Two Kashmirs — one economy?

[Neo]

Two Kashmirs — one economy?

INDIA has not yet officially accepted Pakistan’s proposal for demilitarising the two parts Kashmir and according them self-governance under the joint management of Islamabad and New Delhi.

But if some of the leaks that have trickled out from the back channel process are to be believed, it has also not rejected it out of hand. Hurryiat which claims to represent the third party—Kashmiris—-has welcomed the idea. Parties sitting in the legislative assemblies of the two Kashmirs have so far refrained from expressing any real opposition to discussing the proposal.

But even if the idea gets the official seal of approval from all the parties to the conflict there would still remain one big question begging an answer: Would the two Kashmirs be economically viable and sustainable enough to be able to self-govern with reasonable level of political sovereignty?

This question needs to be answered before any further progress is made on this ‘out-of-the-box’ Pakistani idea because the limits and scope of self-governance which has been defined as something more than autonomy and less than independence would be decisively dictated by the level of the two entities’ economic dependence on their respective managers.

If it is going to be the same old story of India and Pakistan pumping resources into their respectively managed ‘self-governed’ Kashmirs to keep them economically afloat as they are doing today then the quantum of the respective political sovereignty of the two Kashmirs would perhaps also remain at the same level as it is today. This would happen because the hands holding the purse strings, even if not wanting to, invariably become too intrusive in the governing domain of the recipients.

So, in order to add some real meat to the proposal and make it really attractive and meaningful Pakistan needs to show to the other parties to the conflict, of course using reliable and verifiable economic data, that the two self- governing Kashmirs would be economically viable and sustainable without the need of large doses of periodic help from their respective managers. It is also incumbent upon the Kashmiri leadership which is aspiring to achieve a reasonable level of sovereignty in their land to start arguing in economic terms what they have so far been struggling to achieve.

On the face of it, if one went by the state of the economy of the two Kashmirs today, it seems that they cannot survive for long without regular and massive doses of handouts by their respective managers –to- be.

Take for instance, AJK. Last year’s size of the state’s budget was a mere Rs18 billion. But its own ability to finance even this size of the budget was no more than Rs2.65 billion plus royalty of about Rs1 billion from Mangla. The rest is financed by Pakistan. Across the LoC, the story is no better. New Delhi finances 100 per cent of the Indian Kashmir’s annual budget of which only 20 per cent is repayable.

The AJK has an area of 13,297 square kilometers and a population of 3.4 million. It has three main rivers—Jhelum, Neelum and Poonch. Before the earthquake the majority of the population depended on forestry, livestock and agriculture. And pre-earthquake unemployment rate was 35-50 per cent. And about 46 per cent of the AJK population had been living below the poverty line.

After the earthquake this ratio must have gone up steeply. Area under cultivation was 13 per cent of the total and most of it (about 92 per cent) is rain-fed.

Major crops of AJK are maize, wheat and rice and minor crops include vegetables, grams, pulses and oil seeds; fruits include apple, pears, apricot and walnuts. About 42 per cent of the total geographical area is controlled by the forest department.

After the earthquake the state’s economy has been reduced to a shambles. In the current year’s Pakistan budget an allocation of Rs50 billion has been made for rehabilitation and reconstruction of the earthquake devastated regions. A number of NGOs and foreign donors are also working on their own to contribute to rehabilitation and reconstruction work in AJK.

The IHK has an area of 101,387 square km and a population of seven million. The state is famous for its knit wear, shawls, silk carpets, kurtas and pottery. Its saffron is considered to be best in the world. It is also famous for its fruits and vegetables.

The Kashmir valley is a fertile area and it is famous for cold water fisheries. The area is also known for its sericulture. Often called “Heaven on Earth”, IHK’s mountainous landscape had remained favorite tourist spots until the early 1990s. The state’s infrastructure is in a bad shape and state monopolies in the forestry, power, and industrial sectors have become loss-making concerns.

Forests, the most important resource in the state cover 8,000 square miles. But forest industry has not grown because of government monopoly. IHK has been known throughout the subcontinent for its wooden furniture. But the growth of this industry has been constrained by resource shortages and lack of proper marketing and also because the craft of woodcarving is dying.

And above all marketing has also been adversely affected because the Jhelum River which was the traditional export route of state’s forest products flows into the AJK. And as a result of indiscriminate felling of trees over the last decade and half, the watershed has been destroyed and springs are drying.

So, the state of the economic health of the two Kashmirs is not all that good at present to be able to stand on their respective two feet immediately following the attainment of the powers to self-govern.

But then one cannot rule out completely the possibility of the two managing a level of economic sovereignty in due course of time with the help of both their respective managers and the multilateral aid agencies.

The timber industry, fruit processing and power generation can be developed to a level where these sectors can earn the two Kashmirs enough to pay for their annual budgets as well as for their import bills.

As it is, the AJK is in the process of being renovated with the best help of the world following the disastrous earthquake of October 2005. With proper planning and timely and efficient implementation the state’s physical infrastructure can be modernized in a matter of five years.

The economic activity all this would generate would create enough jobs for the able bodied and this in turn would place in the hands of the people a fair amount of expendable surpluses triggering consumerism leading to setting up of appropriate manufacturing and fabricating units.

And with the trading routes between the two Kashmirs reopening, the two would find it more economical and more convenient to access markets beyond India and Pakistan for their perishable and non-perishable exports. This will also set in motion a process for the re-integration of the economies of the two Kashmirs.

International aid agencies which had been denied access to AJK on grounds that it is a ‘sensitive area’ are now moving freely in the state after the earthquake. And now even the World Bank and the Asian Development Bank are said to have decided to invest heavily in both the Kashmirs.

So, perhaps Stanley Wolpert was right when during an informal talk in Karachi in December 2003 he said that the problem of Kashmir would be served more “by General Motors and General Electric, than by General Powell or General Musharraf. As big money comes the Kashmiris’ way, old issues would take a new dimension.”

And that there would be a massive economic fall out—all beneficial— for the South Asian region in general and Pakistan and India in particular, once they reach a peaceful resolution of the festering Kashmir dispute has never been in doubt.

As an immediate consequence, the colossal resources of men, material and finances ensnared at present by the 60-year old conflict would be released for mutually more constructive and uplifting activities. And in due course of time, Pakistan would become the economic hub of the region in a real sense while the Indian economy as it accesses the rich Middle East and Central Asian markets will get an immense boost.