Whither the riches of paradise? Jammu and Kashmir's economy sans Article 370

Five years after Article 370 was ‘abrogated’, the state of the economy in the union territory of Jammu and Kashmir is grim, to put it mildly.

The unemployment rate in the what used to be India's northernmost state was a whopping 17 per cent in February 2024. Compare 12. 3 per cent in Bihar and 6.6 per cent in Andhra Pradesh. This despite the tall claims of booming tourism, that new start-ups and industries allegedly pepper the landscape that is customarily called a paradise.

While both AP and Bihar were singled out for special packages in the 2024 Union Budget, Jammu and Kashmir was ignored by finance minister Nirmala Sitharaman — who, in the absence of an elected assembly, presented the former state’s budget in Parliament for the sixth year in succession.

Mia Altaf, the National Conference MP from Anantnag–Rajouri, speaking in the Lok Sabha, pointed to rising unemployment and inflation in the state. Pensioners are not getting their pension and bills of contractors are pending for over a year, he said.

Meanwhile, Delhi–Srinagar air tickets are so expensive that it is not just impacting tourism, but making it difficult for the common people to travel during emergencies, he complained.

"Various projects are languishing and people are facing hardship due to non-completion of these projects,” he added. The frustrated MP suggested that a joint committee of Lok Sabha members should visit Jammu and Kashmir to get the real picture on the ground.

He was even more peeved at the union finance minister not consulting anyone from the Jammu and Kashmir before presenting the budget for the union territory. Shouldn’t she have consulted stakeholders, business owners, traders and entrepreneurs, as well as locals MPs, he wondered aloud.

The state’s budget, as presented by Sitharaman, actually indicates serious fiscal mismanagement by New Delhi.

In the last two years, loans to the Jammu and Kashmir government, for example, have gone up five times. Last year, the budget sought to allocate Rs 12,000 crore, but the union territory actually went on to borrow twice that amount, i.e., Rs 24,000 crore. Not only is there no clarity on why the borrowing exceeded the original demand, it is certainly not a shining example of fiscal prudence.

In the absence of an elected assembly, even lurking doubts on whether the 'excess borrowing' was used to host the G20 tourism meet last year cannot be raised to any actual authority or anyone with accountability. 

What's more, the budget had projected a figure of Rs 7,800 crore to be raised by Jammu and Kashmir as 'Additional Resource Mobilisation (ARM)' last year. All it could raise, however, was Rs 1,000 crore.

Its fiscal deficit, which the budget had claimed could be pegged at 1.6 per cent, turned out to be more than three times higher — 5.36 per cent.

The share of Jammu and Kashmir in the national GDP further declined during the year. In addition, its tax–to–GDP ratio rose from 5 to 8 per cent, indicating that residents and traders in the state are possibly being taxed more heavily than before.

Private investment in Kashmir in 2022 was less than half what it used to be in 2018. “It’s still too much of a conflict zone for investment to make sense,” said an academic quoted by the Kashmir Times.

Tourism has seen a modest recovery—backed by intense publicity that portrays Kashmir as a peaceful, picturesque place full of colourful tulip gardens and cosy homestays. Yet, visitor numbers in 2022 were roughly the same as in 2018, and tourism still accounts for just 6 per cent of the union territory's GDP. While the Dal Lake is brilliantly lit and tourists admire the music and dance recitals, local residents wish some of the electricity were supplied to their homes.

At the same time, what hasn't been as much in the news is that unusual weather patterns, unseasonal rain and record high temperatures have affected the size, quantity and quality of apples grown in Kashmir.

In July 2024, Srinagar recorded 37ºC as its highest temperature — a city whose the average used to hover around 20ºC. For comparison, in July 2021, when Kashmir had witnessed its hottest July in eight years, the record temperature was 35ºC.

Apple growers have been an anxious lot, therefore, with weather changes continuing to affect their precious crop, their livelihood. Kashmiri apples are classified into three categories — A, B or C — depending on their size, colour and shape, with B-quality apples boasting fewer scars and bruises than the C grade. Of late, however, the harvested crop shows a preponderance of the B and C varieties.

There is also a severe trust deficit among locals. The government’s efforts to promote outside investment, it is widely suspected, are designed to dispossess Kashmiris.

“Everything is about snatching land, jobs and resources from locals here and giving them away to wealthy corporate allies of the present dispensation,” said Mehbooba Mufti, former chief minister. 

In April 2023, the government — in a written reply in the Rajya Sabha — informed that since the abrogation of Article 370, as many as 185 people from outside Jammu and Kashmir had bought land in the union territory during 2020, 2021 and 2022. Meanwhile, several lakh people have been allotted land for housing under the Pradhan Mantry Awas Yojana, few Kashmiris believe the administration’s claim that no outsider has been allotted land under the scheme. 

On the other hand, the decision to deny renewals of expired leases on government land and leasing out the plots afresh instead has triggered fears that the administration wants to 'snatch' land from the locals to benefit 'outsiders'.

‘While non-Kashmiris always had the right to take government land on lease in Jammu and Kashmir, the overwhelming majority of existing lessees are local people. Hundreds of hotels, schools and other institutions have come up on leased land over the decades,’ reported The Telegraph.

The new notification that rules out renewal of expired leases also held that fresh leases prioritise businesses run by the self-employed and housing for ex-servicemen, war widows, families of deprived categories (per the latest socio-economic census), disabled persons, families of martyrs and migrant workers—many of whom are likely to be non-Kashmiris.

The move was a replica of Israel’s policy in occupied Palestine, quipped Mehbooba Mufti.