Region Shallow Promise of Economic Prosperity in Indian-held Jammu and Kashmir

Since the erasure of Indian-held Jammu and Kashmir (J&K)’s special autonomous status on August 5, the region has remained on an indefinite lockdown for nearly five months. The lockdown is accompanied by the suspension of Internet and mobile phone connections, lack of public transport and deserted markets. Indian political leadership asserts that the abrogation of Article 370 from the Indian constitution is to ensure economic prosperity in the region. The article investigates the promise of economic prosperity by looking into recent economic data. It argues that the promises of the Indian leadership appear to be merely shallow unless there is some serious change in the otherwise belligerent approach of Modi administration.

The $15.3 billion economy of Jammu and Kashmir is mostly predominated by farming, handicrafts and tourism. Despite having poverty levels half the mainland India’s national average, Kashmir’s per capita income is $1,333, which is 25% lower than the mainland’s national average of $1,778. During the past decade and a half, the per capita incomes of J&K residents increased by two and a half times, whereas the average income of Indians increased almost four times during the same period. In nearly 19 years since April 2000, J&K received only $5.5 million in the form of foreign direct investments, the lowest among Indian states.

The scrapping of the autonomous status of the Muslim-majority state has impacted its economy significantly. The indefinite lockdown in the disputed territory has resulted in an economic loss of more than $1.4 billion.

Additionally, the agricultural sector is on the decline and industrial growth has been stagnant. Consequently, jobs are vanishing, incomes falling and there is a lackluster expansion of economy. Tourist numbers had already fallen by 41.5% between 2012 and 2017. Gross fixed capital formation, which is considered as one of the key parameters of business interest and development, has been languishing back to its 2006 levels in the disputed territory. For sustaining its economy, the region largely relies on grant offered by the Indian government. However, many believe that the grants have failed to provide desired outcomes because of rampant corruption in the disputed territory.

The scrapping of the autonomous status of the Muslim-majority state has impacted its economy significantly. The indefinite lockdown in the disputed territory has resulted in an economic loss of more than $1.4 billion. The region’s first global investors’ summit, scheduled around mid-October, was postponed to 2020 to ensure “necessary preparations to secure robust participation of investors.” Apple industry, which provides livelihood for about 44% of J&K population and constitutes 70% of India’s total apple production has been severely impacted. Despite government’s assurance of purchasing apple crops, many framers are expected to suffer significant losses.

During Modi’s first term, the limited success of Modi’s jobs and skills programmes for Kashmiri youth and allocation of smaller chunk of development budget explains the seriousness, which his government has demonstrated in fulfilling promises of economic prosperity. Apart from the on-going economic losses, the future of Jammu and Kashmir’s economy looks bleak. It is estimated that it will take several years for the complete recovery of the state’s economy following the August 5 decision.

Abrogation of Article 370 has allowed purchasing of property by non-permanent residents of J&K and investing money in the region. Land purchasing from outsiders will not guarantee an increase in investment in the region. On the contrary, it will trigger demographic shift in the region with the influx of new settlers and dispossession of locals. Consequently, Kashmiris will be reduced to the status of second-class citizens within their own region.

During Modi’s first term, the limited success of Modi’s jobs and skills programmes for Kashmiri youth and allocation of smaller chunk of development budget explains the seriousness, which his government has demonstrated in fulfilling promises of economic prosperity.

Meanwhile, future investments in the region are directly proportional to the operationalisation of normal political processes and the downward trajectory of violence or threat of violence. Since August, Kashmir Chamber of Commerce and Industry received no inquiries from potential investors. Similarly, the return of tourists from mainland India and foreign countries is also linked with the return of normalcy in the region. The unemployment rate in J&K, which is double the average of mainland India, is likely to change with non-permanent residents of the region now inline to bag government and private jobs.

To secure goodwill and confidence of local populace, Modi administration needs to build trust with the local population and assure them that they are a major stakeholder in deciding their future. Moreover, the locals need to be convinced that future changes in the region are meant to bring them prosperity. In this regard, several welfare programmes need to be started. However, Modi will face difficulty in materialising such initiatives because the Indian economy is in slowdown while unemployment is the highest in 45 years.

To secure goodwill and confidence of local populace, Modi administration needs to build trust with the local population and assure them that they are a major stakeholder in deciding their future.

Moreover, experts have highlighted the need to focus on public investments in building connectivity and power supply. However, all these measures could be undertaken when sustained peace will occur in the region. For that to happen, the Indian government needs to show flexibility in its otherwise belligerent approach toward the grievances of the people living in the disputed territory. Failure on the part of Modi administration in taking such an approach will result in severe repercussions for the region by furthering alienating local populace and forcing some to pick up arms against Indian security forces.

Fahad Nabeel

Fahad Nabeel

is currently pursuing M.Phil in International Relations from National Defence University. Currently, he is working as a Senior Research Associate at CSCR.

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