MS Moneybag

Every time Prime Minister Manmohan Singh lands in Kashmir, he makes promises to change the socio-economic discourse by pumping resource to manage the deficit. But the projects are either caught in the delay-web or simply remain untouched, reports R S Gull.

The otherwise marginalized ‘policy makers’ of J&K government are in a fix these days. As Prime Minister Dr Manmohan Singh is coming on a visit later this week, they are unsure if they should seek a new package or press for rejig of the earlier one that Singh had announced in November 2004. There are indications that they might end up seeking both, a process they started early this month when Anil Goswami, the designate Home Secretary visited Srinagar.

In 1988-89 when Kashmir was peaceful, J&K’s entire budget for the state police forces was Rs 67 crore. It has now swelled to Rs 3353.77 crore in 2012-13 and the state asserts that “it is not in a position to meet such huge extra policing requirements on its own.” It has suggested the “extra burden” be provided under Security Related Expenditure (SRE), an open ended account under which MHA owes Rs 296.20 crore to the state, Goswami, a J&K cadre IAS officer who will hold the crucial position later this year was told. Managing more resources for state’s pressing requirements is the key focus of the planners. And they are desperate even to get part of the resources from the Prime Minister’s Reconstruction Plan (PMRP) which is not delivering in key sector despite availability of resources and time.

PMRP was supposed to be the main game changer after Congress managed to become part of Kashmir’s governing circuit in 2002. The fully funded Plan was aimed at offering the ruling coalition, the soft power to build new infrastructure and help the state manage its surging infrastructure deficit. But its implementation lost the script somewhere in between.

The situation, right now is that the PMRP that would require Rs 24099.47 crore in five years is pegged at Rs 35261.04 crore plan after more than eight years. Now it needs a formal extension on y-o-y basis. Overall expenditure booked, so far, is Rs 14007.65 crore. The achievement at 39.72% is a huge question mark over the Plan. PMRP has three sections: one that central government implements directly; second that state government is implementing and third which is central government’s job but has been given to various state government agencies for implementation. And the worst part of the implementation is the doing of various central government agencies.

Bulk of the resource, now evaluated at Rs 22339.61 crore, which is 63.35% of the total ‘package’, was allocated to various central government agencies. Most of it went to major central government agencies like Border Roads Organization (BRO) and NHPC for implementing various mega-projects, some of which were already at various stages of implementation in the state. The expenditure booked in this part of the ‘package’ is only Rs 6988.91 crore, an achievement of 31.28%.

The only project that was completed within days after the PMRP was announced were the 1000 water-mills that were converted into tiny energy generators. It was army’s project. These projects closed with the same speed as they were implemented. NHPC’s two power projects in Ladakh were completed and by the end of 2013, its Uri-II will also be operational. The rest is in doldrums.

State government’s performance is better. It was assigned 19 projects with an overall fund requirement of Rs 6199.66 crore. So far, the state government has booked an expenditure of Rs 4849.89 crore thus achieving an implementation of 78.22%. It has completed 13 projects already. “There are certain areas in which the devolution of resources is slow like in rehabilitation of the people who live in Dal Lake and who are supposed to be relocated out of water body,” one officer said. “Against overall allocation of Rs 356 crore, we got Rs 83.18 crore and spent it. For the rest we need to wait.”

State government got another 23 projects which were actually outsourced to it by the central government. Mostly, these projects are schemes falling under health, tourism and creating some avenues for jobs. Against an overall resource requirement of Rs 6721.77 crore, the state government agencies have booked an expenditure of Rs 2168.85 crore making an achievement of 32.26%. Almost six projects have been totally completed.

State government officials said this part of the PMRP has certain flagship projects like creating a huge sewerage and drainage system for the twin capital cities of Jammu and Srinagar and a futuristic water supply set up for Jammu. These three projects, now shifted to JNNURM, require a cumulative resource of Rs 3763 crore. But in reality not a single penny has been received or spent on either of three mega projects.

PMRP has been a statistical jugglery by the central government that gave the ‘package’ a spin which it did not deserve at all. State government planners had sought not more than Rs 7000 crore from Dr Singh when he visited the state in 2004. Some of them were shocked to listen that the package was worth Rs 24000 crore. It took a bit of time to decipher the larger reality that Prime Minister Singh was getting cash from his one pocket and putting it in another and claiming that the money went to rebuild Kashmir. Prime Minister gave bulk of the money to the central government agencies which would offer no benefit to the state government. That is true with various BRO projects already in place as part of the strategy to counter Chinese roads approaching the LoAC. Same is true with NHPC project that will, at the most, fetch J&K 12% of its generations as royalty and nothing more.

The second ingredient of the package was intelligently gelling centrally sponsored schemes in the PMRP. Even if they would not have been in the PMRP, that resource would otherwise come to the state government. The actual benefit to the state was not more than Rs 6000 crore.

And the interesting part of the story is that the central government is unwilling to even dispense the allocated resource that J&K is seeking for other pressing requirements. Of late, state government is seeking rejig of the PMRP. “We are seeking release of allocated resources so that the state government would take-up the project directly or divert part of the resource to more pressing requirements,” a senior officer said. PMRP, for instance, had kept Rs 9955.19 crore for two power projects at Pakal Dul and Bursar. It was done at a time when NHPC was supposed to implement the two projects. After second thoughts, new decisions were taken. Pakal Dul is part of the JV that state’s fully owned PDC has with NHPC. Bursar is unlikely to come up because of serious environmental problems. “We are seeking release of this resource so that we can implement Pakal Dul and may be the Baglihar-II,” the official added.

Efforts to make rudimentary changes apart, the state officials have drafted another huge plan that they want the Prime Minister to approve. They call it PMRP-II (see the box: If Delhi Wishes). These are some of the projects that officials have assembled under one head.

But the PMRP-II is not a new idea. Policy makers have graciously given this name to the two thick reports that Dr C Rangarajan had drafted for the state.

Dr Rangarajan’s tryst with J&K started after Dr Manmohan Singh appointed him as head of an 11-member task force to frame a long-term plan for the integrated social and economic development of J&K on March 29, 2005. It had a huge mandate of identifying of sources of finance – locally, nationally and globally – to fund the development of the state and the projects it suggests. Besides, it was tasked to analyze issues, economic or otherwise, referred to it by the Prime Minister. It submitted its huge report to the PMO in November 2006.

Dr Rangarajan was in the middle of his assignment when a new job was created by the situation in May 2006. He was tasked to head one of the five Working Groups that the Prime Minister invited Round Table Conference on J&K had set up. The working group on the economic development was tasked to evolve a strategy that ensures (a) balanced economic development and employment generation and (b) balanced regional and sub-regional development within J&K.

The learned economist knew fully that all the initiatives on Kashmir lacks seriousness, he repackaged his earlier report as the WG report and submitted it to the Third RTC on April 24, 2007 in Delhi. He suggested various projects worth Rs 7947 crore but did not change the focus of his prescription. He suggested Rs 1750 crore for rural roads, return of Dulhasti power project to the state, creation of Special Industrial Zones (SIZs) and an asset reconstruction company (ARC). Officials said the report would eventually take the shape of PM’s Reconstruction Plan-II. It is this plan that officials are padding every time some VVIP comes flying to Srinagar.

Reports notwithstanding, New Delhi skipped implementing anything that would help trigger a change. The only major thing that was formally announced for implementation was a Working Group recommendation pertaining to the return and rehabilitation of the migrant Kashmiri Pandits.

During a visit to the state, Prime Minister Dr Singh announced on April 25, 2008 that Delhi would spend more than Rs 1600 crore for the Pandits’ rehabilitation in Kashmir. It envisages offering Rs 7.50 lakh to a family to procure a shelter under Group Housing Society that the government will set up. While more than 1200 Pandit youth were appointed in the state government and housed in secured places, there is nothing much that could happen. Recently, the MHA informed the parliament that not a single Pandit family availed the special package and returned home!

This is nothing very specific to economist Prime Minister. His predecessor Atal Behari Vajpayee did the same thing. Though his packages were the crude translation of political statement into currency, they suffered the same crisis. That was true with Devi Gawda and even Rajiv Gandhi as well.

But this cannot be said about the Special Task Force that the Planning Commission and the centre constituted at the peak of 2010 unrest. The idea was to engage Jammu and Ladakh regions at a time when the government projected appointment of interlocutors as a major concession for Kashmir. The Task Force headed by two members of the Planning Commission for two regions was development specific. They recommended an outgo of Rs 911.82 crore of which Rs 496.63 crore would go to Jammu, Rs 189.19 crore to Leh and Rs 226 crore to Kargil.

Interestingly, while the STF came up with the recommendation of spending a particular amount on specific projects identified by it, nobody talked about the resource that would fund it. Eventually, the Planning Commission asked the state that it should deduct funds for implementing the STF recommendations in the two regions. State government did not object despite the fact that there is no rationale of diverting part of the resources meant for entire state to a particular region. But it happened. So far the state plan money worth Rs 301.69 crore was diverted to implement the crudest special plan at the cost of Kashmir – Rs 142.80 crore in Jammu, Rs 56.40 crore in Leh and Rs 102.49 crore in Kargil, in last two years.

Now the state government is seeking resources for funding this special plan from Planning Commission. It will have to wait. Even state’s routine yearly plan is yet to be approved by the Planning Commission.