Kashmir: The Economics of Azadi

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The turmoil on the streets of Kashmir has receded, and it should be the time to focus on Kashmir's economy. In many ways, the political and economic are closely intertwined. Kashmir is heavily dependent on New Delhi for its funds, more than any other state in India, which calls into question the demands of autonomy or even azadi. But raising questions about economic autonomy unsettles all the key Kashmir players. While for the state government and New Delhi, it means confronting an unhealthy equation of dependence and control, for the separatists, talking about anything other than secession is seen as a government conspiracy. This is a great pity since as we realised that there is a silent transformation unfolding in the Valley's economy. (Read: We must first try and get fiscal autonomy, says Haseeb Drabu)



Srinagar: At the office of the Jammu and Kashmir Liberation Front (JKLF), in downtown Srinagar, Yasin Malik is mildly surprised by our question about economic autonomy. He is quick to reminds us that the early leaders of Kashmir's militancy were all qualified professionals, like Dr Abdullah who was the head of Surgery, like Prof Abdullah who was the head of Law Department in Kashmir University and Ashfaq Majid, who Yasin says was the first Commander-in-chief.

This is his way of restating the familiar logic - azaadi first, everything else later. He adds, "This movement is not because somebody is unemployed. No."

But this is a mellower Yasin Malik, who when we persist, claims to be sensitive to the economic impact on ordinary Kashmiris of three lost summers. He tells us that the JKLF has decided to not give any bandh calls. 

There is no such concern, none expected, from Syed Ali Shah Geelani, the pro- Pakistan separatist leader who became the figurehead for the unrest of last year. When asked about his economic vision for Kashmir, he brushed it aside by saying, "Don't worry for our economic vision. We are worried only that the forcible occupation should end. When we will adopt our own system, there will satisfactory arrangement for economic development."

The State's chief minister Omar Abdullah admitted his unease about visits to Delhi for getting his budgets sanctioned. He said, "As a CM I find it incredibly uncomfortable to have to go with a begging bowl every year to meet the PM, the Finance Minister and the Deputy Chairman of the Planning Commission and to tell them that I'm sorry I don't have enough money to survive, can you throw something into this bowl so I can see the next year out." (Read: Economic dependence is our own fault, says Omar Abdullah)

But openly admitted also, that foregrounding the economy carried few political gains,  saying "This is an area you have to do something about without expecting any sort of political kudos for, because there simply isn't any. People would still prefer to hear about political autonomy, self-rule and everything else."

New Delhi too hasn't been above playing the politics of economic packages. In 2006, the PM on his visit to Srinagar announced a Rs 24,000 crore reconstruction package for the state. Haseeb Drabu, ex Chairman, J&K Bank says tells us that the amount actually asked for by the State was only Rs 6,000 crore but the announcement made was of a Rs. 24,000 crore. Haseeb says he was shocked and rushed the the PMs media adviser Sanjaya Baru to say that this is a fraud. He told us that, "Rs. 18,000 cr was given to the power sector in the central sector. NHPC got the money. None of it came to the State. The 6000 crores was spent well, on roads, infrastructure among others. But that the whole game that was played in this for someone like Dr Manmohan Singh, was very strange and surprising".

This political response ranges from indifference to opportunism to even fatalism is doing little to address a steadily ballooning budget. This year Kashmir spent about Rs 23,000 crore while earning a mere Rs 3000 crore. It borrowed about Rs. 4000 crore and the balance, roughly Rs. 16,000 crore was paid by New Delhi.

Even for a state that has the disadvantages of region, a history of conflict, whose economy is driven by sectors that are not taxed - like tourism, agriculture, crafts and exports, this is an extraordinarily high amount. Any reduction in this would require a committed engagement with complex factors that led to the crisis.

Kashmir's politicians, instead, seem to have virtually overnight, and across the board - found an economic quick fix. From Yasin Malik to the firebrand PDP leader, Mehbooba Mufti to the Chief Minister himself, there is a unanimous demand for getting back power projects from the National Hydel Power Corporation.

Abdullah says, "Power is our biggest problem and power is the biggest opportunity as well." Mehbooba Mufti concurs, "We need to re-negotiate our power resources. We need our power projects back form New Delhi." Malik says, "Hydroelectric projects which are not with us, but with Delhi can come back to the Kashmiri people and they will themselves start these kinds of projects."

We travelled to North Kashmir, in Bandipora, to understand what has brought about this rare, somewhat misplaced bout of economic activism.

Surrounded by mountains infamous for infiltration is ground zero of an example of  J&K's power wars - in this case the Kishenganga Power plant being constructed by NHPC. 

The plant has become the latest focus of rhetoric of a Kashmir valley victimised by New Delhi. Almost everyone in Kashmir says that they want NHPC to  transfer the new and past projects to Kashmir because power generation, they believe could hold the key to Kashmir's economic autonomy.

Currently, NHPC has a virtual monopoly over J&K's hydel power. Since the 80s , it has built 4 hydel projects, 10 more are on the way making a whopping Rs. 900 crore profit every year.

The state now wants these projects to be handed over, citing the original terms of agreements, a claim which NHPC is contesting. The State has now signed a Joint Venture with them to build new power plants to tap into the state's massive hydel capacity which goes up to the tune of almost 20,000 MW.

But even if Kashmir gets back these power plants, or builds new ones, questions about rampant power theft persist. Raids on illegal power users in Srinagar, are a rarity, staged mainly for cameras.

Kashmir has one of the worst transmission and distribution losses in India - close to 70%  which is almost double the national average.

Unfortunately, no government wants to do anything about it. Abdullah says he is determined. He said "Systems basically fell apart because of the militancy. Linemen weren't willing to go into many areas, engineers weren't willing to follow up. There is a whole lot of things that went wrong."

When questioned on being unable to meter power he says, "We will meter power. We will do it. At the end of the day either people want electricity, in which case they've got to get meters, or they'll have to suffer 8 to 10 hour power cuts in winter, which is what they're getting right now." 

But  there are more sensitive problems with the state's power ambitions. NHPC officials told us that most of the specialised personnel that run the plants have to be hired from outside J and K, claims rubbished by Omar Abdullah, "That's rubbish. Capacity is generated over time. Why would I create capacity for projects I don't have? I'd end up with people sitting around doing nothing."

While the state's fledgling attempts to build on its  power capacity can only help, given the high costs and logistics involved , it will take years, perhaps even decades to realise the vision of power independence. What is worrying is the lack of focus on other areas that have weathered the years of conflict and carry the potential of providing home grown solutions to the economic stagnation.

As Haseeb Drabu said,  "If J&K survived, its economy survived the militancy, it survived largely on 2 things - apples and shawls."

As Chairman of J&K Bank he funded a number of small businesses that are conducive to Kashmir's unusual economic environment.

In Srinagar, we met young businessmen, beneficiaries of such loans, who are re -energising traditional sectors, which is one route to economic autonomy. 

Khurram Shafi, of Harshna Naturals, says, "We were the first ones to provide the entire integrated cold-chain to the apple farmers." Umar Tramboo of the Khyber group is building Gulmarg's first five star resort while Mudassar Mir Nazir, of Magpie Hydel Construction is the first Kashmiri to build a power plant. Kanwal Spices' Farooq Amin started Treish, Kashmir's highest selling mineral water plant says, "It is the best selling and according to BIS standards is one of the best in north India. I have a capacity of around 60,000 1 litre bottles a day, which we are supplying to the market every day."

Bank finance was a big problem. Barring J & K Bank, all of them agreed that most other national and private sector banks have been conservative to say the least. Mudassar says, "What I like to call them is deposit banks. So you can go and deposit the money." Umar adds, "They have their own limits. They won't probably cross a certain line in terms of where they feel they are safe."

All of them employ locals. Umar says, "In our cement plant alone we employ around 1000 people. It is a high end technology and it took us a year or so to train them, but eventually it is 98% local people who are running the show."

At Mudassar's power plant in Bandipora, a short distance from NHPC's Kishanganga Project site, we met his all Kashmiri staff. They have all been trained by engineers from  the French firm that sold him turbines, like engineer Naveed, Firdaus Ahmad one of the main mechanical guys while the chief mechanic used to be a blacksmith before this.

Of course, this is a small plant - just about 10 Megawatts - but  it is quicker off the block, greener, and allows the  hiring of locals.

In Kashmir small just might be beautiful.

More than a 100 kilometres to the South in Pulwama , Khurram Shafi shows us what he is doing to transform a Kashmiri staple - apples.

He takes us through a high velocity tour of his plant - it is shockingly  only the second high tech cold storage - known as  controlled atmosphere storage - in the entire Valley.

Khurram says, "Kashmir produces 1 lakh tonnes of apples. Yes there are only one or two facilities for cold storage."

Yes it's a speck in the ocean. But now , seeing his success, two more are on the way - in the same industrial park. He adds, "They have come up because we have been able to come up with a financially sustainable model." Unconcerned, Khurram says his project is not solely profit focused - it is also meant to benefit farmers. "We want our farmers to come in and take this space, put their produce here so that they can make more money later on in the market. First year we had only 5% of farmers, second year we had 20%, third year we had 40% of farmers and this year, we can actually let this whole facility to farmers."

There are no such units in the heart of Kashmirs apple belt, in Sopore, in the North, home to Asia's second largest fruit mandi.

It has been a clearing house for almost all of Kashmir Valley's apple farmers. But while this year, the apple output is up, the mandi  badly needs an upgrade. Fayyaz Ahmad Malik, President of Sopore's Fruit Association says, ""The only thing that has saved the Kashmir Valley is the fruit industry."

After two years of drought, this year the output is up but the mandi badly needs an upgrade. Malik says, "There is a huge problem with cold storage here."

There are other risks involved. Sopore is the bastion of Syed Ali Shah Geelani who led the protests that brought the town to a standstill for much of last year.

Geelani had told us that strikes are a necessary sacrifice. But at the mandi, the perspective on the events of last year was different.

Malik says, "Last year during the tumoil, we used to work at night. If the fruit industry had closed at that time, people would have died of starvation."

We had touched a nerve, and our quesitons are interrupted  - this is after all, Geelani territory.

A young man cut in, and told us, "If someone is killed for no reason, then we have to protest."

Everywhere we went, Sopore, Bandipore or Pulwama, all flashpoints on Kashmir's conflict map and will remain so till a political solution comes. But each also pulsating with economic energy, each offering lessons on doing business in Kashmir.

Khurram says,  "We have had front-end clients in the past three years such as Bharti Feel Fresh, Reliance Fresh, Adani and also Mahindra. In working with these corporates we have realized that there are many business opportunities around India that are lucrative. Sometimes you invest 100 crore in a company and know that within 2 or 3 years you are going to make tonnes of money. But in Kashmir I think, and I have very little experience relative to these guys, that you have to be patient." 

If Kashmir's politicians could even encourage a fraction of the vitality we have seen, economic autonomy may not be too far down the road, but for that they will first have to confront the greatest source of Kashmir's financial dependence.

The biggest challenge to the state's economy is not power or security. But the state's salary bill. This year Rs 12, 000 crore was paid out as wages and pensions to a record 4 lakh employees which is about half the state's annual budget.

If one were to reduce the number of government jobs, by opening up alternatives, suddenly, the promise of economic independence doesn't seem that distant.

Up the stairs of a building in downtown Srinagar, in Khaniyar, another epicenter of last year's unrest, a small step is being taken in creating those alternatives. Young men and women from Srinagar are  being readied for jobs in the private sector - in this case, learning the basics of hotel management. 

Their trainers are from the Don Bosco chain of schools, which has floated a company called DB Tech, and sponsored by corporates like Accenture and Schneider. It is an on the ground outcome of  the Rangarajan Report, a Rs 400 crores initiative drafted in New Delhi by  C Rangarajan, head of the Prime Minister's Economic Advisory Council. 

It hopes to ropes in  corporate India to do skill training in Kashmir and create about one lakh jobs in the coming five years.

So far efforts like these have placed about 100 kids in 4 months, way below the target of almost 1500 placements a month.

Amit Parinoo, State Head J&K of DB Tech, says, " Today also we have interviews of around 12 kids. We have tie-ups with so many people. We have a tie up with Cafe Coffee Day, Pizza Hut so that these kids get opportunities there also."

Further downtown in Srinagar, government funds are being used to seed  a smaller effort - creating  a new generation of craft and design entrepreneurs.

One of the boys tells us us, "I took the two year Craft Management and Entrepreneurship Program here, and now I have a designer in Delhi who I supply to."

Another girl says, "I started with teaching and then I thought if I really wanted to make a difference to the craft sector, then this is the best thing to do."

At the Crafts Design Institute, students learn how to fashion the traditional pinjra, or jaali work, into contemporary furniture. The Kashmiri namda or felt wool rug too, gets a modern twist. While girls from the neighbourhood get to upgrade their embroidery skills.

The CDI team hopes, in its small way, to interest young Kashmiris to take interest in crafts which is not as easy task. Their craft management course is now a certified one by Kashmir University.

Shariq Farooqui, director Craft Development Institute says, "You bring in crafts and develop it in a manner which is in tune with international requirements and international taste and style."

But all of these are only scratching the surface of Kashmir's employment mountain. In a conflict zone, the state becomes the employer of last resort , creating an unhealthy dependence on government jobs. Omar Abdullah says, "It takes time to change mindsets. Unfortunately the mindset here is, if you don't have a government job, you're not working.Boys aren't able to find suitable marriage partners. Same is true for girls, if they can't promise their prospective in-laws that they either have a government job or that they're pretty damn sure they're going to get one."

But as we found in the compound of the Srinagar Police Lines, the government has not lost the old habit of using jobs as a political tool.

Dozens of young men, recruited by the police from ground zero  of Srinagar's worst stone throwing neighbourhoods - Habbakadal, Sabakadal, Idgah, Maisuma and Khaniyar. All a part of a series of mammoth recruitment drives, over the past 7-8 months, to co opt the anger on the streets.

They will add to the  bulging  salary bill of a police force which is already one lakh strong - but for the police that is money well spent.

Under the watchful eyes of the police minders, their answers, at first seem scripted. One boy says, "This is the best job. We are responsible for serving the nation." Another says, "There is more stone pelting here because of unemployment."

The boys seem keen to distinguish themselves from stone throwers, by under-lining their superior education.

One says, "We are all educated." while another joins in, "We have a chain of houseboats in Dal Lake."

But then, slowly, the similarities and the contradictions emerged.

When asked specifically on how they would handle the negative feelings against the Police, one says, "As far as the families of those who died last year, are concerned, I have extreme sorrow and grief. If we need to face the same people again, I would say we would be a bit more diplomatic in that and try to sort it out." He admitted to being a little worried, but says, "I will work it out."

Another whose friend got killed says, "Of course, one of my friends was also killed. The reason I have come here is so that we can protect our own youth. We will take care of everyone so that this doesn't happen again."

If we could hear these sentiments in a police compound, as we did outside,  it is clear that solving the problem of unemployment or any of Kashmirs economic hurdles will not calm the anger on the streets. Every new custodial killing, fake encounter or unmarked grave, or any of the daily minor and major brutalities of the state will only keep alive the Kashmir problem.

But equally, economic solutions don't wait for political ones.

While it is naïve to assume that by creating jobs, or offering loans, the stone throwers of Valley will transform into power producers, crafts entrepreneurs, or even cops, creating a  strong and relatively less dependent economic base won't vitiate any political structure, be it autonomy, secession or integration into India. And  till a political solution comes along, it is worth forcing the key actors in Kashmir to think and speak a new grammar, one that may hold meaning to the people they claim to represent.

(With inputs from Niha Masih)


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