J&K: A Classic Case of ‘Aamdani Athanni Kharcha Rupaiya’


Anmol Gupta

Most of us usually make some purchase from the neighborhood grocery store.  Now, imagine a scenario where you went to the store with a big bag of money filled with billions of dollars just to buy a loaf of bread and being turned down by the shopkeeper as you did not carry enough money. This is no fiction but the situation that existed in Zimbabwe in 2008 when inflation reached a staggering 79.6 billion per cent (with prices doubling every 24 hours). The scenario known as hyper inflation has also taken place in Post World War I Germany, Afghanistan, Hungary etc among others. Faulty economics or govt policies are the most common reason for scenarios leading to hyperinflation. And, if not for the support provided by the emerging economic powerhouse that is India, this would have been the prevalent situation in Jammu and Kashmir. The advocates of an independent Kashmir must first understand the economic disaster that the state really is.

rupee-graph2  rupee-graph

The state of Jammu and Kashmir had total revenues of Rs 14,069 crores (including share in Central taxes of Rs 4,477 crores). Against these revenues the state had a revenue expenditure of Rs 31,503 crore and capital expenditure of Rs 11,588 crores (total expenditure Rs 45,091 crore). Further study of the state budget reveals that the state collected taxes of Rs 6,438 crore during FY 2015 and against that provided salaries of Rs 16,480 crores, constructed roads and created other infrastructure amounting to Rs 9,522 crores and serviced debts of the state. Now, here is a scenario where the state is spending 3.06 times its earnings. If, not for the central assistance of Rs 20,472 crores during financial year ’15, the economic crisis is the state would have even put Greece to shame. The case of Jammu and Kashmir is that of a reckless son who does not devote any time to work and spends lavishly because he knows that his father (India) will take care of everything.

The salary and pension bill of the government was Rs 16,480 crores during the financial which itself exceeded the total revenues. While India has a total of 1.87% of the population working as Central Government, State Government and PSU employees, it is estimated that the figure for J&K is as high as 6%.  The state has no private enterprise or industry to speak of and the prospects for tourism are harmed by the perennial protests taking place in the state.

Given the state of finances of the state, it comes as a surprise that against 25.70% people living below the poverty line in all of India, the figure for J&K in 2011 stood at 11.54%. Therefore, by ensuring an assistance of more than Rs 20,000 crore year after year, the central government has in a way chosen prosperity for the people living in J&K at the cost of the people living in the rest of India. From the stand point of economics, an average Kashmiri owes his life and livelihood to the assistance handed out by the central government

Rather than requesting for doles, the J&K government should work on a model for long term economic upliftment of the state. Firstly, there should be minimal recruitment by the government in its largely inefficient machinery and instead the focus should be towards creating a robust private sector. Owing to the lack of any factors of production, the state would always be at a disadvantage in case of the manufacturing sector and hence, the focus should be on industries that can derive advantage from the natural beauty of the state and also, industries like IT and Finance where there is no requirement of raw material. Even currently the state government is expecting a financial package of Rs 1 Lakh crore from the center rather than taking steps to boost investment climate in the state.

There should be a realization on the part of the Government and the people that by divorcing economics no state or region can truly progress. Greece has suffered because of the quantum of pensions and freebies being offered by the government and our state should also desist from the current ‘Aamdani Athani Kharcha Rupaiya’ Model.

The writer is a MBA in Finance and has recently shifted base to Jammu after working in various corporates for 8 years

U4UVoice does not endorse the opinion reflected in this article neither does the article reflect U4UVoice policy.


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