The Hindu Business Line : What price the largesse for Kashmir?

The only effective antidote to insurgency is the restoration of good government and order. With the latter largely absent in Kashmir, any new package might end up putting more good money into the hands of those who cannot deliver the goods.

The Prime Minister, Dr Manmohan Singh, with the Minister for Parliamentary Affairs, Mr Ghulam Nabi Azad, during his visit to Srinagar... Are handouts the way to tackle J&K's problems?

THE Prime Minister, Dr Manmohan Singh, addressing a meeting in Srinagar on November 17, announced an "economic revival plan" of Rs 24,000 crore for Jammu and Kashmir. But unwrapping the package as a bold new one may involve some terminological inexactitude. What is new is just Rs 5,800 crore. The remaining Rs 18,200 crore was committed several years ago to ongoing power projects of the National Hydroelectric Power Corporation.

If this Rs 5,800 crore is in addition to what J&K is in any case slated to get, it would no doubt be most welcomed by all those who have been living off the government. After all, it translates into a grant of additional Rs 5,712 per capita.

As it is, J&K does rather well in terms of Central government grants. In 2000-03, it got Rs 13,188 crore, which is more than three times what India's most poor and violent State Bihar got — Rs 4,047 crore.

When one considers that, of the Rs 14,085 crore net resource transfer by the Centre, Rs 13,188 was as grant, one will get an idea of the magnitude of dole that J&K gets. Another way to view this is to consider that a similar "economic revival plan" for Bihar would amount to Rs 47,458 crore!

Clearly, Dr Manmohan Singh thought this was not enough for he put some icing on the cake by announcing in Jammu the following day that he is ordering the lifting of the freeze on State government employment. It is not that the State does not have enough public employees. In fact, it seems to have far too many. By its own admission, the J&K Government employs 3.5 lakh persons, giving it a ratio of 34.5 government employees to every thousand persons.

To get a better idea of the enormity of the Prime Minister's largesse, consider this. The Rajasthan Government employs about six lakh persons and it is about five-and-a-half times as big as J&K in terms of population.

The underlying problem of Jammu and Kashmir is not economic. It is political and administrative.

The State does quite well in terms of socio-economic development. Its literacy level (64.8 per cent) is almost on a par with the national level (65.4 per cent). So too its sex ratio at 923/1000 (national average 933/1000).

Its birth rate at 19.9/1000 is lower than the national average (25.8) as also its death rate at 5.4/1000 (8.5/1000).

J&K's infant mortality rate (45/1000) is also superior to the national average (68/1000).

The official per capita income of Jammu and Kashmir is Rs 12,399 and is lower than India's Rs 16,707. But it is much better than, say, Bihar's Rs 5,108 or Orissa's Rs 8,547. For the Tenth Plan, J&K got a per capita allocation of Rs 14,399 whereas Bihar and Orissa got Rs 2,536 and Rs 5,177 respectively, while the national average was Rs 5,668. It can, thus, be nobody's case that J&K did not get enough.

This is not all. In 2002-3, J&K raised a mere Rs 936 crore by way of taxes when its total non-tax revenue was Rs 4,745 crore. Bihar collected Rs 2,814 crore by way of taxes and had a total non-tax revenue of just Rs 2,062 crore.

Quite clearly, the nation's munificence is lavished upon J&K. It seems to miss most people who matter, even those at the helm in Bihar, that the valence of public disorder when measured in terms of violent deaths is no less in Bihar than in J&K.

If disorder and violence is the basis for allocation of Central government funds, then Bihar clearly has at least as good a case as J&K?

It is not that all the money has gone down the tube in J&K. In the last ten years, its poverty level has dropped from 25.17 per cent to a mere 3.48 per cent. The poverty level in India still hovers around 26 per cent. Whatever the reasons for this, good government is most certainly not one of them!

The proof is there for all to see. There are hardly any public works contributing to the common good and higher productivity to show. Roads are in a terrible condition.

The power situation is miserable. There is no public sanitation worth the name and all the sewage seems to flow into the Dal Lake and thence drained into the Jhelum.

The J&K Government's books have not been audited for over a decade and no one really knows what was spent where and who got what? Talk to even the most ardent pro-India Kashmiri (and there are some), and he will tell you that the politicians and bureaucrats have stolen most of the money. Lending credence to this is the amazing explosion of new construction in evidence all over the Kashmir Valley.

It is believed that every second house belongs to a government employee or one connected with it. Relate this to the low poverty level in the State and it would seem that trickle-down economics works! It also underlines John Galbraith's description of trickle-down economics: That it is akin to feeding racehorses high-quality oats so that the sparrows can eat the dung!

The only effective antidote to insurgency is the restoration of good government and order. In J&K, there is neither. The forces meant to impose order are themselves often quite disorderly.

The Indian Army and the various para-military forces work independently of one another and often at cross-purposes. Worse, they work independent of the popularly elected government of J&K. We must wonder if powerlessness makes the State government purposeless as well?

Speaking at Srinagar, the Prime Minister said: "The time has come to put forward a new blueprint, a fresh vision for Kashmir and for the Kashmiri people, free from war, want and exploitation."

Instead of a fresh vision and a new blueprint, the Prime Minister is only doing what all his predecessors have done: Put more good money into the hands of those who cannot deliver the goods.

The threat of secessionist violence has become an integral part of our political process. In Punjab, successive chief ministers have been extracting higher procurement prices and quotas each year by implying that otherwise things may go out of hand.

Ditto for the water that Punjab is obliged to supply to neighbouring States. We seem to have no answer to this other than more handouts. But we also know handouts do not work.

We have seen it not working in the Naga Hills region, which has remained one of our poorest regions despite having long had the highest per capita "development" expenditure in India. On the other hand, the abundant availability of state funds is only an easy source of funding for the insurgents and terrorists.

We delude ourselves believing that only Pakistan's ISI funds insurgencies in India. The ISI's Kashmir Budget is but a mere fraction of how insurgents sustain themselves from government funds. Do the Naxalites who now dominate large swathes of territory in Bihar, Jharkhand, Chattisgarh, Madhya Pradesh, Maharashtra, Orissa and Andhra Pradesh get ISI funds? They too milk the system.

Immediately on taking over as Prime Minister, Dr Manmohan Singh spoke of the need to make public administration purposeful, honest, efficient and transparent. Yet, he seems to be walking down the old well-trodden path. But, then, is there any other way?

(The author is Chairman, Centre for Policy Alternatives, New Delhi. He can be reached at mguru@sify.com)