by Syed Suhail Yaqoob
As per official data, Jammu and Kashmir had 8.47 lakh hectare agriculture land in 2005-06, which has shrunken to 7.94 lakh hectare till 2015-16. This means, the loss in a decade is estimated at 53,000-hectare farmland (equivalent to 10, 60,000 kanal), which has been converted for non-agricultural activities across Jammu and Kashmir.
In the Kashmiri language when somebody eats too much, he or she is referred to as Bateh-Jin (glutton). It is very difficult to find the origins of this word. We can however guess that it describes a situation when a person or a nation consumes too much and still the wants are insatiable. The Kashmiri language is full of creative words and idioms that meticulously describe a certain situation. The word Bateh-Jin is one of these wonderful words.
Kashmir has witnessed many horrific famines throughout history. We have frowned on people consuming too much as it might lead to famine and hunger. Open a book on economics or religion about debt. Both of these desist debt trap because it, in long run, results in recessions, poverty, and stress in the population. The world recession of 2010 that caused a spike in unemployment and poverty was due to the debt trap. Further both economics and religion is clear that too much consumption is bad in the long run and moderation in consumption is required. The basic economics suggests that debt can only arise when people or societies consume more than they produce.
Are people of Kashmir gluttons? Do we consume too much? The statistics about the state confirm the point. The debt to gross domestic state product was as high as 45 percent in 2015-16. Further, the data states that the fiscal deficit has remained as high as 5.5 percent during the decade. It is projected that if the current scenario keeps on for a long period of time the state’s revenue deficit will be close to 6 percent and the fiscal deficit will be 11.96 percent by 2024-25; a 26 percent increase in its outstanding liabilities.
The concern further increases as the Developmental Capital expenditure is persistently decreasing from 2011-12 to 2014-15 “indicating that the developmental works were getting inadequate resources. A report in Kashmir Life (March 19, 2021) indicated that the state’s liabilities have passed over Rs 830000 crore rupees. Official documents have revealed that the state’s debt has piled up to 83537 crore rupees by 2019-20 up by rupees 4513 crore in the preceding year. The documents revealed that Rs 13,487 crore liabilities were raised by Jammu and Kashmir in 2018-19 and Rs 11999 crore in 2019-20. The liabilities include Rs 34291 crore market borrowings, Rs 1237 crore loans from the centre, Rs 3370 crore special securities issued to the National Small Saving fund, Rs 3374 crore borrowing from financial institutions/banks, Rs 692 from Ways and Means provident fund, and Rs 9709 crore from reserve fund /deposits.
The CAG Report
A report of the Comptroller and Auditor General of India on Jammu and Kashmir’s finance brings out a disturbing trend. According to the report the State’s share in Union Taxes and Duties and grants from the Union Government together constituted 69.51 percent of the total Revenue Receipts during 2012-13 which has increased to 71.67 percent during 2016-17, resulting in an increase in revenue surplus with a consequent decrease in the fiscal deficit. The non-debt resources transferred by the Central government through the State government accounts have increased from 60 percent in 2012-13 to 62 percent in 2016-17.
The data shows the high dependence of the state on the centre. The State could not maintain its revenue surplus which declined from Rs 1100 crore in 2012-13 to Rs 70 crore in 2013-14 and to a deficit of (-) Rs 390 crore in 2014-15 and (-) Rs 640 crore in 2015-16, due to shortfall of the States’ Own Non-Tax Revenue and Grant-in-Aid vis-a-vis, projected Receipts.
The data suggests that the state is nowhere close to fiscal autonomy. The basic rule of economics is that it is better to spend more on capital goods rather than consumption goods as in the long run the production will be enhanced. The same report suggests that our capital expenditure is way below the revenue expenditure, which increases the risk of dependence on the centre.
As if the state’s dependence on the centre was not enough, Jammu and Kashmir is importing more than it exports to other states. A report suggested that Jammu and Kashmir imported goods worth Rs 58,050 crore in 2017-18. Signifying the state’s rising dependence on outside supplies each passing year, Jammu and Kashmir has witnessed more than a 50 percent increase in its imports in the last seven years. The exports, however, recorded in 2017-18 were only Rs 30,406 crore; a trade deficit of Rs 27644 crore.
In contrast, in 2011-12 the trade deficit was Rs 15,858 crore with exports worth Rs 12,370 crore. In 2012-13, the trade balance was Rs 18,211 crore. Imports in this fiscal were recorded at Rs 30,906 crore and exports Rs 12,695 crore.
In 2013-14 trade balance was Rs 18,379 crore, imports were Rs 34,297 crore and exports were Rs 15,918 crore.
Trade deficit in 2014-15, Rs 15,846 crore, exports were Rs 19010 crore, imports Rs 34,856 crore.
In 2015-16, trade deficit was Rs 17,281 crore, imports stood at Rs 37,480 crore, exports Rs 20,199 crore.
In 2016-17, the trade deficit was Rs 16,856 crore, exports and imports were Rs 22458 crore, Rs 39,314 crore respectively.
Experts believe that rising dependence on imports is impeding the growth of Jammu and Kashmir. Not only our dependence on outside states is increasing but the dependence has affected our industrial development.
The main concern is our dependence on food imports. In 2016-17 the food imports have reached to its highest level of 1lakh metric tonnes. In 2002-03 the state imported 503 thousand metric tonnes of food grains, which rose to 952.55 thousand metric tonnes in 2016-17 due to shrinking farmlands.
Jammu and Kashmir has lost an estimated 10 lakh kanal agricultural land to non-agricultural purposes in the past 10 years primarily because of the failure of the government to curb the practice.
As per official data, Jammu and Kashmir had 8.47 lakh hectare agriculture land in 2005-06, which has shrunken to 7.94 lakh hectare till 2015-16. This means, the loss in a decade is estimated at 53,000-hectare farmland (equivalent to 10, 60,000 kanal), which has been converted for non-agricultural activities across Jammu and Kashmir. The unabated conversion has become a major cause for the spurt in food imports. In the last three years, the import of food grains has witnessed a considerable increase from 756.60 thousand metric tonnes in 2014-15 to 952.55 thousand metric tonnes in 2016-17.
In order to avoid the collapse of the economy, the government must manage its finances well. The government must work out a long-term plan to reduce imports and dependence on the central kitty. The government has to target the 3 percent fiscal deficit set by the finance commission. Further, Jammu and Kashmir can also check the imbalances in the export and import and take drastic steps to check the unabated conversion of agricultural land for non-agricultural purposes.
(The author is a pursuing PhD in economics from the AMU. The ideas area personal.)