FEBRUARY 2008

Baba Ghulam Shah Badshah University, Rajouri

185131 (J&K)Announces Admission for Academics Session 2008-09

Epilogueb e c a u s e t h e r e i s m o r e t o k n o w

THE MONEY MOVEMENTTHE MONEY MOVEMENT

THE MONEY MOVEMENT


THE MONEY MOVEMENTTHE MONEY MOVEMENT THE MONEY MOVEMENT

THE MONEY MOVEMENT THE MONEY MOVEMENTTHE MONEY MOVEMENT THE MONEY MOVEMENT





THE MONEY MOVEMENT THE MONEY MOVEMENT

www.epilogue.in

Editor in ChiefZafar Choudhary

Consulting EditorD. Suba Chandran

Associate EditorIrm Amin Baig

Executive DirectorMohammad Yasmeen

Mailing AddressPO Box 50, HO Gandhi Nagar,

Jammu

Phones & emailEditorial: +91 94194-80762Administration:+91 [email protected]@[email protected]

Edited, Printed and Published byZafar Choudhary for CMRD

Publications and Communications

Published from ‘Ibadat’, Madrasa

Lane, Bhatindi Top, Jammu, J&K

Printed at Dee Dee Reprographix, Jammu

Disputes, if any, subject to jurisdiction

of courts and competitive tribunals in

Jammu only.

Price : Rs 40

CONTENTS

Letters to the editor 2

Prologue 3

Dialogue

6

Special Reports

Zafar Choudhary 11

Dr Ashok Bhan 13

Pawan Bali 16

Anmol Sharma 18

Kashmir Politics

36

Report

43

Columns

Tareekh 45

Jest Ponder 47

Review

Movie 49

Epilogue

From the Consulting Editor 50

Haseeb A Drabu

Separatist Unity :

Alliances of Compulsion

Situation in J&K and

Contours of Future Strategy

Volume 2, Issue 2, February 2008

IN FOCUS

THE MONEY MOVEMENT

Budget 2008-09 : Political Courage 20Sans Innovation ?

‘Figures Fuged, 25Statistics Faked’

‘We Have Brought Turn 27Around In Economy’

‘J&K Is Headed For 34A Severe Debt Trap’

Epilogue Ø × January 20081


2002-032008-09 (Projections)

Army Chief appreciates Epilogue Add monthly chronology

The Chief of the Army Staff has gone

through the Epilogue magazine and has I have been reading Epilogue very

conveyed his appreciations to you for keenly ever since it was launched

bringing out such quality magazine. January last. In a short span of time, the

magazine has established itself as a BRIG SK CHATTERJI reputed and credible source of

Deputy Director General,information which has been missing in

Public Information, DGoMI the mainstream media. I would

appreciate if you consider a couple of

suggestion –one that it is a monthly

Keep the mission alive journal and therefore it should carry a

chronology of the main events of the I got an opportunity to have a look at preceding month and second the Epilogue magazine and found it up to the

magazine should have a regular section mark, I hope you will keep up your

on economy of Jammu and Kashmir. mission and come forward for the rescue of he people, who are reeling under the cruel feet of the present government. Expand area of coverage to entire J&K

ANU GUPTA University of Jammu ASLAM KHAN We are greatly appreciative of your

Via email magazine which has provided an

alternative to mainstream coverage of

events in Jammu and Kashmir. We, Resume column on travel Why rural reports missing

however, feel that to garner greater

readership, your articles should cover all Your regular column on travel has been I saw a letter to editor in your magazine regions of Jammu and Kashmir including missing for last three months. Named as some three months back which the Pakistan occupied Kashmir, Gilgit Travelogue, the regular column served as suggested doing some more work on and Balochistan and also the adjoining a good source of information on the rural reporting. Your editorial stuff is Pakistan. This would meet aspirations of destinations in Jammu and Kashmir. We yet to include reports from the margins. region specific readers and also provide are told that every place in your state is Please consider doing this lest the an over-arching compendium to worth visiting. Could you please think of magazine is seen addressed an elite interested analysts. resuming the column with some audience.

additional information on mode of

transport and stay options. BRIG ABHIJIT GUHA

AATIF SHEIKH BGS (IW) Northern Command

NAZIR KA Kishtwar(Now GoC, Third Division, Leh)

Kochi, Kerala

M A I L B O X

LETTERS TO THE EDITOR


LettersMail your letters to [email protected]

Sincere effort

I have been reading

Epilogue magazine

regularly. I appreciate the sincerity

of efforts that go into making of this

magazine.

Sachin Pilot

MP, Lok Sabha

Invaluable source on J&K

Epilogue Magazine is excellent. It is indeed an invaluable source of information on our state –Jammu and Kashmir

Pervez Dewan, IAS Chairman and Managing Director, ITDC

P R O L O G U E

FROM THE EDITOR


January was literally a month of to be some alliance. This has National

political upheaval in Jammu and Conference exasperated and requiring

Kashmir. An expansion of state cabinet it to built an aggressive posture against

was followed by the last budget session the government. There was hardly any

of the state legislature. State is headed day when the opposition allowed

for general elections later this year. The smooth proceedings of the assembly

government had obviously wanted to which met for its last budget session

showcase its achievements of past five January 7 onwards. The Finance

years to consolidate the public mood in Minister was not allowed to make a

its favour. The opposition which reply to the discussion on budget as

appeared at a weak footing, despite opposition demanded his resignation

strong in numbers, also came up with a for his alleged involvement in the

renewed strategy to take on the irregularities in Forest department.

government. In fact, the opposition D i s cu s s i on s on the budgeta ry

National Conference had little to a l l o c a t i o n s o f mo re t h an 2 5

actually behave as a strong opposition departments were not allowed to be

all these years when the ruling alliance held and the assembly had to be

partners –the Congress and the Peoples adjourned sine die ten days ahead of its

Democratic Party –continued to be schedule. It will be misplaced to

drawn into murky battles within. With conclude here that what National

the alliance partners washing their Conference did was just for the sake of

linen in the public, the National it. There was a definite cause of action.

Conference probably was waiting to There were allegations of corruption

cash in the opportunity to see fall of the against many functionaries of the

coalition government and then enter government including Ministers.

into a possible alliance with the Eradication of corruption, it may be

Congress to regain the lost power. This mentioned here, has remained one

apparently was the reason that the single top most agenda of the coalition

National Conference for over two years government ever since it took over in

behaved more or less like a friendly ally November 2002. Ironically, the end of

of the Congress. However, in first week the day the allegation are against

of December last year, the Congress and g o v e r n m e n t i t s e l f . T h e m o s t

the Peoples Democratic Party decided unfortunate part of the story, however,

to bury their differences and resolved remains that instead of coming clear on

to strengthen their ties and work the allegations, the government has

towards a renewed alliance for chosen to level counter allegations

forthcoming elections. It is unwise to against the National Conference for

predict as what political situation what they did before 2002. Probes may

emerges later this year but as of now bring the truth to fore in due course of

none of the major political parties –the time but in the meanwhile the message

Congress, the PDP or the National going to the public reads, we are

Conference –are in any position to form corrupt but lesser than National

the government at their own. There has Conference.

An Elegy To Transparency

Zafar Choudhary


EPILOGUE aims at providing a

platform where a meaningful exchange

of ideas, opinion and thoughts can take

place among the people and about the

people of Jammu & Kashmir. The

attempt is to research, investigate,

communica te and d i s semina te

information, ideas and alternatives for

the resolution of common problems

facing the state and society of Jammu &

Kashmir and in the context of their

significance to South Asia as a whole.

We welcome contributions from

academics, journalists, researches,

economists and strategic thinkers. We

would also like to encourage first-time

writers with the only requirements being

a concern for and the desire to

understand the prevailing issues and

themes of life in Jammu & Kashmir

Contributions may be investigate,

descriptive, analytical or theorectical.

They may be in the form of original

articles or in the form of a comment on

current events. All contributions have to

be neatly types in double space and may

be sent to the address given alongside or

e-mailed to the editor.

While the editor accepts responsibility

for the selection of the material

published, individual authors are

responsible for the facts, figures and

viess ithe tier articles.

H E A R A N D H E A R

WHO SAID WHAT


“We cannot lower our guard, whether on the borders or in the interior'”thLt. General (Retd) S K Sinha (During his speech on 59 Republic Day)

“Every single person in the State is under debt of Rs 10655”Dr Mehboob Beg, NC leader, reacting to the State Budgt

“Gun is not solution - be it in the hands of the troops or the militants”Mufti Mohammad Sayeed, People's Democratic Party (PDP) patron and former Chief Minister of J&K, during a meeting in Samba

“I was forced to pay Rs 40,000 to a Special Assistant of a Cabinet Minister to get

my sister's genuine work done in the Civil Secretariat”Shoaib Lone, MLA during his speech at the Legislative Assembly

“We are at a crucial stage of the freedom movement.

We swim together, or we sink together” Shabir Shah on his return to the Hurriyat Conference led by the Mirwaiz

“Pakistan cannot arrest me. I live on my own soil”

Syed Salahuddin leader of the United Jehad Council

At 24 places, Kundalreport says the wrongsof Forest Officers hadapproval of Minister....... still the government maintains that there is no direct involvement of any minister

Ali Mohammad SagarNational Conference

Various TV News Channel

Cm’s life under

threat. Gardner,

telephone operator in

collusion with

militants

January 1: January 15: in the State Legislative Assembly said,

during 2007, 148 persons lost lives in 476 Chief Minister Ghulam Nabi Azad expands Minister for School Education and militancy incidents.his Council of Ministers by inducting four President of state unit of Congress

more Ministers –all from Congress. Mula Peerzada Mohammad Sayeed is sacked

Ram and Abdul Ghani Vakil are inducted following allegations from a legislator January 18: as Cabinet Ministers while Ghulam that he paid Rs 40,000 to Minister's The Legislative Assembly passed a bill to Mohammad Saroori and Chowdhary Gharu personal staff for getting a work done set up Shri Shiv Khori Shrine Board Ram are inducted as Ministers of State. from his department. (SSKSB). According to the Bill, 20 per cent

of the shrine funds is likely to be spent for

January 2 : development of Reasi and areas

surrounding it.Union Minister of State for Commerce Jai

Ram Ramesh says that A. V. Thomas,

world's largest wallet making company January 21: has desired to set up at leather wallet At Mandigam village near Handwara in making unit in Kashmir Kupwara district, three militants of

Lashkar-e-Toiba have been killed at the

January 7: residence of two activists of the ruling

People's Democratic Party (PDP).State Legislative Assembly meets for its

advanced budget session which began at

a noisy note amidst boycott of joint January 25: sitting by the opposition National Security forces gunned down Bashir Conference and protests in the Central Ahmed alias Sabba Hajia, of Harkat-ul-Hall by Panthers Party. Jehad Islami (HUJI) outfit, in Kishtwar,

He was believed to be behind the serial

January 10: blasts in Uttar Pradesh in 2007.

Mangat Ram Sharma, Minister for Health

and Medical Education announced in the January 26: January 16: Legislative Assembly that the coalition Justice Adarsh Sen Anand, former Chief

partners are committed to the Finance Minister Tariq Hameed Karra Justice of India and former chairman of Delimitation Commission, which is a part presented annual Rs 18443 Crore budget National Human Rights Commission, Mian of the Common Minimum Programme and for the financial year 2008-09 Bashir Ahmed, veteran Gujjar spiritual they would introduce the bill in this and political leader, Prof Amitabh Matto, session itself. January 17: Vice Chancellor of the Jammu University

and Mohammad Yousuf Taing, MLC and As many as 66 passengers of Karvan-e-January 11 : former Secretary Culture Academy were Aman bus crossed sides at Kaman, the

given Padma awards. Justice A S Anand Jammu-Srinagar National Highway was last Indian military post on the Line of has been awarded Padma Vibhushan, reopened for the traffic after being Control (LoC) in Uri sector in north Kashmir.Mian Bashir Ahmed Padma Bhushan while closed for three days due to landslide at Prof Mattoo and Mr Taing have been Panthyal January 17: awarded Padma Shri.

Deputy CM Muzaffar Hussain Baig says January 12: that he State Government has proposed

January 30: Security forces gunned down three to establish a residential and technical The Speaker of State Legislative militants of Lashkar-e-Toiba (LeT) in University in the State to offer Islamic, Assembly Tara Chand adjourns the Doda district scientific , technical and other education

as also utilization of finances of Jamiyat- session sine die, ten days ahead of the e-Ahalihadees, Salfiya Muslim Education schedule, following unprecedented January 14 : Trust and Wakf Tanzeem Trust protests from the Opposition National Shabir Shah, chief of the Democratic

Conference seeking resignation of two Freedom Party (DFP) returned to the All January 18: Parties Hurriyat Conference (APHC) led Ministers for their alleged role in the

by Mirwaiz Umar Farooq. Taj Mohiudin, while answering a question Forest scams.

C H R O N O L O G Y

J&K JANUARY 2008


Sacked: Peerzada Sayeed

You joined Jammu and Kashmir numbers had to sanctity and lacked would vitiate fiscal balance. There were government as economic advisor in credibility. large information gaps that needed to be January 2003. Can you please recall plugged in before a complete fiscal your assessment of state's economic position could be worked out. The Can you imagine that in the preceding position at that point of time? We heard

government, for instance, had no five years (before 2003) there was no from the present government that estimates of the off-budget borrowing discussion on the plan? There was total there was a fiscal crisis in 2003. and guarantees given by it. Therefore, lack of information. The Finance Minister However, in June same year, the we could have faced a default. There government presented a Zero Deficit would give a figure of Rs 5000 Crores and might have been borrowings that weren't budget. How do you explain this revised estimates would suggest Rs 2000

journey? provided for in the budget. My proposal Crores. It was a fiction. I wonder how was agreed to and we started working on things used to move without having an new scheme of things. My f irst experience was quite advance meeting with the Planning

disappointing at the state of affairs. On Commission.

January 4, 2003, the Finance Minister After five years of Zero Deficit budget, Muzaffar Hussain Baig called me to his now we hear that the brain behind this The system was in disarray. Therefore I office chambers in civil secretariat for a innovation was yours. Please share suggested the Finance Minister (Muzaffar meeting. When I went in, the Minister with us the inside account of this Hussain Baig) that instead of presenting had with him Finance Secretary and budgetary balance and innovative term budget we should look out for a Vote on Planning Secretary. The issue being which was hitherto unknown to Jammu Account for three months till we arrive at discussed was debt servicing of Baglihar and Kashmir. a complete understanding of the system hydro-electric project. The state was

and fix the problem areas. It made no heading for a default on January 6. On

sense to present a budget with a budget See the problem is very simple to Baglihar project, it was a complete off

deficit of Rs 1,600 crore or a fiscal deficit understand. There are three types of budget borrowing. This set me off with

of over Rs 2,000 crore. The Finance deficits. Fiscal deficit reflects thinking that there is something wrong

Minister got the point; we both met the borrowing. Revenue deficit means short with the whole fiscal mechanism. The

Chief Minister over the issue. As on revenue and what exactly budget deeper we looked, the messier the

expected, the Chief Minister asked that deficit means is your total expenditure situation emerged. There was a

why to postpone the budget and seek minus total receipts. This shortfall is complete adhocism in the system. The

Vote on Account. called the budget deficit which can be approach of the predecessors, as I

mopped up only by printing notes and gathered from my initial look at the

nothing else. States can not have budget I quickly gave him the outline of the system, was completely adhoc and deficits because they do not print notes. problem as I saw it. The plan size hadn't unprofessional. I could gather that there If you can not print notes and your budget been finalised and that meant we would was no application of mind. It was an still shows deficits this means that the have a fictitious number in the budget. entirely loosely knit system where part of the budget corresponding to the And once the plan size was assumed in estimates would crop from the bottom deficit is unfunded. This reflects the budget without resources in sight, it while there should have been a mismanagement. Therefore, the budget was bound to be financed by higher formulation of estimates from the top. It should have zero deficits. borrowings from institutions and that was more like a fiction. The budget

Dr HASEEB A DRABU, the Chairman of Jammu and Kashmir Bank and Economic Advisor to the State Government, is a perceptive economist and a meticulous planner. In a freewheeling discussion with ZAFAR CHOUDHARY,

Editor-in-Chief Epilogue Magazine, he shares his ideas on J&K’s economic scenario and explains growth story of his bank.

D I A L O G U E

H A S E E B A D R A B U


J&K is a Rich State

Run by a Poor Government

Interview with Dr Haseeb A Drabu

It is been five years that you have been are not paying for what they get. Take to wall and many of them closed down

the power budget out and there are no their branches. The Jammu and Kashmir adv is ing Jammu and Kashmir

taxes on anything else. For example Bank stayed back and served the people. government on economy. How much,

agriculture and horticulture sectors are There was a huge business growth. do you think, the state has benefited not taxed and industry is enjoying a slew from your advices. Can you please of exemptions. Sooner or later these gaps enlist the major reforms? The third phase was the phase of will have to be filled up to support consolidation and it coincided with my finances of the government. arrival at the helm of affairs. See, the My influence is peripheral and limited. I

story of 1990s was quite simple –we generally sit outside the system. But I can benefited by exit of other banks and got Suggestions…claim credit for few things. One, that we business in huge volumes. The latest brought professionalism in the system phase invo lved a s t ra tegy o f and ensured a complete transparency. See, there are some important areas consolidation and improvement in

The level of information shared with the which need rethink. For example quality of service. The strategy was not

public is larger than what was there planning has to be totally based on more of only lending but also investing in

e a r l i e r. T h e Pr i m e M i n i s t e r ' s understanding of the whole structure. government schemes at low interest

Reconstruction Plan is another area The Finance Minister needs to have some rates. My coming in at this position was

more flexibility. Unfortunately, in an era where I feel that I played definite role. marked by three things:

of centralized financial management, The separation of power budget from the

the State Finance Ministers will soon be main budget is another area where my th * Interest revisionreduced to the 12 man in the cricket inputs brought discipline in the system.

* Rise in interest rates andteam. Therefore, the Finance Minister * People going back to other should get some more flexibility. A re-How do look at the debt burden

bankslook at the plan methodology is essential. problem of Jammu and Kashmir. Is it We should plan in a different manner –say fiscal or macro-economic? It is growing to have sub plans etc. The government Looking at the prevailing scenario, we by ever year. Your assessment of the should also focus at putting in place a did a quick change in strategy. Instead of problem please. strong institutional capacity for lending endless ly we tr ied to implementing the economic policy. The consolidate. Our growth in 10 years had

Well, debt burden is a problem of slower economic policy too needs to be re- been quite explosive so we gave a pause growth. If you grow fast, the burden will structured to have a special emphasis on and worked out improvements in the come down. There is a wrong impression social infrastructure. Another most internal system. We were provided for 40 that Jammu and Kashmir has a huge debt per cent NPAs which we revised to 75 per important thing –the government should burden. Your debt has to be seen in cent. We brought a complete look at corporatising a large part of its relation to SDP of the state. Compared to transparency in the system. You may note operations. In this direction a beginning other states in the country our position is that first time in the history of any bank, can be made with the Power far better. our balance sheets for two consecutive Development Corporation and I am sure

years had no qualification alters. This this will yield tremendous results. speaks of transparency in the system. How do you look at the overall

economic scenario of Jammu and The Jammu and Kashmir Bank has been Kashmir? Jammu and Kashmir is a At what position do you rank your bank growing with enormous pace. Please

in terms of public trust and growth in resource rich state but still it is seen as explain the growth story of your bank. the country? poor in outlook. What are your

suggestions for making this state The growth story of Jammu and Kashmir

economically vibrant? Jammu and Kashmir Bank has been rated Bank goes back to history when this bank as one among the 150 most valuable came up in 1938. The major phase of companied in India. Our public trust is Jammu and Kashmir is a rich state run by growth, however, was in 1970s when the enormous and growth stupendous. a poor government. The natural Bank moved out in the state and

resources of the state are rich but elsewhere in the country. The second finances of government are poor. There What is your Bank's role in micro-phase of growth was in the 1990s. The are obvious gaps in the system. People enterprise in Jammu and Kashmir. Can civil strife had pushed most of the banks

D I A L O G U E



D I A L O G U E



we expect you taking some lessons sheer accident. And then coming to As we know that you were brought into

Jammu and Kashmir was rather a bigger Jammu and Kashmir government as from the Grameen Bank of Bangladesh accident and not a decision by careful Economic Advisor by then Chief which earned Dr Muhammad Younis design. Minister Mufti Mohammad Sayeed. Nobel Prize.

Some people say that somewhere in

early 1990s you were speaking at a Going back to my school days, I was poor See, what Grameen Bank did has always Seminar in De lh i where you at sciences. In my higher secondary been a part of our operations. What all disapproved of land reforms policy of examination, I failed in Chemistry. This we have in Jammu and Kashmir is small Sheikh Mohammad Abdullah and Mufti made me to change the choice of my and tiny enterprises and financing them spotted you there as the right person subjects. I shifted to Amar Singh College is a part of our portfolio. However, we suited to his ideology. in Srinagar and took up Arts stream –with can not exclusively devote ourselves to

Economics as one of the subjects. this sector alone and we need to look at Meanwhile, I developed keen interest in I don't know any such thing but let me say the big enterprises as well. Economics. I continued with Economics that I have deep appreciations for Sheikh

at University of Kashmir and topped in my Mohammad Abdullah's economic policies. Right or wrong, but there is a general MA degree. Then I shifted to Mumbai and Mufti might have heard me at some perception that the growth story of joined the Center for Development seminar but let me tell you that my first Jammu and Kashmir Bank is directly linked Studies, then headed by Mr KN Raj. The entry to Jammu and Kashmir was in 1996. with poverty of Jammu and Kashmir environment there changes my way of In fact, Dr Farooq Abdullah's Chief government. Some people feel that the life. Meanwhile, I got a job in the Secretary Ashok Jaitly knew about me government is your biggest borrower and Planning Commission during VP Singh's and I was made a member of Madhav the interests you earn thereupon regime where I became of member of a Godbole Committee on Economic make your bank rich. Comment… high powered group and wrote a paper on Reforms. My association with Jammu and

employment. I was taken as a member of Kashmir government dates back to 1996.

Economic Advisory Committee to the (Laughs) This reflects a total lack of Prime Minister, headed by Mr Bimal information and understanding. Our total In 2002-03 two persons had suggested me Jalan. Later, I met Mr C Rangarajan, who lendings are of more than Rs 23,000 to work with Jammu and Kashmir was then Deputy Governor of the Reserve crores while what all Jammu and Kashmir government –KC Pant and Dr Manmohan Bank of India and I was made a member of government owes is something around Rs Singh. In fact, I had settled down in the Finance Commission. When 2000 crores. Therefore, it is only eight Mumbai when Dr Manmohan Singh called Rangarajan retired from the RBI as per cent of the total interest which we me in Delhi and asked to go to Kashmir. Governor, he recommended me to Mr KC get from the government. 92 per cent of Pant for a role in the Planning our interest earnings are from outside

What role do you aspire to take up after Commission. the government. So where is the question your term with the state government of linking bank's growth to the poverty of and the Jammu and Kashmir Bank is government? Sometimes later, I realized that I was sick over. Can it be a role with World Bank,

and tired of the government jobs and IMF or Planning Commission? then I moved to the newspaper (Business What would the J&K Bank look like two Standard)years later?

I have already worked with the

organizations you have named. Honestly Some experiences from Business Regional in origin speaking I want to retire after my present Standard…? National in profile assignment. I am saying this from the

core of my heart. International in quality of operations Well, that was the stint I enjoyed most in

my life. I was sitting at a powerful Can we see you performing a larger role Can you please share with us something position and my writings wielded a lot of in Jammu and Kashmir politics? about the making of Dr Haseeb Drabu impact. The Corporate world sometimes –the economist? People don't know appeared worried. My regular column in much about you. No, I am happy with what I am doing. the Business Standard would often come

Well there is not much about me which Even otherwise I believe one can perform under discussions in Parliament. That people should be keen to know but my better being outside the politics. was most satisfying experience. becoming an economist was a matter of

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S P E C I A L R E P O R T S

TRANSPARENCY


All pervasive if this does not describe It is natural for the opposition to take on Conference got the necessary impetus

the menace of corruption in Jammu and the government in a bid to convince the to push the government to wall.

Kashmir, the recent fuss does say so. On electorate that the choices should be Pressure was mounted and chief

a daily average each sitting of Jammu reconsidered. To that extent, the Minister was literally compelled by NC

and Kashmir legislative assembly costs National Conference played it well. But Legislators, Particularly Abdul Rahim

the state exchequer rupees one crore, the coalition government, which had Rahter and Ali Mohammad Sagar to

claims Deputy Chief Minister Muzaffer listed corruption as it top agenda, will table the (BR) Kundal Report on

Hussain Beig. By a modest estimate Rs. eventually become so weak in defence irregularities in Forest Department.

20 Crore must have been lost till the was least expected. The government Agreeing to table the report in the

speaker Tara Chand adjourned the did have a number of things to list in House, the Chief Minster sought to

House sine die on January 30, ten days defence, but in the dominant din the assure the members in the Legislative

a h e a d o f s c h e d u l e a m i d s t a ruling regime was caught on the wrong Assembly that no minister has been

pandemonium and ruckus in the house. foot. indicted by the probe panel.

Unprecedented indeed, demands on

grants of all departments worth Rs. After compulsive resignation or sacking This clarification came from the Chief 1911336.19 lakhs sand many bills were of Education Minister Peerzada Minister at a time when opposition had passed without any discussion. Reason : Mohammad Sayeed, the government yet not cast any aspersion on role of the ma in oppos i t i on Nat iona l suffered a severe blow to its public Minister(s) even though the media Conference continuously stalled image. The opposition National reports had earlier indicated this. proceedings of the House demanding

resignation of two ministers on

corruption charges even though one

senior cabinet minister had been sacked

earlier this month after a legislator

stunned the house with revelations that

he had to pays Rs. 40,000 to the

Ministers ' (Peerzada Mohammad

Sayeed) driver to get a work in

secretariat done.

This was the last budged session of the

present legislature and one had

expected some landmark legislations

and debates in the assembly as later

this year the state heads for fresh

assembly elections. 'Corruption' was

perhaps the one big word and one big

issue which dominated the proceedings

since January 7, when the legislature

met.

Politics takes a different turn during the

election year there is nothing new in it.

Zafar Choudhary

Tackling Corruption :Trends Reversed?

NC MLA’s protesting against corruption in legislative assembly

Interestingly, while the government all

along goes on defending the ministers,

even a cursory glance at the Kundal

Committee report would reveal that the

Forest Minister (Qazi Mohammd Afzal

and his predecessor Tariq Hameed

Karra, though not identified by name)

have been nailed 24 times for approvals

to the wrongs for which the officers had

been indicted and severe strictures

passed against them. It makes one to

doubt on whether head of the probe

panel compiled his report sparingly or

the government is turning blind to all

those paragraphs (in the report) which

conclude that the scams had approval

of the Ministers. The Ministers, Commission's affairs. It has been lying however, continue to stick to the chair headless for close to two years now. The and government refuses to read those SAC did receive an overwhelming public lines.response against corruption. More then

1700 application have so far have been The Paradox :

received and many decisions delivered

aga i n s t s en i o r M i n i s t e r s , t op Remember the first session of the bureaucrats and other functionaries in present assembly and first promise the cases of corruption and misuse of government made. It was in November official authority. Ironically there are 2002 that Mufti Mohammed Sayeed took some missing links. All such decisions over a Chief Minister and declared war have been stayed by the High Court. against corruption. Recalls the senior Besides SAC, the State vigilance Peoples Democratic Party leader and organization was re-energised to weed Deputy Chief Minister Muzaffar Hussain out corruption from public life. Radha Baig, “I asked Mufti saheb that I want to Vinod Raju, a police officer of high do something big for common good, integrity, was brought in by Mufti please suggest me what it should be... regime to wield the tough baton of war he asked me to work on a legislation for against corruption.setting up of State Accountability

Commission (SAC).” With powers and During Mufti's tenure as Chief Minister

status of the High Court, the (Nov 2002 to Nov 2005) some 60 officers

Accountabi l i ty Commiss ion was were terminated from the services as

supposed to be the highest anti-government, claimed established cases

corruption ombudsman empowered to of corruption against them. The most

probe complaints and try public men high profile case of Mufti's regime

including the Chief Minister and against corruption was the one which

Ministers. This underlines the priority involved a top IAS officer Ajit Kumar. In

which the present government has been fact this reiterated before public the

claiming from the day one. The government's seriousness of an

Commission was set up after an unsparing was against corruption.

inordinate delay, however, a year later

its chairman resigned after going public When Ghulam Nabi Azad took over as with the a l legat ions that the Chief Minister in 2005, he renewed and government was interfer ing in


TRANSPARENCY


The most high profile case of

Mufti regime against corruption

was the one which involved a top

IAS officer Ajit Kumar.

The crusade against corruption

was renewed with more vigour

and resolve when Azad took over

as CM in Nov 2005.

In August 2006 Azad sacked 15

officials for established case of

corruptions against then. Most of

them were small fishes. The high

profile name in Azad lists was of

Sayeed Asghar, then director

rural development, Kashmir

Interestingly, among its first few

cabinet decisions, the Azad led

government reinstated Ajit

Kumar suspend by Mufti

government on corruption

charges. Not only this, Kumar

was given an honourable

posting, though he is yet to come

clear from the courts. And no

wonder that Syed Asghar

Hussain, sacked by Azad

government in 2006 is now the

state secretary of Mufti's Peoples

Democratic Party. The message

here is loud and clear. Slogans

are for public consumption.

Defensive : Azad in assembly


TRANSPARENCY


‘It is coercion at bottom,

Collusion at Top’

Interview with Dr Ashok Bhan, Commissioner SVO

refreshed the war against corruption.

Azad often described corruption as more

serious challenge before Jammu and

Kashmir than militancy. Like Mufti (who

convened a special session of assembly

to pass legislation on SAC) Azad too

convened a special session in December

2005 to get amendments in the anti-

corruption law passed in assembly to

make it the most stringent in the

country.

On August 15, 2006 the Azad led

government announced termination of

the services of 15 government officers for

established cases of corruption against

them. The high profile name in the list

was that of Syed Asghar Hussain, Director

Rural Development, Kashmir. Infact,

Asghar and the then Minister for Rural

Development Peerzada Mohammad

Sayeed both were indicted by the SAC for

their involvement in the Rural

Electrification scam. Asghar was sacked

but Peerzada was spared on the grounds

that allegations were yet to be proved.

The SAC chairman had said that “the

Minister is neck deep in corruption”.

However he managed to stay on till

January 2008 when a legislator made

allegations against him.

Interestingly, among its first few cabinet

decisions, the Azad led government

reinstated Ajit Kumar suspend by Mufti

government on corruption charges. Not

only this, Kumar was given an honourable

posting, though he is yet to come clear

from the courts. And no wonder that Syed

Asghar Hussain, sacked by Azad

government in 2006 is now the state

secretary of Mufti's Peoples Democratic

Party. The message here is loud and clear.

Slogans are for public consumption.

Again going back to the first session of

present assembly one recollects the

scathing attack of coalition government

against National Conference for

'institutionalizing' corruption. And now as

last session is adjourned sine die, one

finds the coalition at loss of words when

talk of corruption is all pervasive.

Since past few years there has been a and by our own monitoring. And the level

tremendous hype that Jammu and of success has been reasonable. From

Kashmir is the second most corrupt January 2005 to December 2007, as many

state in India. In this backdrop, the as 117 trap cases were registered.

state government has a lways Interestingly, from the trap cases one

reiterated that weeding out corruption can make a fair idea of where the

is at the top of its agenda. In fact the corruption takes place most. Out of

present Chief Minister Mr Ghulam Nabi these trap cases, the highest (26) were

Azad declared in his first press reported from the Revenue department,

conference in November 2005 22 from Police, 17 from Engineering

(immediately after taking over as CM) departments and 12 from Finance and

that eradication of corruption makes allied departments. Information about

his priority number one. An all many cases was generated through the

pervasive and intensified war against whistle blowers.

this deadly menace followed. Two

years down the line, where does Unfortunately, we observed that the Jammu and Kashmir stand today in level of information generated through terms of transparency in public life? different sources was coming down.

Perhaps they were no more ready to

come forward with information fearing a They (Transparency International) talked

shabby treatment from the immediate about petty corruption. They visited system for taking lid off the rot. This some ten or eleven departments and did matter was discussed at appropriate some sample testing as how much a levels. Now the government (also common man has to pay for the basic through the speech of the Chief Minister) services. Though I am not in full has send a clear message that whistle agreement with the scheme of their blowers deserve due honour. This is likely testing and choice of samples but they to further encourage the genuine did a great job in bringing this information generation system. (corruption) menace to focus. The

government was seized of the challenge

and an increased attention came in Apart from the political rhetoric and against the corruption. The Transparency obvious blame game, there is also a International sparked a cause of action feeling that conflict situation also had a for all –for the government and for the lot to do with promotion of corruption. public. Your analysis please…

In our working methodology, we too have Your analysis is true. In fact the conflict tried to target the petty corruption. In situation weakens machinery of the fact one has to understand the pyramid government in keeping a check on all its corruption as a coercion at bottom arms. Conflict situation has definitely becomes a collusion at the top. Under influenced un upward trend in this regime of increased focus against corruption. Figures explain this well. corruption we have tried to nip the From 1990 to 1996, Jammu region targets both ways –by public mobilization recorded 76 per cent of the total cases


TRANSPARENCY


registered. This implies that people were no move of your organization has been you receive at an annual average? And

not ready to come forward. And when the seen on this front. what is disposal mechanism and

popular government returned in 1996, success rate –filing charge-sheets,

the scenario changes. From 1997 to 2007, disposals etc. See, corruption is widespread in country Kashmir region accounted for 65 per cent and world and no part of society can be of the total cases registered. said to be totally free of it and honest. On an annual average we receive

(However) a professional organization around 5,000 complaints. On perusal, it

The corruption is often described by like State Vigilance Organisation has to comes out that 50 per cent are in

many in a very technical term base its investigations on available duplicate (means filed before many

–institutionalized. Do you think that evidence. (Moreover) investigations have agencies with a copy to us). Out of the

c o r r u p t i o n h a s r e a l l y b e e n to convince the courts also. Therefore, 50 per cent considered by us, 35 per

institutionalized and, if yes, how we would not like to be drawn into cent are (normally) referred to the

difficult it is to break down this hearsay or wild allegations. (But) all Departmental Vigilance Officers (Heads

institutional mechanism? cases with concrete evidence will be of departments, DCs etc), therefore,

looked into on merits (and) irrespective we deal (directly) with 15 per cent of

of the status (of the persons involved). cases –which means around 750 Instead of calling institutionalized, I inquiries a year. would rather say that corruption here is

deep rooted. Take (for example) the case Your proceedings are normally initiated

of Social Welfare Department. We when there are specific complaints or In fact we are particular about quality

unearthed some five to six cases any case has been referred to you by (and not quantity). If we go after the

pertaining to old age or widow pensions courts or government. Do you also volumes, cases are not proved at the

or other relief schemes. There was a end of the day. If we look at the initiate suo motto proceedings based

huge but silent scandal. The amount due statistics of past few years, of the total on your in-house research?

to the beneficiaries ranged from Rs 200 cases registered between 1990 and

to Rs 500. They (the poor beneficiaries) 1996, 64 per cent could not be proved; We generate information at different would be happy to get this amount but no between 1997 and 2002, 66 per cent levels. There are very few people who

could not be proved. The trend loud cries if this did not reach them. So, would approach me directly. But they improved post 2002. 73 per cent of the some officials considered the second meet our officers and share information. total cases registered between 2003 option. They (officials) did not send Another way is through written and 2005 were proved. As we compile money to a la rge number o f complaints. However, the written the figures of cases registered between beneficiaries. The amount was swindled. complaints have not proved very 2005 and 2007, it will emerge that as Now you see (for example) SICOP or productive. Proceedings are initiated many as 90 per cent have been proved. I Super Bazaars. They are supposed to after we are convinced (to a certain) am happy to inform you that out of 65 supply materials to the government level that prima facie there becomes a cases registered in 2005 there is only departments and run their affairs out of case. one case which is still under the earnings on sales. But in connivance investigation –all others have been with traders they overcharge the items.

A n d w h a t a b o u t a n o n y m o u s filed. Out of 84 cases registered in 2006, The booty is shared between the buyer complaints…there may be chances of 44 have been challaned. In 2001, 81 (government departments), the supplier witch-hunting and settling personal cases were registered and 44 are under (private traders) and officials of these scores among parties. investigations. corporations/societies. Same is the case

with Cooperative Housing Society who Yes, that is what I have tried to explain. has the government as their counter- Vigilance proceedings, as we see, take In fact, on getting such complaints we guarantor. Same is also the case with idle too long to reach a conclusion. We ask our officers to first check reputation purchases in various departments, have often seen cases taking 15 to 25 of the person against whom a complaint p a r t i c u l a r l y t h e E n g i n e e r i n g years and in many such cases the has come. If our test check reveals that departments. accused is acquitted –sometimes with the person bears a good reputation then court observations that your probes some caution has to be exercised. failed to establish a case. I hope you What is your opinion about political

understand in such long proceedings corruption in Jammu and Kashmir? the damage to the reputation of an How many complaints of corruption do There have been many allegations but


TRANSPARENCY


accused has already been done before be prone to pressures. But I am happy to corruption is being described as most

the courts confirm that a case could not say that they have been able to work serious challenge before Jammu and

be made out. The accused also suffers a against pressures (to bring home Kashmir, last year the awards of

humiliation and obvious harassment for credibility). Still, we have a system of honesty were conferred upon top

a long. Isn't there something wrong monitoring and in-house checks at most officers, except one from the

with the system? several levels. The moment we feel that middle rung. The outgoing Chief

investigation is going in wrong direction, Secretary, the Chief Secretary-in-

the person (investigator) is immediately waiting, another top IAS officer, the We are seized of the issue and are changed and action is initiated. Not many Principal Secretary of General concerned about this slow pace. (In fact) people know that the appointments in Administration and you shared the this is a loss to us also. For last ten years Vigilance Organisation are clearly by a honours. Does this selection give to the average conviction rate has been high powered committee headed by the understand that honesty prevails only 12.5 per cent. Because of delays people Chief Secretary (DGP is also a member) at the top and the rot has loose interest in cases and they generally and many things are taken into account accumulation at the bottom only? forget (what had happened). Slow pace is while making selections. We also keep on detrimental to the success in rate of shifting people. Another thing (which I conviction. (Not surprising in this We I am not the right person to answer would like to mention here) that we have scenario) that 400 cases are still pending this question. But I personally believe done away with the system of having before courts. This may take another few that such awards of appreciation should specialists for particular nature of cases. years to clear these cases and during this go to the people who have ten to 15 This has been done to ward off the risk of time you get new cases also, thus, years of service to go. This can be a breeding vested interests. pendency is carried on. You may know, motivation for the awardee and

the Chief Minister has already announced inspiration for others.

that there will be two more special anti- There is a general perception gathering Your amended law against corruption corruption judges –one each at Jammu ground that the people targeted by the has been much talked about. We are and Srinagar. But at the level of Vigilance Organisation are usually from told that even people in Europe have investigations we are trying to move fast. the middle and lower rungs of the evinced keen interest in applying this

system, of course, barring a few model there. What difference has this exceptions. law brought in the crusade against Your reputation of an honest and

corruption? efficient officer has very few parallels

in Jammu and Kashmir. The fact that As I explained at the very outset that

you were chosen for this challenging corruption at the bottom is coercion and The law you are talking about was assignment speaks about your when you walk the ladder upstairs it imminent in view of a scenario where credibility. But your people down the turns into collusion. I also pointed out for the corrupt people the gains of line are also part of the same system earlier (in this interview) that the petty corruption far overweigh the losses (on which is loudly condemned as corrupt. corruption has to be targeted first. See, their prosecution, conviction or sacking In the interest of public trust, can you (what happens) the collection takes from the government service. In fact, please explain the system of in-house place at the bottom and then the booty the United Nations too had proposed checks in your organization? share goes up. Unfortunately, the this law (as an effective tool to curb

complainants at the top level are not corruption) but we were prompt in forthcoming, there is also problem of having it in place. (I must assure you) there is a definite obtaining credible evidences but in case system of checks. But let me say that of bottom you have many complainants. whatever we have achieved today, the So far, we have taken over properties (Simplifying further) in fact, the bottom credit for all this goes to our investigators worth Rs 3.5 Crores in 12 cases of is the collection terminal. But this not a for the courage (they have demonstrated corruption. Now a new trend has come matter of policy for us, what all we need in being above board). I would again say up. The people (with dubious money) is specific complaints and credible that there may not be many people who are going in for Benami properties evidences. can approach me but you must instead of buying in their names or in

appreciate that our investigators are the names of family members. We are locals (they come from the same On the contrary, we have another scanning every such case minutely to segment), in such scenario any one can interesting scenario. At a time when find out the linkages where they exist.


REFUGEES


In the January 2008 assembly session of With Article 370 applicable in Jammu and did not qualify as permanent residents as

the Jammu and Kashmir government, Kashmir, the West Pakistan refugees per these clauses. Also till May 1954,

chief minister Ghulam Nabi Azad once were never considered a part of the they had not even completed 10 years of

again mowed down their hopes. While state. Unlike refugees from Pakistan stay in Jammu and Kashmir. The refugees

replying to the Governor's address, he Occupied Kashmir, they were not granted from Pakistan Occupied Kashmir,

categorically stated that the issue of a Permanent Resident Certificate or what however, were considered to be part of

West Pakistan refugees was a human in other terms is a state subject. Quoting the Kashmir territory, and recognised as

problem, more than a political one. In the Jammu and Kashmir constitution permanent residents.

many words, Azad also ruled out granting (which was fully adopted ion January 26,

Permanent Residents Certificate or state 1957), the following Section 6 qualifies NO PRC -THE STRUGGLE: subjects to these families. The minister the permanent resident as:

of state for revenue Aijaz Khan also said Lack of permanent resident certificate state subjects for them was a difficult Every person who is deemed to be a translates into gross disadvantages and decision. All this despite the common citizen of India under the provisions of disparities. This means that around 1.5 minimum programme of the government the Constitution of India shall be lakh of these West Pakistan Refugees promised a solution in black and white. Permanent Resident of the state if on here cannot buy immovable property, The government's plea is that granting fourteenth day of May 1954 transfer land in their name, and under Permanent Resident Certificates to West the rule 17 of J&K Civil Services Act, they Pak i s t an Re fugee s r equ i r e s a He was the state subject of Class I or are even barred from employment in the constitutional amendment to Article 370. Class II state government services. Also, they And for this constitutional amendment cannot vote in the state elections, and they do not have the required two-third are even disqualified from being Having lawfully acquired immovable majority. With another tenure coming to members of the village Panchayat under property in the state, and he has been an end this year, their demands will be in Section 6 of Panchyati Raj Act , 1989. ordinarily resident for not less than 10 deep freeze for yet some more time. They, however, have the right to vote in years prior to the date (May 14, 1954).

Lok Sabha elections. THE GENESIS OF THE PROBLEM: Any person who, before the fourteenth Men like 83-year-old Jaggu Ram, say day of May 1954, was a state subject of During the Partition, 5,764 families they voted once immediately after the class I and class II and who having (47,215 people as per official records) Partition when Justice Mehar Chand migrated after the first day of March migrated from West Pakistan and settled Mahajan took over as the first Prime 1947 to the territory now included in in parts of Jammu, Kathua and Rajouri. Minister of the Jammu and Kashmir. But Pakistan returns to the state under a No land was allotted to them, but these after, the rules changed, Article 370 permit of resettlement or for permanent families did occupy some government came into force and they lost their voting return issued by or under the authority of land and evacuee property, which later rights. Ram says disillusioned by this any law made by the state legislature they were allowed to retain with certain discriminatory attitude of Jammu and shall on such return be a permanent conditions. In all, over 46,466 kanals was Kashmir government, these families had resident of the state.occupied by these families. But this was once even decided to leave the state and the land they cultivated, but never settle down in Punjab. But it was then Since the West Pakistan refugees were owned. chief minister Sheikh Abdullah who asked not residing in the state territory, they

West Pakistan Refugees :

60 years on, still refugees with no homeland

Pawan Bali

Their three generations have lived in the state, but have never been a part of it. For six decades, they have tilled the land,

weaved a promise and waited anxiously. It has been over 60 years since the mayhem of 1947-when 5,764 families left the

insecure hamlets of the newly created West Pakistan and took refugee in Jammu and Kashmir. Since then the families have

lived as refugees, waiting to belong to the state where they once sought a home. Years later, they still have not got one.

them to stay back and promised a driver's licence or even applying for a applicable to their areas.

settlement. But the settlement never bank is not an option. What do the young On the analogy of Kashmiri migrants,

happened. do then? Set up shops, play card games, identity cards should be issued for indulge in idyllic conversations and disbursing of any type of reliefregrets. Some have meagerly paying Between conversations, refugees like 70-private jobs, some take tuitions, and the year-old Mohan Lal say that once forms Those living on Custodian land and rest hope that some day there is a had been distributed then for property should be allowed to repair change. registration of West Pakistani refugees. their houses as per norms

Sheikh Abdullah had come close to an

agreement, but their people were The land holdings are also shrinking. The Deputy commissioners will be directed to divided then. An unorganised, leaderless families have divided from nearly 6,000 issue them domicile certificates after body of West Pakistan Refugees split, to 24,000 households now. Since they do fulfilling formalitiestook divergent views. Some even floated not own the land (most of which is

rumours that the forms were for sending evacuees property), it cannot be Special package should be formulated for them back to Pakistan. Selfish motives officially divided. New land cannot be them and the matter should be taken up played with the ignorant class, and the purchased, no new houses can be set up. with the Central government.matter was never resolved. This was the Cramped spaces and lost opportunities

closest they ever came to a settlement. have been passed on as family heirloom THE PATH AHEAD:

Since then, it has been protests and to the generation next.

marches. Cries that sometimes reach The road ahead does not seem easy

the capital, and many times, do not cross WADHWA COMMITTEE REPORT :either. With a complete lack of a political

the borders of the state.will to resolve this issue, a change in their

In 2007, after several debates and fate is a thin chance.

During Rajeev Gandhi's tenure as the protests, the government formed a Prime Minister, these refugees had committee under the chairmanship of GD

President West Pakistan Refugee staged protests at Delhi's Boat Club. Two Wadhwa, Financial Commissioner

Committee Labha Ram Gandhi years back, they again organised dharnas Revenue, to look not the issue of those

threatens that if left with no choice the at Jantar Mantra. More promises, but displaced during 1965, 1971 from POK

families would uproot themselves once never results. An irony in the recent and also, of the West Pakistan Refugees

again and settle somewhere else in the times, since our present Prime Minister

country. The Courts are another option. Manmohan Singh is also from West The committee, which submitted its Labha Ram claims that there have been Pakistan. report in November 2007, stated that the times when relaxations have been made West Pakistan refugees were citizens of while granting permanent resident GENERATIONS WASTED: India, and their demand for state certificates, like for several Tibetan citizenship was a political one, which refugees who settled down in Kashmir The past has not been pleasant, and the should be decided by the government during Sheikh Abdullahs tenure as chief future does not look bright either. The Barring this, the committee did make minister. Then why not this section of families, majority of which belong to the some favourable recommendations for refugees? scheduled caste, had been mostly into the West Pakistan refugees:

agriculture, tilling the patches of land The Wadhwa Committee report did make which they had retained. Some opted for Provision of separate funds for providing some favourable recommendations, daily labour chores and a few lucky ones basic civic amenities for the areas which need to be implemented got into central jobs like armed forces. inhabited by these refugees. immediately. Regarding the issue of The problems have compounded now. Since most of these displaced people granting state subjects, a right political The young have no future to look forward belonged to schedule caste category, the will is the key. Jammu and Kashmir goes to. Without a state subject, there are no government should issue grant them to polls once again in 2008. The issue of government jobs, and getting into armed reserve category certificate applicable West Pakistan Refugees will prop up in forces is difficult. Young boys like Romesh only for recruitment of posts under various agendas, but will this issue ever Kumar in Parnoia village near Jammu Central Government or other state see resolutions. Some conflicts benefit have not studied beyond class 12. Higher seats of power. And unfortunately, just governments and para military forceseducation and even professional degrees like this one, they benefit a few at the again require state subjects. Getting a cost of thousands. Centrally sponsored schemes should be


REFUGEES



DELIMITATION


The rationale for including Delimitation daily, “For the third straight time, the

Commission in the Common Minimum People's Democratic Party (PDP), the Azad disrespected and sacrificed Mangat Programme of the coalition government main coalition partner in Congress led Ram Sharma for the sake of salvaging his was not only to end the disparity in the Government, boycotted meeting of the own incompetence, by remarking number of the assembly seats but also to political committee …. as Abdul Rahim 'Punditji to is tarah ki assurances dete end the political, social, and economic Rather (Leader of Opposition in the rahte hain' (KT, 16th Jan' 2008), and in hegemony of one region over another. Assembly) and Prof. Bhim Singh also that way turning the senior most party However, the truth is that it remained far didn't turn up, the meeting held in colleague into a cheap sitcom stooge. from its objective of equal regional Srinagar under the chairmanship of

development and was from the very Health and Medical Education Minister By this over simplistic explanation, Mr.

beginning mere rhetorics and shambolic Mangat Ram Sharma, was virtually Chief Minister has tried to trivialize the

with series of contradictory statements reduced to a farce.” (DE, Draft bill on complex and delicate character of Dogra-

by the Mufti-Duo, the then PCC Chief delimitation circulated, 11th June' 2007)Kashmiri geopolitics while ostensibly he

Ghulam Nabi Azad, and belligerent NC himself has so many times made

leaders like Abdul Rahim Rather. The last excuse he could mush out was oxymoronic statements in the Press. “…that the Government would need a

The Delimitation Programme was more of two-third majority (for delimitation) in At one place he said, “the same

less like a football match played between the State Assembly which was not there (delimitation) is needed for the next

the heads of various political parties in at the moment.” (DE, 5th Nov' 2007)elections and if we did the same it will

the parochial chowk of the Kashmir destabilize the whole functioning of the

centric politics, with Congress and PDP Not just him, but all the consecutive G o v e r n m e n t … d e l i m i t a t i o n o f carelessly fooling around in the futile Chief Ministers are explicitly guilty of constituencies at present juncture will parleys and JKNPP leadership meanwhile i g n o r i n g a n d s n u b b i n g t h e lead to neglect of some areas." (DE, I will intermittently grabbing the agenda like c o n s t i t u t i o n a l l y g u a r a n t e e d continue as PCC chief, 27th Jan' 2003). rugby aficionados. The supremacist Chief fundamental rights of the people of Minister on 15th Jan' 2008 blew the final Jammu Province. At the risk of sounding

While addressing a press conference as whistle with the ego of being a clichéd, it would nevertheless, be Co-ordination Committee Chairman and international demagogue in the Assembly pertinent to point out that the provisions PCC (I) President Mr. Azad declared Hall of the Jammu Darbar. of both the Constitution as well as the “...that all promises regarding

Representation of the People's Act were implementation of Wazir Commission

The unapologetic body language of the never scrupulously adhered to, even and setting up of Delimitation

CM had no trace at all of regret for his during NC's regime. Commission, can be fulfilled in just three

utter failure to fulfill the promises made months of the Government.” (DE, 'What

to the people in the manifesto and The favoritism with one particular region NC couldn't do in 6 years; we have done in numerous public meetings. Referring to a and the gross discrimination with Jammu 3 months', 15th Feb, 2003)local daily, 'Virtually kicking off the were self-evident when 75 members of campaign for the forthcoming Lok Sabha the Jammu & Kashmir Constituent

Then, he tried to place the carrot in front elections… the setting up of Delimitation Assembly, all of them belonging to the of the donkey by floating a separate, Commission, Mr. Azad assured the National Conference, embarked to unrealistic, and impracticable idea of gathering that Congress will leave no delimit the assembly segments based increasing the number of seats in each stone unturned to remove discrimination upon the obsolete 1941 consensus. The region by 25%, which he very well knew with any region or sub-region of the bar was discriminatingly set at 60,000 before hand that JKNPP, NC, and PDP State' (DE, 11th Feb' 2004) voters for each assembly seat at Jammu would never support. To quote a local

Anmol Sharma

Delimitation Farce For a

‘Khush-hal’ Kashmir

while it was only 40,000 for Kashmir. This Sometimes he talks about setting up gone up to 52 by the time the bill had

legacy of the propounders of 'Khushal' Delimitation Commission, demanding reached the House. However, knowing

Kashmir has continued until today in the that is a constitutional requirement perfectly well, being a good student of

fact that a mere 9,900 electorate exists under Section 47 of the J&K Constitution law, he is, that any increase in the

for the Gurez segment while the figure is and section 3 of Representation of number of seats without the satisfying

1.65 lakh for Jammu-West seat. People's Act. At other times, he forgets the parameters mentioned in The RPA

what RPA actually mandates, and brings and the Constitution would be illegal,

from nowhere his 'Sheikh Chilli' ideas of unconstitutional, and void abinitio. Still It would be very interesting however to the like, 50 seats each should be given to he displayed the fixation of doing those see the how Farooq and Co face the both the regions. kinds of things for the reasons best known Jammu electorate in the forth coming

to him and his leader. assembly elections. Farooq and his party

are openly averse to any process of

delimiting the constituencies. (DE 1st The prose of the great poet Iqbal suits the

April' 2002). Abdul Rahim Rather gave the present predicament very well when he

lame excuse that delimiting would mean said, “Bus ek he ullu kafi tha barbaad

more and more legislators and the gulistan kerne ko, har shaakh pe ullu

consequent burdening of the ex-chequer. baitha hai, anjam-i-gulistan kya hoga.”

Therefore, the citizens must exercise

their votes sensibly this time so that they If anything really, came in the way of do not elect persons who make fool of setting up this Delimitation Commission, themselves are not opportunists, and it was the obdurate and intransigent take the people, who elect them, for a mentality of the representatives of ride.Kashmir. Their apprehension was that

delimiting constituencies would increase

the number of seats form Jammu and if

the demand of JKNPP to give eight

reservations to the people from POK

living in Jammu were also met, it would

polarize the power in the hands of non-

Kashmiris. That is the reason perhaps,

why Mehbooba termed the caucus

meetings discussing delimitation as

“mazaak” and a futile exercise, which

she naturally never attended.

The biggest tragedy with Jammu is that it

lacks politicians with oratory and

leadership qualities like in Prof. Nirmal To illustrate an example by referring a Singh or Mr. Ashok Khajuria. Bhim Singh local newspaper, 'Former Minister for on the other hand is in the habit of Education and senior National Panthers making such fantastical statements, like Party legislator from Ramnagar, Harsh the one he had made in Parade Ground, dev Singh has said that his Party will move “Mahabharata will start if delimitation bills regarding delimitation of assembly commission etc., is not constituted” (DE seats with 50 seats each for Jammu and 29th May' 2003), that now nobody takes him Kashmir regions…' (DE, 27th July' 2006, seriously enough. Harsh Dev Singh who is Bills for 50:50 Assembly seats, 5 yr LA sadly notorious for losing his temper in term being moved: Harsh) public meetings and debates in the

Assembly Hall has also contradicted himself

many a times on the delimitation issue. Interestingly, the number had actually


DELIMITATION


To illustrate an example by

referring a local newspaper,

'Former Minister for

Education and senior

National Panthers Party

legislator from Ramnagar,

Harsh dev Singh has said

that his Party will move

bills regarding delimitation

of assembly seats with 50

seats each for Jammu and

Kashmir regions…' (DE,

27th July' 2006, Bills for

50:50 Assembly seats, 5 yr

LA term being moved:

Harsh)

In Jammu City

Get your copy of

Epilogue

delivered

at your

doorstep

Call :

9419180762

Backdrop Government) took the politically continued throughout the duration of

courageous step of postponing the this coalition government.

budget and going in for a “vote-on-For one this is the last budget that is account” instead as the budget framed being presented by the Congress-PDP One aspect of this effort is the was under-prepared and in a mess. The coalition government as it completes its introduction of “zero-deficit” budgets. numbers about to be presented were full tenure of six years. The budget Another aspect of this effort can be seen fictitious and lacked credibility. It was speech delivered by i n t h e

Mr. Tariq Ahmed rationalization of

Qarra resonated with taxes and single-

this theme as he minded and even

d e s c r i b e d t h e narrow stress on tax

upward economic collections. How

trajectory traversed has this strategy

by the State in the fared? In absolute

last six years leaving n u m b e r s , t h e

others to infer that it State's own tax

was indeed this revenues have risen

government that was from 936 crores in

responsible for the 2002-3 to 2299

economic upturn. He crores in 2007-8 and

went further. The are projected to

m i n i s t e r a l s o rise to 2666 crores

c l a i m e d t h e in 2008-9. As a

r e s t o r a t i o n o f proportion of State

financial governance Domestic Product

and discipline which t h i s m e a n s a n

in turn enabled the increase from 6.2% realized that not only would the plan size State government to spend increasing in 2002-3 to 10.2% in 2007-8 and is have to be brought down to more amounts in capital formation. projected to rise to 10.6% in 2008-9. realistic levels but also revenues would Since SDP itself has demonstrated have to be raised by the politically moderate growth, tax collections have This is a theme that has underlain almost inconvenient but necessary method by been buoyant. Clearly, on this score, the all budget making exercises since 2003. getting people to pay for government coalition government cannot be faulted That was the first time the newly elected services. This process of putting the state for patting itself on its back. Similarly PDP-Congress coalition (with some government finances into something Plan Capital Expenditure (which now prodding from the NDA-ruled Central resembling fiscal discipline has been

I N F O C U S

THE MONEY MOVEMENT


State Budgets do not generally get the kind of publicity that Union budgets do. This is because given the centralization of

finances that still persists and the absolute figures involved the Union Budget not surprisingly puts state budgets in shade.

For example the Central Government's share of plan expenditure has consistently been over 55% while the share of all the

states hover around 40%. Additionally, as the Economic Advisor to the State Government, Haseeb Drabu pointed out, the

budgetary measures like income tax policies that give relief to the ordinary citizens lie with the Central Government. The

ability of States to do anything in this regard is limited. That is why the storm created by the State Budget despite its short

duration was surprising but not perhaps unjustified.

2002-03

7524

7442

82

1771

2391

-620

9833

9296

-537

-1881

-722

2006-07

(Pre-actuals)

(RE)

11981

10212

1769

2182

3951

-2182

14163

14163

0

-1509

-308

2007-08

(BE)

13555

10763

2792

2712

5504

-2792

16267

16267

0

-2011

-760

2007-08

(RE)

13901

11855

2046

3453

5499

-2046

17354

17354

0

-2737

-706

2008-09

(BE)

15316

12089

3227

3127

6354

-3227

18443

18443

0

-2330

-730

Items

Revenue Receipts

Revenue Expenditure

Revenue Surplus (A-B)

Capital Receipts

Capital Expenditure

Capital A/C Deficit(C-D)

Total Expenditure

Total Receipts

Budget Deficit (E-F)

Fiscal deficit

Primary deficit

A

B

C

D

E

F

TABLE 1: BUDGET AT A GLANCE(in Rs crore)

Budget 2008-09 :

Political Courage Sans Innovation ?

Dipankar Sengupta

goes largely to building infrastructure indulged like that of a backward child In this context the government wants the

and increases the productive capacity) of that has performed well but rather with budget to be viewed as an employment

the economy rose from 1316 crore rupees critical eyes. This is to be welcomed as oriented budget; it would be fair in 2001-2 to 4007 crore rupees in 2007-8. this is surely a step towards the therefore to use this yardstick to judge Even when Central government largesse restoration of dignity and self-respect a the government's effort this year.is availed of is in the case of the Rs 3900 theme that Mr. Muzaffar Hussain Beig

crore Power Grant spread over three brought up when he presented the Economic Policy and Budget Making

years it has been matched by the State budget in 2005. Or so it would seem.

with a commitment to bring discipline to It is well known that the sector that this sector by undertaking reforms the The first indicator of the magnitude of contributes the most to employment is most visible and politically difficult the task that lies ahead was described by agriculture. The sector that has grown examples being the metering of Dr. Drabu himself when he pointed out most rapidly is the Arts and Crafts sector connections and the hiking of power that salaries alone exceeded the State's employing 340,000 artisans. Other tariffs. It is to the credit of the own revenues! The estimated salary bill sectors that have also grown are tourism government that the independent in 2008-9 is 4771 crore rupees which is especially in the Jammu region while auditor has certified to the central

government that the state has achieved

the benchmarks mutually agreed upon by

the Centre and the State governments.

The nature of fiscal reforms whether

they are in the realm of generating

resources or changing the composition of

expenditure increasingly in favour of

capital formation (from 23% in 2003-4 to

32% of total expenditure in 2007-8) has

occurred in a milieu of increasing tourism in the Valley has exhibited some double the 2002-3 figures of 2394 crore transparency the most important signs of recovery. It is not necessary given rupees when the coalition assumed manifestation of which is the publication the Coal i t ion ' s stated goal of power. Thus the increase in the salary bill of the annual Economic Survey of the employment creation that the budget during the Congress-PDP rule is more State a practice that has been prevalent allocates funds to sectors depending on than the increase in tax revenues! The in other states. This document which is a contribution to employment or even second is the massive outflow on account commentary on the State's economy growth. That would be simplistic and of power where expenditure on power describes the context in which the even unnecessary. For example the massively outstrips revenues although on budget making exercise takes place so as dynamism of the Arts and Crafts may not this count the state government can be to make debate on the budget more need heavy financial assistance given credited with bringing it down (by raising meaningful. local entrepreneurship and effort. Thus revenues more than threefold from 268

the quantum of funds spent in this case crore rupees in 2001-2 to a projected 922

will be less important than the quality of crore rupees in 2008-9). We are perhaps seeing the beginning an intervention required.era where the state of Jammu and

Kashmir is no longer being looked at as an But these problems place the Jammu and entity to be bribed or coaxed. It is indeed On the other hand productivity in the Kashmir in the company of other state being looked as a state that can and state's agricultural sector (which few of which enjoy healthy financials and should stand on its own two feet. Indeed, accounts for 29.44% of the SDP and not a state that has to be constantly when it was announced that the state supports 80% of the population) is below bribed into submission! This however is had led the nation in growth of VAT national averages for many crops a not enough and as much is admitted by collections, the observation that Jammu dismal state of affairs given the fact that the State's policy makers. They want the and Kashmir had started from a very low national productivity figures themselves budget to be much more; specifically base (albeit correct) came in too quickly. are low to begin with. Moreover the State they want the budget to be an indicator This possibly suggests that the state's is food deficit and imports cereals, meat, of the Government's long-term policies. performance in any area will not be

I N F O C U S

THE MONEY MOVEMENT


16980

8.9

5.75

11.07

56

29115.26

13.7

8.6

5.2

47.6

32172.24

14.7

10.1

6.2

44.5

32172.24

15.4

10.2

8.5

53.6

35872.05*

16.1

10.6

6.5

47.7

Memo Items:

Gross State Domestic Product

Own Revenues/SDP ratio (%)

Tax Revenues / SDP ratio (%)

Fiscal Deficit / SDP ratio (%)

Salary+pension+int/rev rec (%) (A)

* projection on an assumption of 11.5 % growth.

I N F O C U S

THE MONEY MOVEMENT

Epilogue Ø 22× January 2008

eggs and milk from other states. When it the social services supplied by it are so low. At the same time corporate India (as

comes to investment or capital little. Social indicators like literacy rates well as industrialists of the state) face a

expenditure in the rural sector, the total are well below national standards. A massive shortage of skilled people. At

sums allocated under various heads in concerted plan to change the nature of this juncture which has seen increased

the budget presented are roughly around government employment (if not the size demand for skilled workers; Jammu and

584 crore rupees or little more than 12% for reasons of political expediency) Kashmir finds itself unable to take

of the proposed total capital a d v a n t a g e o f t h i s

outlay. What is embarrassing opportunity. On the other

is that for certain heads, hand the government has

p a r t i c u l a r l y R u r a l announced the opening of

Development where the several new colleges with

plan outlay in 2007-8 was an eye on the coming

391 crore rupees the actual assembly polls. This comes

e x p e n d i t u r e w a s at a time when most

approximately 149 crore colleges in the state are

rupees only! Similarly, running with the help of

against the plan outlay contractual lecturers hired

allocation of 238 crores on a temporary basis.

committed to irrigation and Moreover, the employability

flood control in 2007-8, only of these graduates is low

133 crore rupees was spent. given the curricula. A far

This failure to spend the cleverer policy and one that

allocated budget for a would also be politically

sector that needs it most acceptable would be to set

and employs the most up technical institutes or

number of people i s polytechnics that would at

alarming and makes a least equip students with

mockery of the claim that skills needed for the job

t h i s b u d g e t i s a n market. Clearly, much of

“employment budget.” This the capital outlay of 70

underutilization of the crore rupees on colleges

allocated amount is also is to could have augmented the

be expected, given the size 26 crore rupee allocation

and topography of the state, m a d e t o t e c h n i c a l towards educationists and health the centralization of its governance and institutes. Here unfortunately, the workers from the day the coalition c omp l e t e d i s e mp ow e rme n t o f budget falls, a victim to a lack of assumed office would have delivered Panchayati Raj Insitutions in the state imagination and innovation on part of the impressive dividends cumulatively over who could have otherwise been coalition.five years. This is while it is impossible to entrusted to plan and execute some of do anything about the government these investments given their proximity The areas that consume the greater employment at any single point in time; to the farming community. Thus, in this shares of the capital outlay are Social incremental changes can have significant case a budget allocation made in a vital Services (1283 crore rupees or 26.2 % of cumulative effects even in the medium sector comes undone because of the proposed total capital outlay), power term.governance and the centralized (1156 crore rupees or 23.6% of the

structure of the government. proposed total capital outlay) and The implications for employment the transport (673 crore rupees or 13 % of the stated government goal of “employment The other area in which the budget is a proposed total capital outlay). General generation” are serious. It is well known victim of government paralysis and lack Economic Services have been allotted that given the lack of institutions that of innovation is evidenced in the runaway 567 crores (11.6 % of the proposed total impart technical skills, the employability salary bill. It is a paradox that the size of capital outlay). The sectors that directly of people who graduate from colleges is the state government is so large when affect the productivity of the economy

Figure 1.Where does the rupee come from? Composition of Revenue Receipts

Resources from the Centre Own resources

23%

77%

34%

66%

38%

62%

2002-03 2007-08 2008-09 (Projections)

Figure 2.Where does the rupee go to? Composition of Total Expenditure

Resources from the Centre Own resources

24%

76%

32%

68%

34%

66%

2002-03 2007-08 2008-09 (Projections)

I N F O C U S

THE MONEY MOVEMENT


are the latter items. The bulk of the units registered, is the highest showing implemented with all benchmarks being

outlay on power is to go to transmission that these bogus units were registered to met. Indeed these measures have

demonstrated (although few have and distribution (812 crore rupees) with take advantage of the generous scheme

noticed) how false is the stereotypical generation getting a modest amount (285 of subsidies that are in operation. A image of the state as one that has to be crore rupees). The impact of investment better indication of investor intent is the continuously bribed into submission. in power generation will come later when surge in the demand for land in the The lack of political innovation or vision apart from hard infrastructure the designated industrial estates and the is demonstrated in the failure or refusal financial health of this sector improves government is responding to these to empower Panchayati Raj Institutions with the reforms in place. Admittedly, in signals as evidenced in the allocations of the state. It is also demonstrated in this area deadlines have been met. made to the industrial estates. the failure to lay the foundation of

changing the composition of government The bulk of the outlay on transport is The Budget in this Context

employment to enable better delivery of targeted at road construct ion

social services and creation of human (approximately 600 crore rupees). Rural How is one to evaluate the budget? capital formation even if it did little for connectivity gets approximately 100 Given the yardstick given by the fiscal discipline in the short or medium crores by way of the Pradhan Mantri

term. It is this demonstration of political

courage sans political innovation that has

prevented a commendable turnaround in

government finances into being a

spectacular one.

Gram Sadak Yojana. This investment is government itself, the shortcomings of

vital as connectivity in this mountainous the budget become all too evident. This

per se is not the fault of the budget. The state is st i l l weak. Increasing

budgets are after all periodic connectivity is a vital precursor to the

expressions of the state's long term exploitation of the state's bio-resources economic policy. This in turn is and mineral wealth, indeed all economic dependent on political management of activity. the necessary difficult decisions that

have to be taken to turn an economy such The problem with investments in power

as this troubled state's. The tragedy is and transport is that while they are

that while political courage has been capital intensive and vital, the benefits

demonstrated, political innovation has will come only later and that too if the

not. The former is evidenced in the corresponding reforms continue and

manner the state's tax revenues have investors grow more confident. As things

grown a feat not matched by many stand today, where industry is

states special category states or concerned, the State holds a unique

otherwise. It is also evidenced in the position where the proportion of

manner that power reforms have been phantom or nonexistent units of the total

GLOSSARY OF TERMS

Vote-on-Account

As opposed to a Budget (which is a

complete set of accounts, including both

expenditure and receipts and which lays

out both the manner in which the money

is to be spent and how it is to be raised), a

vote-on-account which is resorted to

mainly by care-taker governments deals

with only with the expenditure side is a

device by which the government obtains

the vote of the legislature for a sum

sufficient to incur expenditure on various

items for a part of the year. This is a stop-

gap arrangement that enables the

government to function till the budget is

approved by the legislature.

Zero-deficit Budget

A zero-deficit Budget is merely one

where estimated receipts and estimated

expenditures are equal implying all items

of expenditure have been budgeted only

after identifying the resource to fund

them.

Figure 3. Where does the rupee go to? (In greater detail)

2002-03 2008-09(Projections)

Others10%

Salaries24%

Pensions6%

Interest10%

CapitalExpenditure

28%

Power10%

Maintenance8%

Security4%

Salaries30%

Capital Exp34%

Power10%

Pensions5%

Security3%

Others9%

Interest9%

Revenue Account Revenue Receipts recovery of its own loans advanced to

State Corporations, Co-operative

Societies, etc., and are entered in the The revenue account comprises Revenue receipts are all those incomes capital account. On the outlay side of the which do not incur repayment liability. expenditures covering the routine capital account, there are expenditures These include, in addition to the State's administration of the State, such as corresponding to the State's own own revenues, grants from the Central

wages, salaries, maintenance and investment outlay and disbursements, Government for the financing of State repairs, telephone expenses, day to day which are comprised of repayment of Plans, as well as non-plan grants.office running expenses and other State public debt and the loans and

overheads. Expenditures relating to the advances made by the State to the Capital Receiptsvarious entities. Thus, both the capital creation of assets - and this includes most and debt portions of the Consolidated (but not all) of Plan expenditure - are in Capital receipts include internal debt, Fund are under the Capital budget.the Capital account. loans from the Center and the State's

I N F O C U S

THE MONEY MOVEMENT


Why Epilogue The northern most state of India bordering Pakistan towards Northwest and China towards North, Jammu and Kashmir remains to be most favourite dateline for the world's news media. With Kashmir as center of discord, India and Pakistan the two South Asian neighbors divided by history have already fought almost four wars and a low intensity conflict is on in this region since 1989. Of late India and Pakistan going nuclear have already added to the global anxiety over the prospects of peace and stability in South Asia. The scourge of violence has its own realm and the politics of conflict does not seem to end in near future. On August 13, 2003, the United States Deputy Secretary of State, Richard Armitage, while delivering a lecture in Sydney said, Kashmir, along with Palestine and Israel, is the most dangerous place in the world. Armitage went on to say, there are a lot of other dangerous parts in the world. India and Pakistan over Kashmir come to mind.

Conflict is still on and the raging tension is yet to settle down, violence is a daily routine, but this is not the bottomline of the story. Jammu and Kashmir State has hundreds and thousands of stories to tell the world and which the world too must know to understand the conflict and the strides life is making behind that conflict. It is not only the conflict for which Jammu and Kashmir State should be known world over there are many other facets which need to be looked afresh. A tourists paradise, Asia's largest fresh water lake, unique geography and topography, a cold desert, one of worlds most strategic peaks, worlds highest and coldest battle field, worlds highest motor road, worlds highest motor bridge, worlds highest railway bridge, large hydro-energy resources, world class handlooms, saffron fields, willow clefts, international quality fresh fruits, India's second most frequented Hindu shrine, secular values of a Muslim majority state in a Hindu majority country, the only special status Indian state with constitution and flag of its own, over 10 million population, diverse ethnic identities, expanding economy, emerging institutions and rich biodiversity are some of the features of Jammu and Kashmir which offer an alternative news paradigm. With an overwhelming focus on conflict, the areas of reportage covering social, economic and cultural aspects of the life in Jammu and Kashmir have not got much attention in the mainstream media. With Jammu and Kashmir becoming more and more important in international thinking, news from this State and about this State is believed to be highly important to rest of the world.

In this backdrop EPILOGUE as an online news resource and monthly magazine serving as an authentic and accurate source of information on Jammu and Kashmir came into being with an aim to collect a widest possible variety of news and views from all nooks and corners of the state and disseminate the same with a professional construction to those who have always been keen to know the developments in this Himalayan territory.

With a team of highly professional, sharp and sensible journalists we concentrate on local, national and global processes effecting the economic, social, political and cultural development of the people of Jammu and Kashmir in particular and the context of such news in relation to the South Asian region in general. We strive to disseminate genuine, meaningful, useful and easy to comprehend news and information from Jammu and Kashmir and on Jammu and Kashmir to the people across the globe. Apart from spot reporting, in-depth coverage of issues and follow-up is cornerstone of our news dissemination process.

The constituent elements of EPILOGUE are an independent policy, a pioneering spirit, a highly motivated professional team, state-of-the-art technology, strategically located Correspondents spread all over Jammu and Kashmir, and above all a sense of mission. We have a deep appreciation of what independence actually takes and how difficult it is to uphold. Out financial independence lies in the independence our editorial policy.

The core policy at EPILOGUE is to impart an up-to-date factual and unbiased panorama of the state of affairs in Jammu and Kashmir, as it stands today and as it is expected to unfold in the future.

I wonder what the Finance Minister has gone down. For example, the export of government. Before claiming credits, he

sought to convey by taking pride in the carpets, which was worth Rs 489 crores should refer to October 17, 2007

proposed high spending of Rs 87,000 during 1999-2000, had gone down to Rs statement of his party patron and former

crore during its six years rule. 300 crore in 2005-06. Chief Minister Mufti Mohammad Sayeed

wherein he said that his party was not

happy with performance of the coalition Instead, the Finance Minister should have The survey conducted by country's government for its deviation from the drawn a comparison on what NC leading magazine India Today in its series political and economic agenda. Does an Government had achieved from Rs of “Best and Worst States” is an outsider need to tell them about the 45,000 crore spending in its six year rule independent analysis of the shift scenario. and what the coalition regime did with Rs economic condition of Jammu and

87,000 crore. Kashmir since the coalition government

took over from National Conference. In Then the Finance Minister claims that the

2002-03 when we had just demitted coalition government has brought In case of more spending the growth rate office, the India Today survey placed Jammu and Kashmir out of the fiscal of Gross State Domestic Product (GSDP)

th mess. I would rather say that they have Jammu and Kashmir at 12 rank in terms too should have gone up. However, this actually pushed Jammu and Kashmir into of agriculture production while the latest was not the case. The Economic Survey

th a fiscal mess. Whether dishonoring of survey places us at 16 rank. Continuing has showed that during 9th plan period, Government cheques by Government with the present trend of ignoring the State's growth rate was 11.98 but it went

th Departments is hallmark of credibility of agriculture sector we may soon be at 20 down to 9.96 during 10th plan. the Government"? As per my information rank. Similarly, in the primary health Agriculture and allied services accounted generated from credible sources, as on sector, we were at number one during for 5.92 per cent in 2001-02 when January 14, (two days ahead of the 2002-03 survey but the latest survey has National Conference was in power but presentation of budget for 2008-09) bills placed us at seventh rank. This is enough this again came down to 1.32 per cent amounting to Rs 548 crore were pending for the government to understand as during 2004-05.in the treasuries while Rs 165 crore worth what they have done to the state's bills were pending in the Secretariat e c o n o m y. I n i n f r a s t r u c t u r e

The overall economic scenario has been treasury alone which including salary of development, the State's ranking has

following an unhealthily trend over all the employees. Overdrafts of the gone down from 8th to 11th, in consumer

these years. Take for example; the state's Government with Jammu and Kashmir market from 6th to 8th and in law and

imports are increasing. This is not a th Bank have gone up to an all time high at order from 13th to 15 .

healthy sign. The import of grains and Rs 2250 crore. Limits of both normal and

pulses was 86 lakh quintals in 1999-2000 power ODs has been exhausted. There is deterioration in every sector. which had gone upto 89 lakh quintals in Employees were not getting their own Take the example of power sector. 2005-06, an increase of 2.67 lakh GPF. Ministry of Railways' money kept despite the Government's claim of quintals. Similarly, import of vegetables with the Government for payment of reforms in power sector including was 9.73 lakh quintals in 1999-2000 compensation to the people has also increase in tariff, installation of meters which was now 23 lakh quintals, a jump been used. Cheques issued to earthquake etc, the power losses have gone up from of 13.84 lakh quintals. Fodder's import victims are getting bounced. How can the Rs 559 crore in 2002-03 to Rs 1281 crore has gone up from 4.79 lakh quintals to 11 Government, in such a situation, boast of this year and are projected at Rs 1295 lakh quintals. What does all this show? a zero deficit budget"?. Isn't it fudging of crore next year.figures and postponing of liabilities.

While the imports are following an The Finance Minister has claimed an upward trend, at the same time, our

One must understand that the Over exemplary performance of the coalition agriculture production and exports have

I N F O C U S

THE MONEY MOVEMENT


Abdul Rahim Rather

‘Figures Fuged,

Statistics Faked’

Drafts are obtained from the Bank to happened on the ground in this connection has been talking about.

overcome temporary mismatch between and interestingly the current year's budget

expenditure and flow of funds from speech of the Finance Minister is If we take an overall look at all these Centre. However, in the present case, completely silent on these issues. factors, one can understand that the the Over Drafts have never gone down state is headed towards a fiscal disaster. from Rs 1800 crore. If the budget is really The situation which has assumed over They talk about the fiscal discipline Zero Deficit, as claimed by the Finance these years is the one where no political and bringing the state out of the mess. Minister, on last day of the financial year, would like to take the responsibility of Look at the figures and find out the the Over Drafts should have been Zero. the Finance Minister and no bureaucrat claims for yourself. On April 1, 2002, But in the present case this is more than would accept the assignment of Finance Jammu and Kashmir had a total debt Rs 2200 Crores. Isn't it fudging of figures? Secretary. I am surprised, under such a burden of Rs 9800 crores and,

gloomy scenario; the Finance Minister I remember, when we had demitted therefore, the per capita debt was at describes the budget as 'Zero Deficit'. It is office, the Over Draft was Rs 817 Crores. Rs 9703. If we compute the figures as a classical case of fudging of fudging of

expected to emerge on April 1, 2008, figures.

Let me go back to the last year's budget the total debt burden would have

speech of the Finance Minister. He had reached Rs 20,561 Crores and ABDUL RAHIM RATHER is leader of talked about Venture Capital Fund, accordingly the per capita debt would opposition National Conference. He was Employment Mission and Self Employment be Rs 20,375. Is this the fiscal Finance Minister of J&K till 2002.Schemes. But nothing has been seen discipline, the coalition government

I N F O C U S

THE MONEY MOVEMENT



ARE YOU MISSING YOUR

EARLIER STORIES ?

Write to [email protected]

June 2007Looking Beyond “K”

May 2007Peace Process

April 2007PDP-Congress Coalition

Schism

March 2007 Baglihar

February 2007The Promise Ahead

January 2007Book of the year

I N F O C U S

THE MONEY MOVEMENT


My friends from the opposition need to Two things have to been seen: Although per capita income has been

make up their mind, whether the quoted at constant prices only, and that

Economic Survey figures are right or too in relation to NSDP, the numbers have Imports as a percentage of GSDP (import wrong. You can't run with the hares and been based on the new series of 1999 - intensity): This has not increased. hunt with the hounds! When it suits you, 2000 series.

you quote Economic Survey; e.g on rate Total Exports as a proportion of imports: of growth of SDP. And not take you don't Economic Survey gives out a table where This is increasing indicating that a larger like it, you call it manipulated. Per Capita Income (PCI) for the year part of the imports are being financed

2006-07 has mentioned as Rs.16779. I from exports and hence there is a Let us take economic growth, for have made an assumption 6.5% growth resource flow from the country to the example Economic Survey has showed for the current year and 7% growth for state. During NC rule there was a net that during 9th plan period, State's the next year and, based on such resource outflow from the state to the growth rate was 11.98 when went down assumptions with regard to growth ,I outside. to 9.96 during 10th plan. Agriculture and have quoted a figure of Rs.19899, for the allied services accounted for 5.92 per year 2008- 2009.

Carpet exports have gone down, because cent in 2001-02 while it came down to of global reasons and competition. Let 1.32 per cent during 2004-05. You are Therefore, Hon'ble Leader of Opposition me remind that in the past tax exports talking of nominal growth. The rate of is absolutely correct in stating the per were taxed and concessions were given thgrowth of 12 percent in 9 plan comprises capita income figures based on 1993-to imports!! This is contrary to common two components viz, real growth and 1994 series. The problem has mainly economic logic. It amounts to penalizing inflation. In the ninth plan, out of 12 per arisen because a comparison has been your producers and subsidsing the cent, 7 per cent was inflation (please see made in my speech between two sets of outside producers. Toll on horticulture is page 47 eco survey) and 5 per cent was figures: one based on the old series and a case in point. real growth; during 10 plan, GSDP was 10 other based on the new series and also percent of which only 4 pr cent was taking into account assumption of growth

Per Capita Income inflation and 6 per cent was real growth. for the current year and the next The same is true for all sectors. financial year. I trust this should clarify

While referring to the status of Per Capita matters. Income (PCI) during the period 1997-98 On rising imports, I have a couple of (Rs.7128) to the year 2002-03 (Rs.7675), points to make:- To also put the matter further in the the income figures have been reckoned correct perspective, Page 10 of the at constant prices based as the old series

Higher imports do not necessary mean Statistical supplement of Economic Survey: of 1993 -1994.

that they are not a healthy sign. We are a states that Per capita Income has consuming state. If we have the incomes, increased by 4 per cent in real terms over te

thAs regards the Per Capita Income and as I showed, per capita income has 10 plan and by 0.31 per cent in 2000-01 and Rs.19899 for 2008-09, the following two increased, it is quite consistent and declined in 2001-02! changes/aspects need to be understood: expected that imports will rise.

We must ask ourselves the basic question as to who has brought out the Economic Survey? It would appear from the

speech of Hon'ble Leader of Opposition that the opposition has prepared it! We must appreciate that it is our initiative. So

when you quote from the Economic Survey, please remember, we, the government, have given the figures. You have not

got them from some own private source.

‘We Have Brought Turn

Around In Economy’

Tariq Hameed Karra

Also, at page 6 of the Statistical survey of Appropriation Accounts and Finance Governor and his consent was received

the Economic Survey. The Index of per Accounts for the State of J&K for the year on January 14, 2008. The same have now

capita Income has increased from 100 in 2006-07 were first received in the been submitted to the Hon'ble Chairman

1999-000 to 104 in 2002-2003. Four per Finance Department on 15.11.2007 but Legislative Council / Hon'ble Speaker

cent increase over a five year period upto were sent back to the Accountant Legislative Assembly on 22.01.2008 for

2002-03. It has increased from 104 then General, J&K for re-checking and laying in the respective Houses.

to 126 in 2005-2006. That is a 22 per cent cor rect ing the same as some increase. That is what is in the budget. discrepancies and wrong figures were Comptroller and Auditor General of Yes, we have projected it for India's Report for the State of the year-end. But then every J&K for the year 2006-07 also single number is the budget is stands received in the a projection. Finance Department on 07.01.2008 and after passing

III. India Today Survey through various stages has

been submitted to the

Presiding Officers of both the Any criticism, based on this House of Legislature on survey, is subject to three 22.01.2008 for laying in the major limitation:- House as prescribed under

rules. This is a survey based on

sample method of survey. This

There is no question of any can not be a substitute for a deliberate attempts to delay Government's report. the presentation of the

Reports. D a t a g e n e r a t i o n a n d

reporting has been a problem

II. FRBM in J&K. It is not clear as to

what set of data/ figures this

survey is based upon. Passed in August 2006 and

operative from 1.4.2007.

It cannot be pre-supposed

that other states will not grow

Draft rules since prepared or have not done better. Any and legally vetted by Law slippage in position does not Department on December 7, necessarily mean hat our 2007. performance has gone down.

The performance of other Rules formally approved and states may have improved. sent for notification in Govt.

Gazette on 22.1.2008. As the Hon'ble Chief Minister discovered in the Draft Accounts; spoke for three hours in the house giving particularly relating to “Power

Govt. of India have suggested that the you graphic details on every single Receipts”. The discrepancies arose on State Act should be brought in line with developmental work that we have done. account of the two overdraft accounts the national act with regard to the cut off So where is the need to repeat it. and the processes relating to inter-OD date for : transfers.

SPECIFIC BUDGET RELATED ISSUES El iminating revenue deficit by After making necessary corrections, the 31.3.2010.

I. Finance Accounts Finance Accounts were processed by the

Finance Department for approval of the

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THE MONEY MOVEMENT


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THE MONEY MOVEMENT


Our Act envisages reduction of fiscal you have a debt of Rs.200. Am I more make every effort to bring down the

deficit to 3% GSDP by 31.3.2010. Central indebted than you are? Not necessarily. overdraft in the first instance to 14.5% of

Government has suggested that the cut expenditure. One has to see the income also. off date should be 31.3.2009 to make J&K also eligible for incentives along other A very large part of the overdraft has If my income is Rs 10,000 and yours is Rs states.

assumed the character of a “structural 1,000, then I am less indebted than you

deficit”. We need to break the current even though my absolute debt is higher. An amendment bill has been drafted for level of overdraft into two components- Similarly, if my income has gone up 20 per submission to Cabinet for approval. a long term liability and a short term cent and debt has increased by 10 per

“ways and means” facility. We could cent, I am not worse off. Nor am I in a The issue highlighted by Hon'ble Leader possibly look at meeting the first debt trap. Please, do more sophisticated of Opposition on presentation of component through a combination of economic analysis. statements alongwith the Budget is grant from Central Government, issue absolutely valid. But, in the absence of of bonds by J&K Government and raising A large part of this debt is “debt in Rules and the prescribed formats, the of Additional Market borrowings. In any perpetuity”. This is related to pension laid down requirement could not be met. case, therefore, the most practical way funds. This will rise as and when As soon as FRBM rules are notified, all and perhaps the only way to go forward

government employment rises. Hence requisite information on prescribed is to replace the structural part of the

pensions also rise. formats will be placed before this House. overdraft by a long-term debt.

IV. Overdraft It is also assured that after the required V. Position in Treasuries

statements are prepared and presented

before this House; an independent At the outset, I must say that, as a part Hon'ble Leader of Opposition referred to agency will be engaged for evaluation of the last year's Budget Speech, the the position on January 14, 2008. Let me and authentication of the performance Government took the decision to share give the specific details. as reflected by the statements. the details of overdraft of the State The overdraft position as on 14.01.2008

Government with J&K Bank. In this is as under :-

III. Debt Position context para No. 23 to 25 of my Speech OD-I = (-) 2092.57 croremay be referred to wherein it had been OD-II = (-) 195.64 crore stated that, over the years the Hon'ble Leader of Opposition had stated = 2288.21 crore overdraft with JK Bank has shown that state had a debt of Rs 9,800 crore on

significant increase. Power deficit has 1/4/2002 which comes out at Rs 9,703 been one of the major reasons for this. Total Pendency as on 14.01.2008 in all crore per capita while as on 1/4/2008,

the Treasuries of the state was Rs.551.66 The overdraft stood at Rs. 2,190 Crore – the debt will touch Rs 20,561 crore (Rs crore. The amount includes amount Rs. 1,942 crore as normal overdraft and 20,375) per person. payable to FCI Rs.85.00 crore. Rs. 248 Crore as power account

overdraft on the date of presentation of The Hon'ble House needs to appreciate a

Budget last year. Total pendency in Civil Secretariat few aspects:

Treasury as on 14.01.2008 was Rs.129.51 crore and not Rs 165 crore. Overdraft has to be seen in relation to

I am paying past dues. As I said, Rs 1,008 total expenditure. As a percentage of

crore was unpaid. NSSF Rs 683 crore was Total pendency under Salary, Pension and total expenditure, the overdraft

unpaid, which I propose to pay. Baglihar wages as on 14.01.2008 was Rs 6.06 amounted to 15.33 % in 1996-97. The

bonds, I have paid. crore. The demand was cleared on the percentage worsened to 18.37% in 1997-same day. 98. On March, 31, 2007, the ratio stood

Debt/SDP ratio at 15.44%. The overdraft at the end of

the third quarter i.e. on December 31, I may add that all outstanding bills across You have to compare debt with income. the treasuries in the state relating to 2007 was Rs 2,110 crore i.e. below the Suppose, I have a debt of Rs 1,000 and salary/pension /Wages/ CDF/TE-OE-March 2007 level. The Government will

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POL/Drug & Diet/Cash Assistance to TAX RELATED ISSUES The State Government has been

Migrants stand cleared upto 19.01.2008. providing concession in the form of excise duty on liquor sold through CSD to I. Placement of Raw Tobacco & Bidis in the tune of Rs.60 crore Gratuity Commutation payments stand Zero percent rate category under VAT cleared upto 20.12.2007.

This concession accounts for 15% of the The Empowered Committee of State total concessions provided throughout G.P.Fund payments have been made upto Finance Ministers took the decision for the country. 18.12.2007. placement of raw tobacco and bid is in zero percent rate category. The Government is seized of the concern Contractors/Firms, Material/ Supplies of ex-servicemen of the state. A Cabinet and Self- help-Group payments stand It is a decision not relating to J&K along. Sub-Committee has been constituted to

cleared upto 19.12.2007. Most of the member states have already work out a mechanism for providing a

adopted the decision of the Empowered relief package for them.

Committee As regards pendency as on 22.01.2008

under Railway Land compensation, the III. Placement of rice, paddy, atta,

same was Rs. 8.19 crore only. Bills The trading fraternity during the pre-maida, Suji etc in zero rate category

received during 2007-08 amounted to Rs budget consultations also demanded

20.07 crore. Bills aggregating Rs 11.88 placement of the said items in zero It was solely with the intention of crore stand cleared. percent VAT category for purposes of providing relief to the common man that

uniformity and to check diversion of the Government went ahead with the

trade. VI. Expenditure of Rs 45,000 crore Vs continuation of placement of these

Rs 87,000 crore commodities in zero percent VAT

The Government is conscious about the category for one more year. Other states health hazards of these demerits goods The simple point I have made is that in are yet to do so. and believes that it requires educating the past money was spent on salaries and the consumers about the ill effects of I have used it for capital expenditure. DEVELOPMENT ISSUESthese and other like goods. The most telling achievement that

expenditure has been doubled and capex

I. Pre-ponement of Budget increased five fold is the real point. We II. Exemption of VAT on CSD Goods: -

have spent on developmental works. The basic idea of pre-ponement of

The VAT regime does not recognize any budget was to optimally utilize the lean VII. Transfers from Centre exemptions. winter months for seeking legislative approval of the budgetary proposals

In Revised Estimates 2006-07 the total Concessions in other forms are available much ahead of the norm so as to

Receipts were estimated at Rs 14163 maximize the limited working season for to the defence personnel both serving as

crore and the Actual Receipts were implementing and monitoring plan well as ex-servicemen in the state.

schemes. Rs.14080 crore

Excise duty concession on liquor sold

Accordingly, the meeting between The variation between Total Receipts, through CSD is available to the personnel Hon'ble Chief Minister and Deputy Revised Estimates and Actuals is 0.1 % of the army forces. Chairman, Planning Commission for finalizing the Annual Plan 2007-08 was Total Revised Expenditure Estimates for Total collection of Excise Duty on liquor held on 13th December 2006.

2006-07 were Rs 14163 crore and the throughout the country is Rs 28,000 Actual Expenditure is Rs.14,627 crore. crore. The approved copy of the “Scheme of Financing (SoF)” was however, received

The variation between RE and Actual so Excise duty concession in the country on only on 9th of April 2007. In the absence

far as expenditure is concerned is 3.3 % liquor sold through CSD is Rs.400 crore. of SoF, neither the District Plan nor the

State Plan could be finalized. In doing so, all the District Development NABARD projects and finally the sanction

Commissioners were also advised to get has been received as such expenditure

their plans approved by the District will now pick up. Besides, HUDCO loan of The delay in the receipt of SoF tended to Development Boards, which met during Rs.100 crore has not been released due to neutralize the advantage of early the month of June, 2007 and first week of default on repayment. Similarly, the LIC finalization of Annual Plan 2007-08 July, 2007. loan (Power Sector: 95 crore, PHE: 20 outlays. On 5th of April 2007, Planning

crore) loan has not been lifted so far due a nd Deve l opmen t Depa r tmen t to some outstanding. II. Current year's expenditure authorized all the Departments and

District Development Commissioners to

incur expenditure on on-going schemes Power Sector is the major consumer of If we compare the expenditure of the upto 25% of last year's approved plan plan funds, both under the State Plan and current year with the last year ending outlays both under Revenue and Capital the PMRP etc. The utilization of funds, November, the %age of expenditure components during the current financial however, in this sector has been low under Capital Component for the State as year. under the schemes like APDRP, a whole for 2006-07 was 30.71%, and for

Strengthening of T&D etc. the current year it is 30.47%. Similarly,

under the District Plan, the expenditure The approval of the Planning Commission under the Capital Component during last for the Scheme of Financing for Annual In actual terms, the work done on the year ending November was about 32.72% Plan 2007-08 was received in the ground is much higher than the and during the current year it is about Planning and Development Department expenditure incurred. It always picks up 28.19%. The main reasons for the low on the 9th April, 2007. In order to ensure during the last months of a financial year. expenditure are: that developmental works do not suffer,

50% of plan outlay was authorized to the III. Shortfall in Receipts in 2006-07 Departments on June 27, 2007 and 100% An amount of Rs.40.00 crore was plan outlay was authorized on July 31, provided under the approved plan outlay Transfers from Centre were estimated at 2007. for creation of new districts has Rs.7,985 crore and the Actual Receipts remained under-utilised, as adequate were Rs. 6,977 Crore i.e. a short fall of

staff has not been posted yet. Similarly, In so far as the District Sector is Rs.1,008 Crore. Short fall was in the concerned, based on the sectoral outlays an outlay of Rs.45 crore was provided for following items:- for district plan obtained from the Heads establishment of infrastructure in the of Departments, district-wise plan new districts. As it took some time to

Rs. 700 crore were estimated under CSS outlays were communicated to the finalise the designs etc, the expenditure

but actual receipts were Rs. 539 crore - District Development Commissioners on is only now picking up.

shortfall Rs. 161 crore. 09-05-2007, and while doing so,

authorization was also given to incur One of the key reasons for low Power Reform grant of Rs. 300 crore was expenditure upto 50% of current year's

expenditure is the fact that the new not released - short fall Rs.300 crore. approved plan outlays on on-going

districts continue to be disadvantaged by schemes.

way of non-availability of full Amount for EAPs not claimed as no complement of staff, which is hampering scheme was put forth. Amounts for EAPs The district plan outlays could not be developmental activities. are included in Plans by design and taken as final at that stage because of usually remain unclaimed - shortfall the then on-going exercise for redrawing

Against the tied allocation of Rs.355 Rs.298 crore. the boundaries of the districts. The crore under Externally Aided Projects

Revenue Depar tment i s sued a (EAP), only Rs.79.60 crore has been lifted

Notification regarding the boundaries of Security Related Expenditure was so far.

the districts only on May 22, 2007 under estimated as Rs.325 Crore but actual

SRO 185. Accordingly, sectoral outlays for expenditure was less and amount Against the loan of Rs.635 crore, only an districts were again obtained from the reimbursed was Rs.163 Crore. Hence less expenditure of Rs.73.49 crore has been Heads of Departments and final outlays reimbursement - shortfall Rs.171 crore. made ending November,2007. It took communicated to the districts on June some time in finalizing the priority of 15, 2007. As will be seen from above the total short

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THE MONEY MOVEMENT


fall of Rs. 931 crore is on account of such c o m m u n i c a t i o n , t h e D i s t r i c t be prepared/finalized and construction

schemes for which the amounts are Development Commissioners were also agencies also had to be nominated.

authorized to utilize funds upto 50% of either not spent till money is received or

the outlays. in respect of schemes for which GoI is Full component of Staff not positioned committed to release money and is in the newly created districts. This has claimed subsequently The final notification regarding the also resulted in under-utilization of an boundaries of the Districts was issued by amount of Rs.40.00 crore earmarked as IV. District Planning the Revenue Department vide SRO 185 Re v e n u e C o m p o n e n t , b e s i d e s

nddated the 22 May, 2007. In order to hampering developmental activities. align the District Plan outlays with the As neither the District Plan outlays nor The projects for infrastructure district boundaries notified by the the State Sector outlays could be development and agencies have now Revenue Department, it was considered finalized in the absence of the Scheme of been approved by the Committee expedient to have further consultations Financing (SoF), it was considered constituted for the purpose and most of with the Heads of Department. Finally, expedient to authorize the District the staff has also been sanctioned. based on these consultations, District Development Commissioners to utilize Keeping these points in view, the Plan outlays were communicated vide funds upto the extent of 25% of last expenditure is expected to pick up.this department's letter No. DP-16/2007-year's approved outlays for ongoing V. Agriculture growth 08/PS-901 dated: 15.06.2007. District schemes. This was done vide Planning

Development Boards met in the months and Development Department's letter

The main reason is the reduction in the of June and July (First week) to approve No.DP-16/2007-08/PS-901 dated: allocation of IWDP project. While as in their respective District Plans. 05.04.2007. 2001-02, the allocation of IWDP was

Rs.56.66 crore which represented about

In due course, authorization was also The SoF was received from the Planning 3% of total plan allocation of Rs.2,050 th given to the District Development Commission only on the 9 April,2007. crore, the allocation of this project in

Commissioners to the utilization of 100% Immediately on receipt thereof, an 2006-07 was Rs.51.42 crore which of outlays under District Plan, 2007-08 exercise was initiated in consultation represents about 1.47% of the total plan vide this department's letter No. DP-with the Administrative Secretaries and outlay of Rs.3,500 crore excluding PMRP. 16/207-08/PS-901 dated: 08.08.2007. the Heads of Department to work out the

outlays for the District Plan and the State If allocation on account of IWDP is netted Sector Schemes. In respect of the district The total expenditure in case of districts out, the relative %age capital outlays as a outlays, this exercise was initially carried upto November, 2007 is 32.67% of which share of total capital outlays for out on the basis of the recommendations 46.28% is the Revenue and 28.19% is the Agriculture & Allied Sector for 2001-02 of the Bloeria Committee, which was not Capital. Statement showing district-and 2006-07 work out to 4.2% and 3.4%. final at that stage. It was, however, wise outlays of Revenue and Capital and considered expedient that while the % expenditure ending November 2007

acceptance of the report of the said Moreover, in respect of Agriculture is given in the table annexed at 'A'. Committee may take some time, the Sector alone , the comparative

planning process at the District level percentage under Capital Component are

It is seen that in case of older districts, should be kick started. Following this 3.06% (2001-02) and 2.44 % (2006-07). An

expenditure of Capital component is exercise, District Plan outlays were amount of Rs.90.77 crore was also about 31% and in case of new districts the conveyed vide this department's letter available under the Centrally Sponsored %age expenditure of Capital component No. DP-16/207-08/PS-901 dated: Schemes (which include Central Share of is 24.41%. This shows that the 09.05.2007. While doing so, it was Rs.84.13 crore of Central Share) during expenditure of newly created districts is stipulated that except in the case of 2006-07. comparatively less as compared to the Kupwara, Kargil, Leh, Poonch and Rajouri old districts. This is because of the Districts (not affected by ongoing

VI. Industrial production following reasons: exercise for re-organisation of district boundaries) the outlays may be treated

In respect of Handicrafts, the production as provisional as these may undergo In case of new districts Rs.5.00 crore has risen from Rs 821 crore during the changes after finalising boundaries of the each was earmarked for infrastructural year 2003-04 to Rs 950 crore during the o t he r d i s t r i c t s . Th r ough t h i s development for which projects had to

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year 2006-07. Out of this production, the 2006-07 respectively. considered to address our power sector

exports have risen from Rs 595 crore separately as it was the main issue OTHER ISSUES during the year 2003-04 to Rs 785 crore responsible for huge deficit. State during the year 2006-07. Carpet, Woolen Government had to enter into an shawls and paper machie have been the agreement for enforcing power reforms main items in the handicrafts sector in order to claim the grant. This necessitated taking of some hard

In respect of SSI, the economic survey decisions so as to ensure reduction in

says that there is an annual average power deficit in three years when power growth of 6.03% by number of enterprises reform grant shall cease to be available. and 6.82% in employment during the period 1998-2005.

People in the State were suffering due to increased power cut. Power cuts were The production by the existing SSI units imposed for 9 hours in a day and even has been normal and in most of the cases more in some areas. flourishing, an increase of 29% in the The reduction in power cut has meant investment haws been registered in this more power imports hence more sector in Kashmir Division during the past expenditure. This should have been year along (2006- 07), with setting up of appreciated that we have been able to 833 industrial units with an investment of reduce the sufferings of common people. Rs 36.07 crore. However, a decline of

around 65% in investment has been Some facts and figures may also be

registered in Jammu Division during that quoted in respect of Power Purchase:-

year. In Jammu division, against an investment of Rs 100 crore in the year Rs. In crore2005-06, only an investment of Rs 65.74 Year Budget Actual crore was registered during the year

2006-07, only an investment of Rs 65.74 Provision purchases

crore was registered during the year 1999-2000 605 669 2006-07 due to non-availability of land in 2000-01 650 814the industrial estates. Nevertheless, this

2001-02 670 954year the trend has been on reverse as

2002-03 670 661 up to upto ending November, 2007, 216 SSI

Sept., 2002 units have been established with an

investment of Rs 81.81 crore in Jammu An amount of Rs. 423 crore were division. outstanding on account of power purchase ending Sept., 2002 despite In large and medium sector, again the having exhausted the Budget provision of existing industrial units have been the year. It may also be indicated that an flourishing as no sickness/ closure has outstanding of Rs. 1204.66 crore were been reported in this sector during the converted into Bonds in the year 2002 past year, which could denote decreased I. Power Deficit production and resultant decline in II. Public Sector Undertakings export. The investment mobilization

during 2006-07 is almost equivalent tot Power Reform Grant is not something

aht mobilized in 2005-06. The different but forms part of negative BCR The financial position of the PSEs is investment in large and medium sector in our Resources assessment statement precariously poised. As of 31.03.2005, as has been Rs 869 crore during the year which is considered by Planning against a total paid-up capital of Rs. 206 2004-05, Rs 674 crore during the year Commission while fixing our Annual Plan. crore, the accumulated losses of the 2005-06 and Rs 673 crore during the year In view of our huge negative BCR it was Corporation aggregated to Rs. 1736

Power Reform Grant is not

something different but

forms part of negative BCR

in our Resources assessment

statement which is

considered by Planning

Commission while fixing

our Annual Plan. In view of

our huge negative BCR it

was considered to address

our power sector separately

as it was the main issue

responsible for huge deficit.

State Government had to

enter into an agreement for

enforcing power reforms in

order to claim the grant.

This necessitated taking of

some hard decisions so as to

ensure reduction in power

deficit in three years when

power reform grant shall

cease to be available.

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THE MONEY MOVEMENT


crore. The liabilities on account of GHS/VRS, have also identified 2225

workers of 5 ailing PSEs who could be statutory dues alone stand at RS. 318

crore. The PSEs employ manpower force

of around 22500 workers; half of which

appears to be surplus.

During the current financial year, an

amount of Rs. 40 crore is available with

Government to provide residuary support

to ailing PSEs in their endeavor of The coalition government says that offering GHS/VRS to their employees, the National Conference regime (1996 which is both voluntary and compulsive to 2002) pushed Jammu and Kashmir

in nature. In fact, PSEs in their revival into a financial mess which they

attempt will not only have to implement claimed to have corrected in next five

years. Can you recall your assessment GHS/VRS but also take some other

of the economic scenario in 1996 stringent measures simultaneously. As for when you took over as Finance instance: Minister?

PSEs to identify assets free from Situation in 1996, when we took over encumbrances and make those assets after six years of Governor's rule was fungible to meet the cost of GHS/VRS, to quite disappointing. There was no tax pay off statutory liabilities and arrears of compliance. People in Kashmir did not salary/wages and also generate surplus pay taxes at all and as an effect the for working capital requirements etc. collections in Jammu region too were

negligible. Same was the case with non-Not to release any further COLA tax revenue between 1990 and 1997. installments until the statutory liabilities The Security Related Expenditure, a and loans are fully discharged. huge burden on the state exchequer,

considered for exit in the first phase. was not being fully reimbursed by the

Likewise, an indicative list of disposable Conceive future business outlook for a central government. I remember, when assets of ailing PSEs has also been given long term sustainability on their own and we took over, besides an ailing economy which holds a promise of potential of chalk out business revival plan for the the immediate burden before us was generating about Rs. 200 crore. The coming five years which will include t h e i m p l e m e n t a t i o n o f t h e Committee have further identified 253 replacement of obsolete machinery. recommendat ions of f i f th pay units of various PSEs that need to be commission. We had to clear arrears closed down. Close down units/activities which are worth Rs 800 Crores. The debt burden beyond any scope of revival and w a s a b o v e R s 1 4 0 0 C r o r e s . Since implementation of VRS/GHS is a restructure, both professionally and Infrastructure was gutted. The power sensitive issue, it may take some time for technically, the potentially viable units. tariff collection was negligible and implementation. Some Corporations Transmission and Distribution Losses have already initiated action in this were highest. Another serious problem In other words, budgetary subventions direction and proposals are under before us was alarming problem of could come only as last resort for such examination at various stages. unemployment which had to be PSEs as do not possess disposable assets, The position is proposed to be reviewed addressed at priority to save our youth or, to fill the gap between the cost of by Chief Secretary towards the end of from going astray. implementing GHS/VRS and the funds January, 2008. realized from sale/exchange of assets in

the case of others. Was there an easy way out?

TARIQ HAMEED KARRA is Minister for

Finance, Jammu and KashmirKundal Committee while giving model No, there was not. Since the issues were

The financial position of the

PSEs is precariously poised.

As of 31.03.2005, as

against a total paid-up

capital of Rs. 206 crore, the

accumulated losses of the

Corporation aggregated to

Rs. 1736 crore. The

liabilities on account of

statutory dues alone stand at

RS. 318 crore. The PSEs

employ manpower force of

around 22500 workers; half

of which appears to be

surplus.

‘J&K Is Headed For

A Severe Debt Trap’

Interview with Mohammad Shafi Uri, former Finance Minister

too precarious and list of problems too measures. Besides putting in place a problem of managing finances was so

large, therefore, we generated an order regime of austerity measures, taking up critical that it was not possible for any

of priority to address the issues. We strict fiscal management initiatives, I Finance Minister to present a regular

pleaded before the central government had to impose some tough taxes on a budget and therefore a Vote on for reimbursement of the Security variety of sectors. I remember the Account had to be sought for first Related Expenditure which was running opposition saying that “only air for three months. How to you react to around some Rs 700 Crores. We also breathing has been spared in the new this? took up with them the reconsideration tax regime”. of special category status to address the

The Vote on Account was a ill conceived serious problem of grant and assistance

In our 1997 budget, we proposed a terminology and highly politically ratio. The 90:10 ratio had been

general amnesty for the tax defaulters action of the government to show to the applicable to the North Eastern States and the taxes were rationalized under people that things were not right. In ever since the inception of the scheme different slabs. Power tariff was revised fact every thing was in perfect order i n 1 9 6 9 - 7 0 b u t t h e r e w a s a and an effective campaign was and there was no need to seen a Vote on discrimination in case of Jammu and launched for tariff collection in order to Account.Kashmir. recover, at least, the cost of

maintenance. Under a slew of measures We wanted this assistance pattern with I admit there was some debt burden at to put the derailed system in order, retrospective effect which could have that time but that was due to Center's interim recommendations (Madhav) written off our Rs 1400 Crore debt default at the commitment. To Godbole Committee on Financial burden. We also gave a memo to the expenditure in limits, the Center had to Reforms were implemented. With the central government for resources to release funds which were not released passage of time some semblance or address the unemployment problem. in time. There was absolutely no need order returned to the system, tax The case of compensation on account of of seeking Vote on Account. collection improved and thinks started Indus Water Treaty was also taken by looking up. with New Delhi as our waters are used The Finance Minister Tariq Hameed

for the benefit of entire country but the Karra has recently presented the last discriminatory clauses against us are In 1998-99 a new industrial policy was budget of the coalition government. resulting into an annual loss of Rs 6000 out in place with a slew of incentives to You were the one who had presented Crores to Jammu and Kashmir. revive the sick units and attract new the f i r s t budget of Nat iona l

investment. The policy showed Conference regime (in 1997). How do Was Center forthcoming in helping tremendous results. When I had left as you look at the scenario now? you out in that situation? Finance Minister (and took over as

Education Minister) the tax collection I must say with authority that if

had reached three times higher and we Unfortunately the Central Government c o r r e c t i v e m e a s u r e s a r e n o t

had already started gearing up for the did not help us the way we had wanted immediately taken up the state is

VAT regime. My successor (Abdul Rahim and the way we rightfully deserved. We headed for a severe debt trap. This is

Rather) further improved the system. did struggle but finally we had to spade my basic assessment of the situation. I

work at home instead of wanting for the often laugh at the Zero Deficit

desired response from the Center. Muzaffar Hussain Baig took over as the terminology. Figures have been faked first Finance Minister of coalition and statistics fudged to portray a

So, what immediate measures did you government in November 2002. He, colourful picture of finances. The Zero propose at that time as Finance and also the Economic Advisor to the Deficit term looses its very meaning Ministers? Government Dr Haseeb Drabu, claims when you see that government does not

that Jammu and Kashmir was headed have enough of money to pay salaries to towards a serious fiscal crisis when Perhaps I was the first and last Finance its employees. they had taken over. They say, the Minister who had to take some harsh

I N F O C U S

THE MONEY MOVEMENT


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