without relative
accountability.
For instance, the fact that the Ladakh
Autonomous Hill Development Council
(LAHDC) had not prepared its accounts
since its establishment and has indulged
in over spending of more than 200 per
cent over and above the appropriation
budgets is a case in point. CAG's
comment that in the absence of
"accounts" true and fair view of LAHDC's
assets/liabilities could not be assessed in
the audit must be taken serious note of.
We must understand this is the by
product of creating a virtual State within
a State, in disregard to constitutional and
other statutory systems without relative
accountability. Can J&K government now
be able to ensure that such quasi
governments ensure compliance to the
State's overall financial policies?
Another serious problem dogging our
State, mainly the Kashmir division, is the
lack of accountability of government
departments and other organs in
delivering quality in time. Thanks to our
shameful work culture and top-down
tradition of impunity we don't have a
democratic convention of questioning
Epilogue Ø
32 ×
January 2008
public organs about the appalling quality
of works. Time extension of projects in
our State has become like a divine norm,
resulting in cost escalations. We do not
have a coordination platform for public
departments, undertaking development
activities, to plan and coordinate in an
integrated fashion. That is the reason in
spite of spending crores of rupees, most
of our public works crumble in no time
and our landscapes look primitively
shabby.
Highlighting this trend the CAG has
reported that during the year 2005-06,
there were 348 incomplete projects as of
March 2006 in which Rs. 1, 716.58 crore
were blocked. Besides, there was cost
over run of Rs. 1,718.79 crore in these
projects as the initial estimated cost of
Rs. 2,319.28 crore was revised to Rs.
4,038.07 crore. Nothing could be as
bizarre as this in any governance system.
The way the Public Accounts Committee
(PAC) of the State Legislature has been
taking up follow up and action taken
issues has always been far from
satisfactory. There is no doubt that it is
the legislature which in theory has to use
its moral discretion to take up audit
issues for correction and remedy. But we
will have to acknowledge the fact that
the credibility of our democratic system
has a long way to go before our
legislature could do it with integrity.
J&K State does not need only the
traditional appropriation and regularity
audits, the propriety audit and the
efficiency-cum-performance audits need
primacy. For that to happen we must
have external audit and quality delivery
appraisals and transparent system of
ensuring actions are taken. We also need
transparency and public information on
the Action Taken Notes by various
ministries so that people know about the
outcomes.
The writer can be e-mailed at
arjimand@gmail.com

How not to Promote Economic Growth :
The case of Jammu & Kashmir
Dipankar Sengupta
It is commonly agreed that when it comes
to industrialization, Jammu and Kashmir
has not done well as it should have. This
arguably is not surprising. After given the
unsettled political climate in the state
after its accession and the licence-
permit Raj that existed in India before
1991 was by no means conducive to
industrialization efforts. Ironically, the
central government started to dismantle
its own economic regime just after
militancy hit the state. Thus as India
started to unleash itself, the State was to
sink deeper and deeper into violence.
Understandably it was Peace and
stability, not economic growth through
industrialization that occupied the minds
of the policy makers.
Revival of Economic Policy Making
As the situation started to stabilize and
then improve towards end of the
nineties, economic policy making made a
comeback in this state. For example in
1998, the State government came out
with the New Industrial Policy which
provided for generous subsidies (in
certain cases defraying up to 100% of set-
up costs eg in the case of captive power
generation), single-window clearances
as well as circumvention of the land-laws
of the state by the provision of leasing.
The aim was obviously to attract
investment from without and within by
creating financial incentives aimed at
neutralizing the impact of poor
infrastructure (eg poor and indifferent
power supply) as well as overcome the
negative impact created by a long period
of militancy. It took cognizance of the
fact that the state would have to
compete for investment with other
I N F O C U S
ECONOMY & OTHER IDEAS
states in a national milieu that was
getting increasingly liberal and thus
It is commonly agreed that
when it comes to
industrialization, Jammu
and Kashmir has not done
well as it should have. This
arguably is not surprising.
After given the unsettled
political climate in the state
after its accession and the
licence-permit Raj that
existed in India before 1991
was by no means conducive
to industrialization efforts.
Ironically, the central
government started to
dismantle its own economic
regime just after militancy
hit the state. Thus as India
started to unleash itself, the
State was to sink deeper and
deeper into violence.
Understandably it was
Peace and stability, not
economic growth through
industrialization that
occupied the minds of the
policy makers.
increasingly competitive. The Central
government too was not to be left
Epilogue Ø
33 ×
January 2008
behind. It provided for income-tax
holidays as well as generous subsidies
(e.g. a provision of 90 per cent transport
was made for raw-material and finished
goods from the railhead to factory site).
The State government's Industrial Policy-
2004 was a continuation of its 1998 policy
while the central government policy was
extended till 2015. Great emphasis was
laid on reconstructing infrastructure
destroyed during the years of militancy
as well as creating new infrastructure
which included harnessing the potential
of hydel power in the state.
The latter of course is a long-term policy
given the long gestation periods involved
while the former was supposed to yield
more immediate results. As a result of
these policies, from 2002-3 to 2005-6
investment in the Large and Medium
Industry was Rs. 2391 crores spread over
132 units employing a little over 19,000
people. This may be compared to
Himachal Pradesh's performance where
over the same period, over Rs 1400 crores
were invested in 160 units employing a
little over 13,000 people. Where small
scale industries or SSIs were concerned,
1406 units were added in Jammu and
Kashmir increasing employment by
10,000 in 2007 while in Himachal this
figure was 952 creating additional
employment of similar magnitude.
Himachal Pradesh's population it may be
pointed out, is 60% of that of J&K. Thus
controlling for populations, the
difference in performance, it may be
argued is not significant. There is
however, one major point of difference.
The incentive schemes of HP are not as
financially attractive as that of J&K.

Therefore where HP to do away with
these schemes, it may not attract fresh
investment but it may be argued that
existing industries would not go away.
The same cannot be said for industry in
J&K. There is reason to believe that
without the fiscal incentive packages,
the small and medium hub that has come
up in Jammu-Samba-Kathua would
simply disappear. This is because many of
the industries have been set up merely to
take advantage of tax concessions and
indeed add very little value in the state
and therefore hire few people. Statistics
suggest that fewer units under SSIs in HP
established in 2006 generated the same
level of employment as a larger number
units did in J&K in the same year. The
overall economic scenario in the state is
stranger still. Data reveals that asset
ownership at Rs 10.7 lakhs per house hold
is the highest in the country! This of
course is primarily a reflection that
transfer of resources both official and
unofficial have not gone to address
infrastructural deficiencies but have
constituted a massive leakage from an
eminently corrupt system.
But to come back to the question of
economic policies, can it be argued that
given the perceptions about J&K
(whether overblown or not) as compared
to HP this is a price that has to be paid
and fly-by-night capitalism a risk that has
to be bourne?
Surprisingly there is a success story so
astounding in its magnitude and location
that suggests otherwise. It indicates that
while sectors that have been given
attractive financial incentives at great
cost to the central and the state
exchequers may not have actually been
grow out of their dependency on state
largesse, the handicrafts industry that
has received very little by way of
financial handouts (with State aid coming
only partially through marketing) has
done very well to carve a niche for itself
I N F O C U S
ECONOMY & OTHER IDEAS
militancy in the state notwithstanding! In
fact, it was during militancy that the
handicrafts sustained the Valley during
militancy with increased employment
and turnover when every other economic
activity had closed down. Official
estimates which are conservative in
nature reveal that handicraft sales from
the state rose from Rs 293 crores in 1996
to Rs 557 crores in 2000 and touched 900
crores in 2005 ie turnover more than
trebled in nine years! Equally
significantly the players who drove this
industry were from the state itself.
Unofficial but knowledgeable experts
consider these figures to be gross under-
estimates and vouch for higher figures.
But by any standards, even these under-
estimated figures are impressive.
Coming as they do at a time and place
where militancy played havoc with law
and order, this performance is even more
impressive still. And here lies a lesson.
The Nature of the State's Economy
Thee success of the handicrafts industry
reveals certain very important facts
about the economy of the state which
policy makers may ignore to the cost of
the state. Indeed, a proper industrial or
for that matter an economic policy may
be designed only after the nature of the
State's economy is ascertained. The J&K
is a hill economy and like all such
economies will be a high-cost economy
due to high transport costs brought about
geographical factors. For J&K this is
compounded by poor infrastructure and
poor management of public services most
notably power. But J&K would remain a
high cost economy even if infrastructure
was to improve and power was to be
optimally managed. But the state would
be by no means unique in this respect.
This is a common feature of all hill
economies nationally or internationally.
How do such economies compete? The
fact is that they do not! Such economies
Epilogue Ø
34 ×
January 2008
generally seek out niche areas where
customers are willing to pay more as the
products of these have quality or
characteristics unique to them. The best
example of a hill economy is obviously
Switzerland which produces a range of
very exclusive commodities and services
be they processed foods, medicine,
engineering goods or financial services.
These goods and services carry a
premium which more than compensates
for any addition to cost brought about
high transport costs. In the same vein
handicrafts from the Valley have a
characteristic unique to them that
cannot be duplicated by other craftsmen
from elsewhere and thus handicraft
buyers are willing to a pay a premium for
this particular product which more than
neutralises the high cost of transport that
has to be incurred when transporting
these for sale outside this state. Clearly
for such products subsidies and tax
breaks are not essential for success!
When it comes to premium niche
markets, J&K is ideally placed. It is well
known that the state has considerable
market power in a host of horticultural
items and indeed the sole supplier for
some items like saffron. Endowed as it is
with a spectrum of micro-climates the
state can grow a variety of items that
enables to be a dominant player in a host
of markets many of them high-value low-
volume items. Indeed the Planning
Commission itself recognizes that there
is sufficient raw material to support an
industry that processes organic fruit and
food products for premium niche
markets. Even the documents of the J&K
government identify niche industries but
propose solutions that have nothing to do
with the strengths or weaknesses of
these industries!
The problems lie in the areas of brand
creation and marketing. An
appropriately designed industrial or
economic policy would seek to

accentuate the strengths of the state and
suggest appropriate action in problem.
Thus strengths and weaknesses should be
identified first and policies should follow
form an analysis of these. Judged in this
light the present policies in place that
concentrate on subsidising capital and
transport costs do not address the state's
problems nor amplify its strengths.
Indeed it may create an atmosphere for
perverse behaviour where the system of
incentives actually mis-allocates
resources and invites fraud. For example
a 100% subsidy on captive power
generation sets takes away all incentives
to economize on power capacity
installation costs.
A 90% transport subsidy pushes
investment in products which are
unsuited to the state and failing to
amplify its advantages. Such industries
would go under the moment such support
is removed.
The Way Forward
What then is the way forward? The
Planning Commission of India does take
note of the problem of marketing and
puts forward a 'statist' solution- it
suggests that the state should take the
lead in marketing, set up export zones,
assume lead role in horticulture, push
the brand name “Kashmiri” promote
research and disseminate technology.
Although few will disagree with the
diagnosis, the solution provided may not
be the best way forward. The ultimate
aim of marketing is to capture shelf
space and this is no means best done by
the state. This is best done by corporate
India as it is they who control the
marketing networks as also being most
suited to guide farmers about local
growers and manufacturers about
standards that are to be met if these
products are to be sold. More
importantly, from the point of view of
I N F O C U S
ECONOMY & OTHER IDEAS
security, corporate India does not have to
be physically present in the valley to
transact business! The success of ITC's e-
chaupals in sourcing agro-produce for
ITC's export arm shows how a supply
chain may be set up even in those areas
without power or telecommunications.
This points to the feasible possibility
where Corporate India markets products
as it owns the brand names but the
specific agro-industries are set up by
local growers and entrepreneurs.
Indeed, the entry of Corporate India in
Retail and the entry of major global
players in Wholesale trade promises to do
much in this regard. This arrangement
will of course let the Corporate India
get a major part of the mark up. But this
too can be worked around. For this it is
important not to just promote the
brand “Kashmiri” but also follow the
French example and brand sub-regions
as well.
Thus the districts or even smaller sub-
divisions of the State would come to
represent the specialty of the region. For
example Rajmash from Bhaderwah could
benefit from this exercise. This would
give local growers and local food-
processing industry some leeway if they
were to enter distribution on their own.
Thus the importance of Geographically
Indicating products (granting exclusive
rights to a product from a region with
certain unique characteristics to be named
after that region) is of utmost importance
if the State is to benefit from its strengths.
This is of course in the State's domain while
brand name creation belongs to the
private sector. The example of
handicrafts shows how strong the brand
“Kashmiri” is. This has to be duplicated
for the other regions of the state.
To Sum Up...
The ultimate goal of the state, no matter
how far or distant it may look, is to be a
knowledge economy where the prime
source of economic growth will be
Epilogue Ø
35 ×
January 2008
through the extensive use and production
of knowledge. Given the state's
resources, the importance of
biotechnology and IT cannot be
overstated. That accepted conditions
must be created where local industry
prepares itself for an infusion of
technology and expertise on commercial
lines in the near future.
A knowledge economy works best when it
is participatory. Thus development of
local entrepreneurship through
initiatives in collaboration with bodies
that secpialise in this field or corporate
India would help. The success of the
crafts clearly indicate that such a class
exists and can function in the most
adverse conditions. Be it through private
or statist efforts, the basis of a
knowledge economy cannot be
accomplished by policies of subsidies and
tax exemptions that attract “fly-by-
night” capitalists, wrong kinds of
investment and in many cases phantom
factories created on paper (merely to
claim subsidies of non-existent capital
investments) and do nothing to induce
sustainable economic growth. They have
instead sapped the State's resources.
This is not to say that subsidies are
unnecessary.
Indeed in so far as they remove
distortions (and the market for
electricity in the state is distorted) they
may be welcome. Indeed a different
regulatory regime rather than subsidies
may be the answer where for instance
the State buys power from the national
grid and sells to local industry at a profit.
But by and large as Kashmiri artisans have
shown the help required is of a different
kind. The help provided so far
unfortunately has not reflected it.
DIPANKAR SENGUPTA
Department of Economics
University of Jammu

Participatory Natural Resource Management :
Experiences and Lessons Learnt
Dr. Falendra K. Sudan
Participatory policies are highly relevant
and are consistent with overall
development strategy of reducing
poverty, protecting environment and
developing human resources in Jammu
and Kashmir. Institutionally sustainable
rehabilitation and management of
natural resources is possible only where
users act jointly to manage the
resources. In order to prevent and
reverse the degradation process of the
Shivaliks and Karewas, integrated
watershed development project (IWDP),
Hills-I was undertaken. Originally, the
project was for a period of 7 years (1990-
97), but was extended for another year
up to 1998. The project was supported by
the World Bank. It was initiated in three
sub-watersheds of Devak and Ramkote in
Shivalik hills (Jammu region) and Dudh
Ganga in Karewas (Kashmir Valley). The
overwhelming evidence from natural
resource management projects is that
without people's involvement the
benefits are not sustainable in the long
run. After the funds from the government
or donors dry up, conservation structures
disappear, committees are disbanded or
abandoned and the livelihood base of the
people remains only marginally improved
at all. Fortunately, these shortcomings
were taken care of, to some extent
during the implementation of IWDP
(Hills-I).
Seeing the physical targets being
achieved, the World Bank decided to
further extend the programme in the
form of IWDP (Hills-II) in 1999, for five
years. This was aimed at providing a
uniform integrated rural development
platform to address the social and
I N F O C U S
ECONOMY & OTHER IDEAS
natural resources problems. The
experience gained through
implementation of IWDP (Hills-I), J&K
encouraged the State Government to
extend the watershed development
project to other rainfed areas of the
State viz. Akhnoor and Ramnagar in
Shivaliks (Jammu region) and Rajwar and
Rambiyara in Karewas (Kashmir Valley).
The main objective of the IWDP (Hills-II)
was to restore the productive potential
of the Shivaliks and Karewas. The focus
was on improving in-situ moisture
conservation, water harvesting and land
management practices. An associated
objective of the project was to assist
with the institutional development and
consolidate the progress already made
under IWDP (Hills-I).
Experiences gained
At the beginning of the project, there
were many unknowns and uncertainties
about the environmental and social
situ a tion of th e se le cte d su b-
watersheds. Therefore, information
gathering was considered necessary
before launching the participatory
process and a few months were devoted
to accomplishing these tasks. Gaining an
understanding of the environmental,
social and institutional situation of the
project area was obviously essential for
identifying the key issues, opportunities
and constraints to be considered in
designing and organizing subsequent
phases of the participatory and
integrated watershed management
process. The project has hired the
services of local consulting firms to carry
out complementary studies. To obtain
sounder information, both conventional
Epilogue Ø
36 ×
January 2008
and Rapid Rural Appraisal (RRA) methods
were used to carry out complementary
studies according to specific needs. The
focus of these studies differed, however,
there were three common areas of
research: farming systems research,
environmental analysis, and social
surveys.
At the beginning of the project, IWDP
(Hills-II) attempted to select
participating communities according to
strictly technical and managerial criteria
and relatively strong community
organization. In some cases, extension
workers made introductory visits of one
or two days to the communities. On other
occasions, these visits continued over a
longer period of time, often through
informal contacts with community
members. Based on preliminary studies,
field visits and the consultant's inputs,
team members identified specific needs
to be addressed, which included
community's population and social
organization, income generation and the
distribution of wealth, education and
literacy, gender issues, accessibility and
use of social services, community's
infrastructure, functioning and
productivity of farming systems and
management of common natural
resources.
A number of participatory research and
action-learning techniques were used
including thematic group discussions,
time-line analysis and transect walks to
explore significant environmental
features and participatory mapping to
prepare maps of the community's
territory or the village, which highlighted
important environmental, social or
 I N F O C U S
ECONOMY & OTHER IDEAS

agricultural features. The participatory
rural appraisal ended with a series of
shorter meetings. The main activities
carried out during these meetings were
feedback of participatory rural appraisal
information to communities,
identification, analysis and prioritization
of problems by participants,
identification of solutions and drafting of
a tentative action plan. Through
participatory feasibility analysis, project
management and field staff reviewed
participating community members' ideas
for action that were developed during
the participatory planning meetings,
with the aim of assessing the feasibility
of the proposed action in the light of the
existing conditions. In most cases, this
required an intensive discussion with
community members on technical
aspects of the proposed activities,
available incentives and subsidies, and
requisites the community should meet
for engaging in a partnership with the
project. This interaction ensured that
the process continued to be
participatory. The purpose of the
participatory feasibility analysis was to
carry out a rapid and practical analysis
that would allow for a decision to be
made on whether or not to implement
the activity in question.
Very often, plans prepared during the
participatory planning meetings were
redundant and over ambitious, and
certain activities seemed to be
technically unfeasible. Furthermore,
staff often felt the need to focus on those
initiatives that best responded to the
project's mandate and operational
capabilities, such as activities related to
the natural resource, improvements in
the efficiency and sustainability of
farming systems, the diversification of
income generation, the empowerment of
rural women and the building of small-
scale infrastructure. For the sake of
transparency and to promote
sustainability of the interest groups and
to facilitate conflict management,
project helped formalize the structure
and the operations of the user groups
collaborating on the activities. This
usually involved establishing clear rules
for membership, watershed revolving
fund, record-keeping systems and
election of a formal leadership body.
Fulfillment of these requirements was
Project staff held a few
meetings with the
concerned user groups to
review in detail the village
development plans and to
amend it according to
their comments and
suggestions.
Project made significant
efforts towards facilitating
the formation and
development of user groups
and community
organizations.
often stated as a condition for working
with the project.
Project staff held a few meetings with
the concerned user groups to review in
detail the village development plans and
to amend it according to their comments
a n d s u g g e s t i o n s . Pr o j e c t m a d e
significant efforts towards facilitating
the formation and development of user
groups and community organizations.
The role of user groups in project
implementation was in general less
direct. However, user groups were often
highly instrumental in coordinating the
activities and in providing a local forum
for the exchange of experiences among
groups and individuals. The participatory
development functionaries of the
project played a major role in the
strengthening of user groups. They
attended all relevant training activities
and were part of the participatory
monitoring and evaluation team, and
provided constant support to all user
groups formed in the project area. They
assisted user groups in such areas as
organizing and conducting meetings,
defining group constitutions and keeping
records.
Project was committed to supporting
activities aimed at meeting basic needs
not directly related to natural resource
management. This included income-
generating activities and improvements
in local infrastructure. To fulfill this
need, the project supported and
promoted a variety of short-term income
generating activities. These included
both on-farm activities (such as
courtyard animal raising, commercial
vegetable gardening and agro- forestry
production) and off-farm activities (such
as cottage industries, handicraft
production). All of these income-
generating activities were small scale,
low budget initiatives targeting the local
market (i.e. the exchanges taking place
in the local community or, at best, in the
immediately surrounding area). Because
of their small scale, the project and
participants were able to start these
activities with very limited initial
investment and risk. However, their
small scale also meant that they only
generated a small income. These
activities were useful for satisfying the
immediate personal needs of
participants, especially women, and

Epilogue Ø
37 ×
January 2008

increasing the groups' self-reliance.
Most of the project-supported initiatives
for improving farming systems were
developed out of negotiations between
participants who wanted to have better
yields, earn a higher income and save
time, and the project's core mandate for
promoting the conservations of water,
soil and vegetation cover. Therefore,
these initiatives were 'conservation by
use' activities that sought a healthy
balance between environmental and
economic needs. In the project area,
most initiatives for managing natural
resources have been more or less directly
associated with farming system
improvement. These included
regeneration of public forests and
rangelands, which resulted from
entrusting local communities with the
responsibility for management. This
included, 'social fencing' (i.e. restrictions
on land use imposed through regulations,
not physical barriers), fire control and
the introduction of household
technologies to decrease fuelwood
consumption, control of the effects of
erosion, such as landslides and gullies,
which cause major damage to agriculture
and property, and management of
streams, including measures for
controlling water power and down
stream erosion or facilitating the
recharging of the local water table.
During participatory planning, user
groups often identified and then
implemented activities in these areas in
response to a specific need related to
their livelihoods. On several occasions
during participatory planning exercises,
participants expressed the need for soil
and water retention measures for
preventing landslides, gullies and river
floods from affecting arable land, houses
and roads. To address this need, the
project supported forestry plantations
and small-scale environmental
engineering works by providing technical
assistance and incentives. The project
I N F O C U S
ECONOMY & OTHER IDEAS
also promoted the sustainable use of
forestland by testing agro-forestry
techniques for fodder production. Major
Major efforts were made
to allow user groups to
carry out different
activities with less project
support (i.e. decreased
methodological, technical
and financial assistance).
Progressive withdrawal of
support to local actors in
participatory planning,
implementation and
evaluation had a dual
objective - promoting the
self-reliance of user groups
in managing their own
decision-making and
action-taking process, and
decreasing the costs of
support in each site, so
that resources could be
used to extend the process
to other communities.
efforts were also made to sensitize
people to the environmental risks related
to deforestation and overgrazing.
Epilogue Ø
38 ×
January 2008
As part of the integrated system of
agriculture, livestock rearing and
agroforestry the project prompted
additional reforestation and erosion
control measures of communal interest,
such as roadside tree planting and the
establishment of erosion control hedges
along the borders of agricultural fields.
Moreover, participatory planning exercises
identified the need to control the
consequences of erosion, such as
landslides and gullies that were affecting
communal grazing areas and private
agricultural plots. To this end, technical
assistance, training and incentives were
provided to the user groups concerned.
Actions facilitating better water
management were undertaken in the
framework of farming system
improvement initiatives.
Major efforts were made to allow user
groups to carry out different activities
with less project support (i.e. decreased
methodological, technical and financial
assistance). Progressive withdrawal of
support to local actors in participatory
planning, implementation and
evaluation had a dual objective -
promoting the self-reliance of user
groups in managing their own decision-
making and action-taking process, and
decreasing the costs of support in each
site, so that resources could be used to
extend the process to other
communities.
Constraints faced
During the process of operationalization
of participatory natural resource
management, several constraints have
been encountered. Some of them were:
inappropriate criteria for community
selection, community conflicts and
infighting, presence of other
programmes and projects with softer
eligibility criteria, inadequate training in
accounts and record maintenance, poor
credibility of some executives on user

groups, lengthy project procedures,
security related problems in some areas,
political interference and nepotism. User
groups were not given adequate
representation on user groups. As a
result, user groups may be unable to
directly influence the decision making
process in terms of the watershed
development related activities
undertaken by the user groups. The
project functionaries at sub-watershed
level have actively been imparting
extension services in the transfer of
technology for watershed management.
However, their role in strengthening the
user groups and in the integration of
traditional knowledge with improved
technological option was not fully
satisfactory. There have also been
complaints of biased approach towards
particular area and community, which
have created a deep sense of mistrust.
The information flow was also
inadequate and project functionaries
were charged with a tendency to keep
the information hidden, which have
hampered smooth participation of the
villagers in various activities. The user
groups' members representing
disadvantaged groups have complained
regarding drastic curtailment of
essential survival activities due to
creation of enclosures. A widespread
feeling of hostility among the members
has been reported due to inadequate
benefits from the resource conservation
and protection activities. Further due to
lack of inter-agency coordination, field
functionaries have not properly attended
the vital issues like institutional building,
capacity building, financial
strengthening and income generating
activities.
In the context of natural resource
management programme, gender
relations are quite significant. Natural
resource management programme will
only achieve sub-optimal results if
gender relations are not considered.
I N F O C U S
ECONOMY & OTHER IDEAS
Agriculture, forestry and other natural
resource interventions have overlooked
the women beneficiaries. The field
professionals seemed to be unaware of
the full level and dimensions to which
women contribute to agriculture,
The participatory natural
resource management
implies that those at the
top cede decision making
power, and (if well
conceived) financial
control, to those lower
down in the system.
However, due to resistance
from within the
implementing agency, the
change is never really
operationalized.
forestry and other natural resource
management activities. The women's
role still appears to be marginalized. It is
desirable to give them a major
representation in user groups. In the
planning process, no assessment of the
indigenous forms of farmers'
organizations and their traditional
institutions appears to be made. Thus,
farmers' traditional institutions seem to
have been excluded from the planning
process. Therefore, the user groups may
Epilogue Ø
39 ×
January 2008
be in danger of becoming a replica of
village panchayat system, which has
been a political rather than a
development body. The existing
monitoring and evaluation system seems
to very inefficient in improving the
activities of user groups and for effective
administration and control of the
project.
Lessons learned
The participatory natural resource
management implies that those at the
top cede decision making power, and (if
well conceived) financial control, to
those lower down in the system.
However, due to resistance from within
the implementing agency, the change is
never really operationalized. The user
groups and their committees were
created but, because they were not given
adequate resources and effective
decision-making power, they became
moribund. The success of participatory
natural resource management hinges to a
great extent on the capacity of the
project functionaries to embrace the
change and to alter its working practices.
Even, before reform, it was lack of skills
within the government sector, which
resulted in poor management. The
operationalization of participatory
natural resource management requires
even greater skill levels than the
previous systems. Due to inadequate
training and experience in social
development aspects, the participatory
social development functionaries were
unable to form effective and sustainable
user groups. Likewise, the extension
officers were unable to select appropriate
sites and design and implement the
project interventions. These are critical
issues, since once local field functionaries
lose credibility with the villagers; it can be
very difficult to recover it.
If the field functionaries are to be in a
position to elicit and devise programmes,

which are responsive to local needs, the
skill upgrading and capacity building are
also important. Demand articulation is
not automatic as might be assumed.
Significant local level capacity building
needs to take place, usually through the
formation of effective local resource
“user groups”, before needs can be
expressed and subsequently prioritized
and addressed. If decentralization within
government is designed in large part to
institutionalize responsiveness to local
people's needs, this is the key issue.
It is also one that is frequently ignored
when plans are drawn up to
institutionalize 'demand driven'
development process. Many project
functionaries, for instance, do not have
the social skills required to group
development. Overcoming such
prejudices can be very time consuming,
but is usually essential if progress is to be
made.
One of the motivations behind
operationalizing participatory
approaches has been a desire to reduce
transaction costs. However, there is little
evidence that costs have actually fallen.
Indeed, reform has added to project
costs, because the funding requirements
for capacity building have increased.
Thus, it is unreasonable to expect that
institutional reforms should have
proceeded without any setbacks.
Numerous conflicts have been
experienced at various levels, such as
between individuals, between line
departments, and between sub-sectors.
Clear policy pronouncements from
government, combined with bold and
enforceable regulations about the limits
to government involvement, are
certainly a good starting point, if these
conflicts are not to be fatal for the on-
going reform.
I N F O C U S
ECONOMY & OTHER IDEAS
All these will help create 'a sense of
mission and commitment' among the
project staff, which is important for
project performance. Besides, it will
contribute to teamwork and inculcate
Epilogue
because there is more to know
problem-solving attitude as well as to
greater coordination between policy and
implementation.
Monthly Magazine
Increasing pressure on natural resources
together with misdirected government Extensively Researched
intervention has led to the demise of
traditional institutions for natural
resource management. However, a Written with Clarity
participatory approach evolved under
IWDP (Hills-II), Jammu and Kashmir has
played a facilitating role in resurgence of
and Insight
local resource user groups.
Covers Four Key Issues
The future of sustainable resource
management lies more with local people Politics
though issues of non-poor domination
and resource conflict may still is
problematic. It is doubtful whether the Economy
few such groups that do exist can
continue to do so without substantial Culture
external support.
At present, resource user groups have
Strategic Affairs
achieved a degree of success by
monitoring and enforcing resource
protection and conservation activities,
and thus enhancing resource productivity Unlike the General run of the News
in environmentally and institutionally
sustainable ways. However, most efforts
are small scale and heavily subsidized,
Magazines
raising doubts about whether they can be
replicated by the project.
DR. FALENDRA K. SUDAN is Reader,
Epilogue
Department of Economics, University of
Jammu, Jammu and Editor, International
Journal of Environment and
Has a s elff life That Extends
Development. He was Consultant to
World Bank funded IWDP, Hills I and II and For Beyond the
Principal Investigator of World Bank and
Ministry of Environment and Forests News Period Covered
sponsored 'EMCaB Project'.
For subscription enquiries
Epilogue Ø
40 ×
January 2008

An economy in
disadvantaged position
Ram Sahai
The State of J&K has faced lot of turmoil
and disturbances since country has
attained independence in 1947.
Infiltration from across the border in the
guise of Kabaili invaders, Indo Pak War of
1965, again Indo-Pak War in the year
1971, the impact of militancy in Punjab
and a very long spell of militancy in our
State since 1989 has taken a strong toll of
Industrial Development and Economic
upliftment. Further our state being at
the extreme end of the country has a
peculiar locational disadvantage and
shortage of marketing for the product
which could be produced in the state
itself. Due to all these reasons the
required Industrial Culture could not be
development and no Industrial activity
worth mentioning could be started in the
state till June 2002. Chamber of
Commerce and Industry which is a 72
year old organization realized the fact
that in absence of Industrial activities
and private investments from outside the
state our economy, Industrial culture and
substantial generation of employment
can not be possible.
In the early years of 50's the state
government also realized the importance
of establishment of manufacturing units
for which certain steps were taken to
establish some units under public sector
and also the private entrepreneurs were
encouraged to start their Industrial units
by providing them liberal import quotas
and certain tax concessions. But these
measures could not prove to be
sustainable and when the value of import
quotas went down in the market all such
units which were established at that time
started going sick and the purpose for
which these units were encouraged got
completely defeated.
I N F O C U S
ECONOMY & OTHER IDEAS
Chamber of Commerce & Industry
Jammu realizing the need to have a
sustainable consistent Industrial policy
The State of J&K has
faced lot of turmoil and
disturbances since country
has attained independence
in 1947. Infiltration from
across the border in the
guise of Kabaili invaders,
Indo Pak War of 1965,
again INDO PAK War
in the year 1971, the
impact of militancy in
Punjab and a very long
spell of militancy in our
State since 1989 has
taken a strong toll of
Industrial Development
and Economic upliftment.
persued vigorously with the state as well
as Central Government for taking
necessary steps initially for revival of the
Epilogue Ø
41 ×
January 2008
sick units and later for granting the new
package of incentives on the pattern of
North Eastern States. Chamber's
delegation met the then Hon'ble Prime
Minister Sh. Atal Behari Vajpayee and
sought his intervention for formulating a
consistence Industrial Policy for the
development of Industry in the State Mr.
Vajpayee, his ministerial colleagues,
Minister of Industries and Commerce &
Industry which was also strongly
supported and recommended at par with
the North Eastern States which included
15% COIS, Excise Exemption, Income Tax
Holiday, 3% interest subsidy on Working
Capital, State of J&K also announced its
own Industrial Policy on the persuasion of
Chamber of Commerce & Industry and
announced similar type of package
containing VAT remission, 100% subsidy
on Power Generator, allotment of land on
subsidized rates etc. Later the present
Union Government headed by Dr.
Manmohan Singh endorsed the same
policy and the Industrial culture started
picking up and as a result outside
investment started pouring in which
totaled upto Rs. 4000 crores. To promote
further Industrialization many
prestigious units like CIPLA, CADILA, Sun
Pharmaceuticals, Berger Paints,
Samsung, Hitachi, Phillips, Jindal
I n d u s t r i e s , U n i t e d Ph o s p h o r o u s
incentives. The Chamber's delegation
met the Hon'ble Prime Minister Dr.
Manmohan Singh and impressed upon him
to extend the period of Income Tax
Holiday and Transport Subsidy which
were expiring on 31st March 2007. It was
also pleaded that the specific Khasra
numbers for establishing the units is
creating a lot of problems because there
is acute shortage of land for further
expansion of Industry so it is imperative

that the entire state should be notified as
industrially backward area to overcome
the shortage of land. Chamber also
requested the Prime Minister for handing
over the Dul Hasti Projects to the state of
J&K so that the problem of Power
shortage could also be taken care of
Chamber's pleading got positive response
from the Prime Minister Dr. Manmohan
Singh and the period of Income tax
Holiday and Transport subsidy got
extended for another 5 years. Not it is
hoped that these provisions will help a lot
in attracting further substantial
investments from outside the state.
As already mentioned the economy of the
state had been based on tourism and
trade as the state was primarily a
consumer state and not a producer state.
So chamber has always been pleading for
formulating a trade policy to give proper
direction towards systematic and
sustainable trade activities. Chamber
has presented a paper in this regard
which has been deliberated upon in
couple of meetings and has been
appreciated by all the concerned.
Besides pleasure tourism and adventure
tourism the pilgrim tourism has proved to
be the backbone of Tourism Industry.
Ever growing number of Mata Vaishno
Devi Shrine, Baba Amarnath Shrine and
other places of pilgrimage provide lot of
potential for economic upliftment of our
state. Chamber has identified many
beautiful virgin areas for the
development of pleasure tourism which
has been brought into the notice of
Central as well as State authorities and
implored upon them to undertake the
infrastructure development of those
areas for the perculation of tourists in
different parts of the state. Similarly,
Chamber has prepared and presented
various papers and presentations to
make Jammu an independent tourist
destination to save it from the adverse
impact, it is likely to face after the train
goes to Katra and beyond and also to
negate the set-back after the completion
I N F O C U S
ECONOMY & OTHER IDEAS
of the Mughal Road Project connecting
the districts of Rajouri and Poonch with
the Valley. For further development of
Industry and trade in the state Chamber
of vociferously pursuing with the
Government that :
1. The entire state should be notified
as industrially backward area.
2. To provide adequate Power to
Industrial Sector.
3. To entend the new incentives for
the old existing units also who have
braved the impact of militancy.
4. To renew the central packages at
par with the latest announced
package for North Eastern States
in which the incentives have been
extended to Industry as well as
health, tourism and service sector
also for another 100 years.
5. To formulate a policy regarding
augmentation of power and tourism
infrastructure with public-private
participation.
For making Jammu as an independent
tourist destination, various suggestions
have been made for the proper
regulation of traffic and parking etc.
Besides early completion of Cable Car
Project from Mubarak Mandi Bahu Fort
and Mahamaya Temple, development
along the banks of river tawi and creation
of lake in the Tawi river and also making it
pollution free by diverting all the Nallas
and drains entering into the main river,
establishment of planetarium alongside
the present Kala Kendra, creation of
amusement park and international
standard golf course etc. The
development of present exhibition
ground to make it an international Trade
centre and certain fly-overs, sub-ways,
over head bridges and creation of walk-
ways are some other points which have
been taken up with the Government. The
steps when implemented will definitely
boost the economy of the state.
Chamber of Commerce & Industry while
Epilogue Ø
42 ×
January 2008
realizing that Government of India and
Pakistan have taken the initiative to
resume bilateral dialogue for resumption
of normal Trade and People to People
contact. The bilateral Trade between the
two parts of Kashmir and Pakistan is
extremely important. To enhance the
bilateral trade, Chamber of Commerce &
Industry took an opportunity to lead a
delegation of 10 members of Jammu
Chamber jointly with the delegation of
PHDCCI to visit seven cities of Pakistan.
While interacting with the Chamber's of
Lahore, Gujranwala, Rawalpindi,
Islamabad and Karachi we found their
keen desire to have bilateral trade with
our Country. India and Pakistan enjoy
several complementarities. There are
advantages of geographical proximity,
common language and cultural bonds,
which are important facts for fostering
closer economic relations between India
and Pakistan. The due removal of earlier
restrictions, in a climate of
reconciliations of mutual interests and
liberal realignments, can help flourish
free private sector trade between the
two countries and indeed open an array
of possibilities for peace between the
two neighbouring countries. To open
new routes for Indo-Pak Trade and
people to people contact across the line
of control. In this connection Chamber
made strong demand for opening of
Suchetgarh-Sialkot route and
Nowshera-Mirpur route as these routes
have great scope for exchange of Trade.
Sialkot has advanced Sports Industry
which needs our willow clefts as their
raw material. All the items have a great
demand in that country which if allowed
to be exported from our state to Pakistan
and Pak directly would cost much lesser
than what they are getting right now.
Similarly in tradable items which can be
beneficial for both of us. These trade
routes once opened will bring a great
leap in the economic development of the
State.
RAM SAHAI is President, Chamber of
Commerce & Industries, Jammu.

A lot still needs
to be done
Annil Suri
Among the six basic principles of the
governance underlying the National
Common Minimum Programme of the
Govt. of India, sustained “economic
growth in a manner that generates
employment” has a pride of place. It also
describes the small scale industries as
“the most employment - intensive
segment”.
This is indeed so. The small scale
industries have a long history of
promoting economic growth that is
employment-oriented and spatially
widespread, and hence inclusive. The
contribution of this segment to the
economic sinews of the country is no less
significant. Nearly 39 percent of the
gross manufacturing output and 34
percent of the exports of India arise from
these enterprises. During the last four
years of the 10th plan, the output of the
segment has recorded a real growth rate
of 8.87 percent annually. Over six
thousand products manufactured by
these include several sophisticated items
used in high technology areas like
nuclear power, missile and space
programmes, information technology,
biotechnology, etc. The level of exports
by this segment also testifies to its overall
competitiveness in the global markets.
While examining the characteristic
features of the economy of J&K State,
one comes to the conclusion that the
State is economically backward as
compared to the other States of the
Country. In view of this state of affairs, it
is highly essential to diversify its
economic structure by developing
industries so that the socio-economic
conditions of the State are improved.
I N F O C U S
ECONOMY & OTHER IDEAS
Industry will not only play a significant
role in providing employment to a large
While examining the
characteristic features of the
economy of J&K State, one
comes to the conclusion that
the State is economically
backward as compared to the
other States of the Country.
In view of this state of
affairs, it is highly essential
to diversify its economic
structure by developing
industries so that the socio-
economic conditions of the
State are improved. Industry
will not only play a
significant role in providing
employment to a large
number of educated youth, it
will also give solution to the
unemployment crisis through
which the state is passing
during these days, and also
would contribute to raising
per capita productivity.
number of educated youth, it will also
give solution to the unemployment crisis
Epilogue Ø
43 ×
January 2008
through which the state is passing during
these days, and also would contribute to
raising per capita productivity.
We are aware that ours is a Land Locked
State and is severely handicapped due to
locational disadvantages. This results in
increase in the cost of production as
compared to our neighboring States. In
order to offset this additional cost, the
State Govt. and Govt. of India has
provided special package of incentives to
the industrial sector so as to make it
competitive. However the effect of
these concessions cannot be presumed as
direct addition in profits.
ØWhen State Industrial Policy was
introduced w.e.f 1st Feb. 2004,
some new elements were
introduced:
ØD e v e l o p i n g Wo r l d C l a s s
Infrastructure for speedy
industrial development.
ØEncourage industrialization of
the backward blocks of the
State.
ØEncourage existing industrial
units to modernize.
ØProvide incentives on brand
promotion keeping in view the
role of brands in promoting
sales.
Concentrate on thrust areas for
development as per the list of Central
Govt. This spirit behind this was to
encourage and sustain the existing
struggling industry of J&K out of red and
simultaneously attract new investments.
But unfortunately the desired results
could not be attained and we could
muster only 3000 Crores of new

investments in comparison to 50000
Crores by Himachal Pardesh during the
same period.
However, we are convinced that J&K
Small Scale Industry has a future. But
while looking at the future, certain
considerations will need to be kept in
mind. The most important is the diversity
in the small scale sector. We do realize
that there are still some speed breakers
on our super-highway to success. The
rationalization of the tax structure is one
such example. A good deal of reforms has
already taken place and some are under
way. Even today the single-man unit is
subjected to a minimum of 37
inspections, 52 laws and 116 forms and
registers. The govt. should try to frame a
single legislation for the small scale
sector which would reduce procedural
hassles and do away with the
Inspectorism. An environment should be
created where the accent is on trust
rather than mistrust ; on facilitation
rather than regulation ; and, on
togetherness rather than on division,
where the words 'you' and 'I' are replaced
by 'ourselves'.
The foregoing discussion leads to several
conclusions:-
The role of the government and its
agencies is very important in promoting
competitiveness of the industry in
general and small scale industries in
particular.
Innovative and tactical ways of
protection needs to be devised for
providing a period of adjustment to SSI's
and also lending them some breathing
space.
The govt. should take some financial and
tax measures to assist SSI'S such as :
Øprovision of subsidies for R&D
costs,
Øguarantee of loans when extended
by the Credit Guarantee Association,
I N F O C U S
ECONOMY & OTHER IDEAS
Øprovision of venture capital funds, of these economic parameters for the
Øtax reduction for capital funds, firm and the industry on a regular basis
loans at low interest rates, would help in decisions regarding
Øloans for modernization of production planning, human resources
equipment, and others. management, marketing and strategic
decisionslike diversification, etc.
4. Opening of trade routes with
Pakistan like R.S.Pura Sialkot, 10. The SSI's should undertake ISO 9000
Rajouri Mirpur routes. and other quality management
system certifications to achieve
the level playing field. Further
5. Setting up “SAARC Knowledge
entrepreneurs should initiate
Platform” including areas like e-
efforts towards global success and
n e t w o r k s , e n e r g y, w a t e r,
ultimately aim at global
healthcare, agriculture, food
leadership.
processing and capacity building -
which will meet the unique needs
Thus, the J&K Small Scale
of regional development and help
Industries can successfully meet the
frame a road map for its time
challenge of globalization.
bound implementation.
6. Govt. Mind set has be changed from ANNIL SURI is president Bari
red-tapism to red carpet welcome Brahmana Industrial Association.
to entrepreneurs which will inspire
investor confidence and in return There are two ways of
boost industrial activities in J&K.
Spreading light;
to be the Candle,
7. For competing internationally, the
firms and the entrepreneurs
or the mirror
should develop pro-active attitude that reflects it
and approach, and should upgrade
technology used in their SSI's and
also focus on upgrading skills and
competence of their personnel
through appropriate training by
developing competence for
training needs identification.
8. Entrepreneurs should analyze
implications of all international
agreements and treaties as well as
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Epilogue Ø
44 ×
January 2008

Time for trucks
D. Suba Chandran
End October, there was a protest
movement in Muzaffarbad and Chakothi
in Pakistan occupied Kashmir led by All
Parties Nationalist Alliance, demanding
truck service between Muzaffarabad and
Srinagar. Though there have not been any
demonstration in Kashmir Valley or in
Jammu region, both the Kashmir
Chamber of Commerce and Industry
(KCCI) and Jammu Chambers of
Commerce and Industry (JCCI), besides
numerous other groupings such as the
apple industry in Kashmir, for long have
been pressurizing the governments of
J&K for cross-LoC trade.
This demand is likely to increase further,
especially after the first colorful truck
from Pakistan entered India via the
Wagah. Pressurizing Pakistan to open the
LoC for trade is in India's interests and is
important for the following political,
psychological and economic reasons.
First, politically, allowing cross-LoC
trade will be the biggest political CBM, in
terms including the Kashmiris in the
peace process. The current level of cross-
LoC interactions is seriously limited
towards addressing the concerns the
divided families, mainly in Rajouri,
Poonch and Baramulla districts; thus the
current level of cross-LoC interactions
mainly address the concerns of three
districts in J&K. Since, there are not
many divided families in Kashmir Valley,
the bus service between Srinagar and
Muzaffarabad, unlike that of Poonch-
Rawlokot, is not a big success. Today, the
Srinagar-Muzaffarabad bus does not
enthuse the Kashmiris and new political
initiatives needs to be taken such as the
cross LoC trade, to keep the both peace
CROSS LOC INTERACTION
TRADE
processes relevant the bilateral
between India and Pakistan, and the
internal between New Delhi and J&K.
Besides, politically, cross-LoC trade will
dent the hold of extremists and militants
This demand is likely to
increase further, especially
after the first colorful
truck from Pakistan
entered India via the
Wagah. Pressurizing
Pakistan to open the LoC
for trade is in India's
interests and is important
for the following political,
psychological and
economic reasons.
such as Syed Ali Geelani and Syed
Salahuddin over the Kashmiri society.
Once the trucks cross, the Kashmir Valley
will ignore any political maneuverings
against cross-LoC interactions by the
militants and their over ground
supporters.
Epilogue Ø
45 ×
January 2008
Second, more than the political impact,
psychological and emotional implications
of cross-LoC trade is immense. Today, the
Kashmir Valley is connected with the rest
of the world through Jawahar tunnel.
The route via Kargil and Leh into
Himachal, is really circuitous and opened
only for three months. The Mughal route
linking the Valley with the rest of India
through Poonch and Rajouri districts,
cutting across the Pir Panjal is being
planned, but a long way to materialized.
Historically, Kashmiris are connected to
the outside world through the Jhelum
river and the Srinagar-Muzaffarabad-
Rawalpindi road.
The fact that, today, the linkage to
outside world is only through a tunnel
and an unstable mountainous road,
psychologically have a negative impact in
Kashmir Valley. In 2007 itself the Jammu-
Srinagar road was closed more than once
due to land slides. Even the air traffic
becomes a problem during the winters,
as happened during the last week
October; the flights were cancelled due
to poor weather conditions. Closure of
Jammu-Srinagar road even for two days
and the subsequent traffic jam causes
huge economic losses, creating a
psychological fear.
Finally, opening the LoC has a significant
potential to improve the economic
situation inside Kashmir Valley,
depending on the nature and extent of
trade. Kashmir Valley, though lacks
industry, its main livelihood comes from
the fruits industry, including apples,
almonds and walnuts. Besides, Kashmir
valley also produces carpets, shawls and
wooden furniture, which could be traded