Considering that Jammu and Kashmir has not been able to attract even half a per cent of the total investments made by both the government and private sectors across India, the Associated Chambers of Commerce and Industry of India (Assocham), the apex industry body, has suggested an annual special package of Rs. 10,000 crore per year for five years from the central government to give boost to economy in the state.
The Assocham has suggested that small and medium enterprises (SMEs), food processing, horticulture, tourism and hospitality, IT/ITeS (information technology-enabled services), BPO (business process outsourcing) and other potential industries should be involved in this.
"The constant flow of private investments and large industries is imperative to bring about sustainable growth, development, jobs and the long-lasting peace in the Valley," said DS Rawat, national secretary general of Assocham while jointly releasing the chamber paper along with Babu Lal Jain, chairman, Entrepreneur Development Council at a press conference here on Thursday.
J&K has attracted over Rs. 1 lakh crore out of the total investments worth over Rs. 140 lakh crore in India as of December 2012, according to a strategy paper titled 'Special Assistance for Development in J&K,' prepared by the Assocham research bureau.
The government is the major investment source in Jammu and Kashmir evidently as 1.3% of the total investments made by the central government across states was put in J&K, while the state attracted a meagre 0.3% of the total investments made across India by the private sources.
While analysing the growth scenario of J&K's peer hilly states of Uttarakhand and Himachal Pradesh, it was observed that state economy of J&K grew at the lowest growth rate of just over 6% between 2004-05 and 2011-12 as against over 12% in Uttarakhand and over 8% in Himachal Pradesh. India as a whole clocked a growth rate of over eight per cent during the same period, according to the ASSOCHAM paper.
"The unfriendly investment climate in industrially backward J&K portrays the inhibitions of the private sector because of low supply and demand linkages apart from security and geographic concerns," said Rawat adding that location disadvantage, owing to hostile terrain and climatic conditions, are certain major problems as main consumption markets of the country are way too far from the production centres in J&K.
Considering that the state has only small and medium-scale industries in traditional sectors, The Assocham has recommended that policy initiatives must be proposed to incentivise MSMEs to expand the production capacity of the sector, including handlooms, handicrafts and others which hold ample of export potential. Besides, access to finance must be made easy so that industry can undergo constant innovation and adopt aggressive marketing and increase its target market size.
The apex chamber has also made a request to the central government to announce budgetary support to J&K in forthcoming central budget as the same would spur job opportunities thereby inducing a productive ambience in the valley.