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Business News/ Opinion / Columns/  Opinion | Was special status a development dampener in J&K?

Opinion | Was special status a development dampener in J&K?

No state has developed on the back of private corporate investment

Pedestrians move on a deserted street in Srinagar on Thursday. (AP)Premium
Pedestrians move on a deserted street in Srinagar on Thursday. (AP)

One of the stated reasons for abolishing the constitutional special status of Jammu and Kashmir (J&K) in the Union is that it hampered the economic development of the state and prosperity of the people of J&K. The new dispensation, as a Union territory, it is said, will harness the growth potential and share the development dividend with the deprived masses of the state. This argument not only sounds hollow, it also enrages rather than enlightens.

For the people of J&K, the biggest benefit of the state having greater legislative latitude under Article 370 has been the radical restructuring of agrarian relations. It was the first state in India, much before the communist government in Kerala, to carry out non-compensatory land reforms.

When the J&K government initiated land reforms and divested the landed aristocracy of their land, the right to property was a fundamental right under Article 19. What prevented the J&K Big Landed Estates Abolition Act, 1950 from being annulled on the grounds of infringing Article 19(1) (f) was sub-clause (b) of Article 370 A.

These land reforms along with a massive debt write-off undertaken over 20 years, from 1951 to 1973, transformed the lives of rural masses and underlie J&K’s better-than national average human development indicators.

Take the case of poverty. In J&K, the absolute level of poverty— households living below the poverty line—is 10%, against the all India average of 22%. The relative inequality, the distribution of income as well as consumption in J&K are all much more evenly spread across the population. The income inequality coefficient for rural households in J&K is 0.221, making it one of the most egalitarian sub-national economies in the country.

Or indebtedness. Households in J&K have the second lowest incidence of indebtedness in the country. Combining the incidence of indebtedness and the average value of assets per household, J&K, with a debt-to-asset ratio of less than one, is one of the best in the country.

Or landless labour. The economic enfranchisement of the poorest in J&K is borne out by the near-absence of landless labour; less than 2% of the work force are agricultural labourers. The all-India average for the incidence of agricultural labourers is 23%.

The level of economic empowerment is evident from the fact that more than 25% of the household earnings in J&K are from own cultivation. In “prosperous" Punjab, it is only 18%, in “vibrant" Gujarat, it is less than 16% and in “terrific" Tamil Nadu, it is only 3%. And yet, J&K is being portrayed as a “sick" state.

A look at the social indicators is equally revelatory. Life expectancy at birth in J&K is 73, compared to 68 at the national level. In J&K, the infant mortality rate is 32 per 1,000 live births against the national average of 40.

What does it all add up to? Simply that the people of J&K are much better-off than those in the rest of the country. The number of poor is low, they have land and other income generating assets, they are much less indebted, very few work as agricultural labourers, and most earn their own livelihood through self-employment. So much for the beneficial impact of Article 370 on development.

It has also been argued that private investment has not been forthcoming in J&K because of restrictions on land ownership imposed by Article 35A. This is patently incorrect. In J&K, land for industrial development is available to outsiders and foreigners like elsewhere in country. The government of J&K offers land for industry for a 90-year lease, which is further renewable. That too at throw away prices and better terms.

Be that as it may, no state in India, especially a border state, has developed on the back of private corporate investment. All the states, without exception, have been developed by public investment, either direct or through central public sector enterprises (CPSEs). Private corporate investments have piggy-backed on public investment. There are 339 CPSEs in India, having investments of 23 trillion, employing 1.08 million people as of 31 March 2018. Of these, only three CPSEs are in J&K. The capital invested of all three combined is a pittance: 165 crore. To add insult to injury, these CPSEs employ 21 people!

The government of India and its companies face no Article 35A barriers; then why is it that in the last 70 years, there has practically been zero public corporate investment in J&K? The fact is that the government of India has not invested growth capital in J&K for private corporate investment to venture in.

The fact is that private investments, especially foreign investment, does not come into J&K because of the UN sanctified “disputed status", it doesn’t even endorse or accept boundaries. This is so not because of the special status accorded by Article 35A or Article 370 of the Constitution of India. And abrogation of Article 370 or rescinding Article 35A doesn’t solve this problem.

Haseeb Drabu is former finance minister of Jammu and Kashmir.

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Updated: 08 Aug 2019, 11:55 PM IST
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