Public finances comprise major part of Kashmir’s economy, leaving government as the main employer, spender and the policy maker. As Finance Ministry is rushing to finalize the next budget, KASHMIR LIFE examines the economic governance of the state.

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Under PMGSY, J&K presently has Rs 2658 crore worth sanctioned projects (about 5111 km), Rural Development Minister Jairam Ramesh wrote to Chief Minister Omar Abdullah on September 16, last year. “However, the implementing department has spent Rs 359 crore during 2009-10 and Rs 297 crore in 2010-11. During the current financial year, about Rs 450 crore has already been released to the state government. The expenditure so far has been Rs 109.92 crore.”

Advising Omar that he will have to strengthen absorption capacity of the implementing agencies, Jairam warned him that otherwise “the cost escalation of the projects will become a burden on the J&K government.”

Availability of funds in J&K was never an issue, especially after the Congress became an all time necessity for the regional parties (NC and PDP) to govern the critical state. But the real challenge has always remained how to spend within the timeframe, prevent cost and time escalations and ensure the public spending triggers a cascading multiplier effect and add more jobs.

The concern has been there for a long time. “By an average around Rs 10,000 crore goes into the capital expenditure from the state plan, the central sponsored schemes, the Prime Minister’s Reconstruction Plan and the central government,” says a senior officer who has handled crucial ministries in the state. “But it does not create the jobs that the same investment would fetch in any other state. Probably it is because most of the contracts are bagged by non-locals who come with their own skilled lot in absence of local workers having the same capacity and skill set.”

Shakeel Qalander

But the governments in Srinagar not being able to spend is just a routine. Shakeel Qalander headed Federation of Chamber of Industries Kashmir (FCIK) for a long time and has been very close to almost all the chief ministers for last 10 years. He was part of various central committees on Kashmir. “Last time while evaluating the implementation of various schemes we were shocked to know that under Rashtriya Krishi Vikas Yojna the state government returned Rs 100 crore out of a Rs 200 crore grant despite the fact that the primary sector growth is stagnant for a long time now,” the industry lobbyist Qalander said.

“It is now third year that a special task force on MSME granted Rs 100 crore for revival and rehabilitation of the sick industry in the state but nobody in the civil secretariat took the pains of claiming it.” He says clear lack of accountability in the civil secretariat is a major crisis. Under the state industrial advisory council that chief minister heads, Qalander says, a meeting is a must every third month and “the first such meeting took place only last week in three years.”

Details tabled in the house last year suggest the government could not utilize Rs 432.69 crore in 2008-09 and Rs 220.86 crore in 2009-10. But the insiders in the government suggest that there is inter-regional diversion of funds at the fag end of every fiscal to manage the utilization. Unlike Jammu, no developmental activity is possible in Kashmir in the last four months of a financial year and Ladakh for almost half of the year.

Abdul Hamid Punjabi is the president of the Kashmir Chamber of Commerce and Industry, one of the oldest business organizations in the region. Unlike past, he said, there has always remained a disconnect between the Chamber and the government. “He (Omar) completed three years as the chief minister in December but never ever did he initiate a meeting with us,” Punjabi said. “We read in newspapers that he had lengthy meeting with the FICCI and CII in Srinagar and Jammu but we never were part of any organized initiative in which he could seek some kind of inputs from us.” Punjabi finally met the chief minister last week in the industry advisory meeting.

That, however, never meant Omar Abdullah was inaccessible or non-responsive to issue that the trade took up. Last time, Punjabi’s Chamber rang him up and met to seek his help in preventing the handover of the Hotel Corporation of India owned Centaur Lake View Hotel to a shady Mumbai firm. Initially he dithered but as the story crept to the front pages of the newspapers, his government acted and the hotel is expected to become a state property in near future.


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