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Wednesday, Oct 16, 2019

Beyond Article 370: A road map for Kashmir’s economic development

Accelerate public spending, encourage private investment, and persuade Kashmiris to welcome it

analysis Updated: Sep 04, 2019 05:44 IST
Vasant Dhar
Vasant Dhar
Pir Panjal tunnel. Kashmiris must now build a solid economy and infrastructure, but to do so will require a significant change in mindset
Pir Panjal tunnel. Kashmiris must now build a solid economy and infrastructure, but to do so will require a significant change in mindset(Hindustan Times)
         

Although the method chosen by the Indian government of removing Article 370 has been unfortunate, seven decades of reality suggest that it did not work, and if anything, was regressive from a development standpoint. Democratic methods, including all-party delegations, interlocutors, and negotiations with Pakistan to stem the tide of militancy in Kashmir, have not worked either. India had two choices: To try something new or let the situation fester indefinitely.

Kashmiris now have an opportunity to turn this moment to their advantage and build a solid economy and infrastructure, but to do so will require a significant change in mindset. This will be challenging. There is, however, no reason why a place of such natural beauty and rich heritage should continue to be left behind in a connected digital world, where trade and investment are the keys to development.

As someone who grew up in Kashmir, I know firsthand that Kashmiris care about their quality of life and the future of their children. Every year, a family ritual, started by an ancestor in 1836 and now in its 183rd unbroken iteration, takes me back to Kashmir. While there, I typically address hundreds of high school students in Srinagar about how they should think about their future in a world of digital platforms and globalisation. The dialogue is invariably about how they can pursue dreams they are unable to realise in Kashmir. That is a shame. It needs to change.

Kashmir’s special status has created perverse incentives and an impossible climate for business. The protections afforded to Kashmiris under Article 370 have turned out to be regressive, exploited by local politicians for their own ends, and they have inhibited investment and progress. Every Kashmiri has come to know and expect rampant corruption. Courts are inefficient. Officials are often planted in posts by their friends. Local leaders have no creative solutions or initiatives, but play a delicate double game between the terrorists and the central government. What is clear after 70 years is that Kashmir’s instability and social climate do not benefit anyone except those served by the status quo.

To understand the region’s economic shortfall, let us look at Kashmir’s GDP of roughly $18 billion more closely. In comparison, Himachal Pradesh, a similarly agrarian state but with half the population, has a GDP of $22 billion. Goa has half of Kashmir’s GDP with a tenth of the population. According to Pratham, one of the largest NGOs in India devoted to promoting education to underprivileged children in India, Kashmir ranks close to the bottom in India on standard reading and math tests conducted across the country.

Addressing the Kashmir question requires two major changes. Kashmiris must be willing to look ahead instead of the rear-view mirror, where they have been played by actors with questionable agendas, and perhaps have made some unfortunate choices themselves. It also requires the central government to convince a people angered by military presence and the current clampdown that a solid economic plan is underway, which will be in their long-term interest. With the lockdown now in its fourth week, this must happen quickly.

What might such a plan look like? Typically, 5% of investment can kick-start an economy if there is a decent “multiplier,” meaning that roads and bridges are built properly, actually lead somewhere, and spur other economic activity. That is a $1 billion a year. The government’s plan is to allocate roughly $20 billion per year on infrastructure projects over the next few years. So, 5% of that total on Kashmir would be significant but within the realm of reality. Without public investment and an accompanying reduction of tension, private money is unlikely to follow.

How should this money be invested? Broadly speaking, it could be split between infrastructure and services. The former includes roads, bridges, schools, health facilities and municipal services. The latter constitutes courts, systems, banking and government services. Without such essential services, there will be no private investment following public spending.

The biggest unknown at the moment is how Kashmiris will respond to private investment. Some have argued that investment in Kashmir has been limited due to its status as a disputed territory and the security situation. But Kashmiris need to be persuaded that a business approach is in their best interest, even though the manner in which Article 370 has been dismantled is deeply problematic and regrettable. This will not be easy, but if Kashmiris choose, there is no reason Kashmir cannot turn into what the Mughal emperor Jehangir said: “If there is a paradise on earth, it is here, it is here, it is here.”

Vasant Dhar is a professor at New York University’s Stern School of Business and the Center for Data Science

The views expressed are personal

First Published: Sep 03, 2019 18:34 IST

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