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Baba Ghulam Shah Badshah University, Rajouri

185131 (J&K)
Announces Admission for Academics Session 2008-09
Epilogue
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THE MONEY MOVEMENT THE MONEY MOVEMENT


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THE MONEY MOVEMENT THE MONEY MOVEMENT

Editor in Chief THE MONEY MOVEMENT


THE MONEY
THE MONEY MOVEMENT THE MONEY MOVEMENT
THE MONEY MOVEMENT THE MONEY MOVEMENT
THE MONEY MOVEMENT
Letters to the editor 2
Zafar Choudhary

Consulting Editor
D. Suba Chandran
MOVEMENT
THE MONEY MOVEMENT THE MONEY MOVEMENT
THE MONEY MOVEMENT THE MONEY MOVEMENT Prologue
THE MONEY MOVEMENT THE MONEY MOVEMENT
THE MONEY MOVEMENT THE MONEY MOVEMENT Dialogue
3

THE MONEY MOVEMENT THE MONEY MOVEMENT


Associate Editor
Haseeb A Drabu
THE MONEY MOVEMENT THE MONEY MOVEMENT 6
Irm Amin Baig THE MONEY MOVEMENT THE MONEY MOVEMENT
THE MONEY MOVEMENT THE MONEY MOVEMENT
Special Reports
Executive Director THE MONEY MOVEMENT THE MONEYZafar
MOVEMENT2008-09 (Projections)
Choudhary 11
Mohammad Yasmeen THE MONEY MOVEMENT THE MONEY MOVEMENT
2002-03

Dr Ashok Bhan 13
Mailing Address
PO Box 50, HO Gandhi Nagar, Volume 2, Issue 2, February 2008 Pawan Bali 16
Jammu Anmol Sharma 18
Phones & email IN FOCUS
Editorial: +91 94194-80762 THE MONEY MOVEMENT
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editor.epilogue@gmail.com Separatist Unity :
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20 Budget 2008-09 : Political Courage Alliances of Compulsion 36
subscription.epilogue@gmail.com Sans Innovation ?

Edited, Printed and Published by ‘Figures Fuged,


Zafar Choudhary for CMRD 25 Report
Statistics Faked’
Publications and Communications Situation in J&K and
‘We Have Brought Turn Contours of Future Strategy 43
Published from ‘Ibadat’, Madrasa 27
Lane, Bhatindi Top, Jammu, J&K Around In Economy’

Printed at 34 ‘J&K Is Headed For Columns


Dee Dee Reprographix, Jammu A Severe Debt Trap’
Tareekh 45
Disputes, if any, subject to jurisdiction Jest Ponder 47
of courts and competitive tribunals in
Jammu only.
Review
Movie 49
Price : Rs 40
Epilogue
From the Consulting Editor 50

Epilogue Ø

January 2008
M A I L B O X
LETTERS TO THE EDITOR

Letters
Mail your letters to editor.epilogue@gmail.com

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
Sincere effort magazine has established itself as a
BRIG SK CHATTERJI reputed and credible source of
Deputy Director General,
I have been reading information which has been missing in
Public Information, DGoMI
Epilogue magazine the mainstream media. I would
regularly. I appreciate the sincerity appreciate if you consider a couple of
of efforts that go into making of this suggestion –one that it is a monthly
Keep the mission alive magazine. 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 Sachin Pilot
magazine should have a regular section
mark, I hope you will keep up your MP, Lok Sabha
mission and come forward for the rescue on economy of Jammu and Kashmir.
of he people, who are reeling under the
cruel feet of the present government. Expand area of coverage to entire J&K
ANU GUPTA
ASLAM KHAN We are greatly appreciative of your University of Jammu
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
Your regular column on travel has been readership, your articles should cover all I saw a letter to editor in your magazine
missing for last three months. Named as regions of Jammu and Kashmir including some three months back which
Travelogue, the regular column served as the Pakistan occupied Kashmir, Gilgit suggested doing some more work on
a good source of information on the and Balochistan and also the adjoining rural reporting. Your editorial stuff is
destinations in Jammu and Kashmir. We Pakistan. This would meet aspirations of yet to include reports from the margins.
are told that every place in your state is region specific readers and also provide Please consider doing this lest the
worth visiting. Could you please think of an over-arching compendium to magazine is seen addressed an elite
resuming the column with some interested analysts. 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

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

Epilogue Ø

January 2008
P R O L O G U E
FROM THE EDITOR

An Elegy To Transparency
Zafar Choudhary

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


political upheaval in Jammu and
Kashmir. An expansion of state cabinet
was followed by the last budget session
Conference exasperated and requiring
it to built an aggressive posture against
the government. There was hardly any
Epilogue
because there is more to know
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 EPILOGUE aims at providing a
showcase its achievements of past five January 7 onwards. The Finance platform where a meaningful exchange
years to consolidate the public mood in Minister was not allowed to make a of ideas, opinion and thoughts can take
its favour. The opposition which reply to the discussion on budget as place among the people and about the
appeared at a weak footing, despite opposition demanded his resignation people of Jammu & Kashmir. The
strong in numbers, also came up with a for his alleged involvement in the attempt is to research, investigate,
renewed strategy to take on the irregularities in Forest department. communicate and disseminate
government. In fact, the opposition Discussions on the budgetary information, ideas and alternatives for
National Conference had little to allocations of more than 25 the resolution of common problems
actually behave as a strong opposition departments were not allowed to be facing the state and society of Jammu &
all these years when the ruling alliance held and the assembly had to be Kashmir and in the context of their
partners –the Congress and the Peoples adjourned sine die ten days ahead of its significance to South Asia as a whole.
Democratic Party –continued to be schedule. It will be misplaced to
drawn into murky battles within. With conclude here that what National We welcome contributions from
the alliance partners washing their Conference did was just for the sake of academics, journalists, researches,
linen in the public, the National it. There was a definite cause of action. economists and strategic thinkers. We
Conference probably was waiting to There were allegations of corruption would also like to encourage first-time
cash in the opportunity to see fall of the against many functionaries of the writers with the only requirements being
coalition government and then enter government including Ministers. a concern for and the desire to
into a possible alliance with the Eradication of corruption, it may be understand the prevailing issues and
Congress to regain the lost power. This mentioned here, has remained one themes of life in Jammu & Kashmir
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 Contributions may be investigate,
behaved more or less like a friendly ally November 2002. Ironically, the end of
descriptive, analytical or theorectical.
of the Congress. However, in first week the day the allegation are against
They may be in the form of original
of December last year, the Congress and government itself. The most
articles or in the form of a comment on
the Peoples Democratic Party decided unfortunate part of the story, however,
current events. All contributions have to
to bury their differences and resolved remains that instead of coming clear on
be neatly types in double space and may
to strengthen their ties and work the allegations, the government has
be sent to the address given alongside or
towards a renewed alliance for chosen to level counter allegations
e-mailed to the editor.
forthcoming elections. It is unwise to against the National Conference for
predict as what political situation what they did before 2002. Probes may
While the editor accepts responsibility
emerges later this year but as of now bring the truth to fore in due course of
for the selection of the material
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
published, individual authors are
Conference –are in any position to form corrupt but lesser than National responsible for the facts, figures and
the government at their own. There has Conference. viess ithe tier articles.

Epilogue Ø

January 2008
HEAR AND HEAR

WHO SAID WHAT

At 24 p
laces, K s l i fe u n der
report s
ays the
undal Cm’ ner,
wrongs at . G ard
of Fore
st Offic thre ra t or in
approva ers had
e op e
.... still
l of Min
ister... telephon n with
maintai
the gov
ernmen collusio s
militant
ns that t
no dire there is
ct invol
vement
any min of
ister Various
TV News Channel

Ali Mohammad Sagar


National Conference

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

Epilogue Ø

January 2008
C H R O N O L O G Y
J&K JANUARY 2008

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


Chief Minister Ghulam Nabi Azad expands Minister for School Education and during 2007, 148 persons lost lives in 476
his Council of Ministers by inducting four President of state unit of Congress militancy incidents.
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
Union Minister of State for Commerce Jai surrounding it.
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
State Legislative Assembly meets for its People's Democratic Party (PDP).
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 Sacked: Peerzada Sayeed
and Medical Education announced in the January 26:
Legislative Assembly that the coalition January 16:
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
As many as 66 passengers of Karvan-e- and Mohammad Yousuf Taing, MLC and
January 11 : Aman bus crossed sides at Kaman, the former Secretary Culture Academy were
Jammu-Srinagar National Highway was last Indian military post on the Line of given Padma awards. Justice A S Anand
reopened for the traffic after being Control (LoC) in Uri sector in north Kashmir. has been awarded Padma Vibhushan,
closed for three days due to landslide at Mian Bashir Ahmed Padma Bhushan while
Panthyal Prof Mattoo and Mr Taing have been
January 17:
awarded Padma Shri.
Deputy CM Muzaffar Hussain Baig says
January 12: that he State Government has proposed
Security forces gunned down three to establish a residential and technical January 30:
militants of Lashkar-e-Toiba (LeT) in University in the State to offer Islamic, The Speaker of State Legislative
Doda district scientific , technical and other education Assembly Tara Chand adjourns the
as also utilization of finances of Jamiyat- session sine die, ten days ahead of the
January 14 : e-Ahalihadees, Salfiya Muslim Education schedule, following unprecedented
Trust and Wakf Tanzeem Trust protests from the Opposition National
Shabir Shah, chief of the Democratic
Freedom Party (DFP) returned to the All Conference seeking resignation of two
Parties Hurriyat Conference (APHC) led January 18: Ministers for their alleged role in the
by Mirwaiz Umar Farooq. Taj Mohiudin, while answering a question Forest scams.

Epilogue Ø

January 2008
D I A L O G U E
HASEEB A DRABU

J&K is a Rich State


Run by a Poor Government

Interview with Dr Haseeb A Drabu

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.

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
five years (before 2003) there was no government, for instance, had no
from the present government that
discussion on the plan? There was total estimates of the off-budget borrowing
there was a fiscal crisis in 2003.
However, in June same year, the lack of information. The Finance Minister and guarantees given by it. Therefore,
government presented a Zero Deficit would give a figure of Rs 5000 Crores and we could have faced a default. There
budget. How do you explain this revised estimates would suggest Rs 2000 might have been borrowings that weren't
journey? Crores. It was a fiction. I wonder how provided for in the budget. My proposal
things used to move without having an was agreed to and we started working on
My first experience was quite advance meeting with the Planning new scheme of things.
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 The system was in disarray. Therefore I now we hear that the brain behind this
office chambers in civil secretariat for a suggested the Finance Minister (Muzaffar innovation was yours. Please share
meeting. When I went in, the Minister Hussain Baig) that instead of presenting with us the inside account of this
had with him Finance Secretary and budget we should look out for a Vote on budgetary balance and innovative term
Planning Secretary. The issue being Account for three months till we arrive at which was hitherto unknown to Jammu
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
I quickly gave him the outline of the nothing else. States can not have budget
system, was completely adhoc and
problem as I saw it. The plan size hadn't deficits because they do not print notes.
unprofessional. I could gather that there
been finalised and that meant we would If you can not print notes and your budget
was no application of mind. It was an
entirely loosely knit system where have a fictitious number in the budget. still shows deficits this means that the
estimates would crop from the bottom And once the plan size was assumed in part of the budget corresponding to the
while there should have been a the budget without resources in sight, it deficit is unfunded. This reflects
formulation of estimates from the top. It was bound to be financed by higher mismanagement. Therefore, the budget
was more like a fiction. The budget borrowings from institutions and that should have zero deficits.

Epilogue Ø

January 2008
D I A L O G U E
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
advising Jammu and Kashmir the power budget out and there are no their branches. The Jammu and Kashmir
government on economy. How much, taxes on anything else. For example Bank stayed back and served the people.
do you think, the state has benefited agriculture and horticulture sectors are There was a huge business growth.
from your advices. Can you please not taxed and industry is enjoying a slew
enlist the major reforms? of exemptions. Sooner or later these gaps 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
generally sit outside the system. But I can story of 1990s was quite simple –we
claim credit for few things. One, that we Suggestions… benefited by exit of other banks and got
brought professionalism in the system business in huge volumes. The latest
and ensured a complete transparency. phase involved a strategy of
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 P r 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
where I feel that I played definite role. more flexibility. Unfortunately, in an era
marked by three things:
The separation of power budget from the of centralized financial management,
main budget is another area where my the State Finance Ministers will soon be
reduced to the 12th man in the cricket * Interest revision
inputs brought discipline in the system.
team. Therefore, the Finance Minister * Rise in interest rates and
should get some more flexibility. A re- * People going back to other
How do look at the debt burden
look at the plan methodology is essential. banks
problem of Jammu and Kashmir. Is it
fiscal or macro-economic? It is growing We should plan in a different manner –say
by ever year. Your assessment of the to have sub plans etc. The government Looking at the prevailing scenario, we
should also focus at putting in place a did a quick change in strategy. Instead of
problem please.
strong institutional capacity for lending endlessly we tried 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 important thing –the government should per cent NPAs which we revised to 75 per
burden. Your debt has to be seen in look at corporatising a large part of its c e n t . We b r o u g h t a c o m p l e t e
relation to SDP of the state. Compared to operations. In this direction a beginning transparency in the system. You may note
other states in the country our position is c a n b e m a d e w i t h t h e Po w e r that first time in the history of any bank,
far better. Development Corporation and I am sure our balance sheets for two consecutive
this will yield tremendous results. years had no qualification alters. This
How do you look at the overall speaks of transparency in the system.
economic scenario of Jammu and The Jammu and Kashmir Bank has been
Kashmir? Jammu and Kashmir is a growing with enormous pace. Please At what position do you rank your bank
resource rich state but still it is seen as explain the growth story of your bank. in terms of public trust and growth in
poor in outlook. What are your the country?
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
came up in 1938. The major phase of as one among the 150 most valuable
Jammu and Kashmir is a rich state run by growth, however, was in 1970s when the companied in India. Our public trust is
a poor government. The natural Bank moved out in the state and enormous and growth stupendous.
resources of the state are rich but elsewhere in the country. The second
finances of government are poor. There phase of growth was in the 1990s. The What is your Bank's role in micro-
are obvious gaps in the system. People civil strife had pushed most of the banks enterprise in Jammu and Kashmir. Can

Epilogue Ø

January 2008
D I A L O G U E
HASEEB A DRABU

we expect you taking some lessons sheer accident. And then coming to As we know that you were brought into
from the Grameen Bank of Bangladesh Jammu and Kashmir was rather a bigger Jammu and Kashmir government as
which earned Dr Muhammad Younis accident and not a decision by careful Economic Advisor by then Chief
Nobel Prize. design. Minister Mufti Mohammad Sayeed.
Some people say that somewhere in
Going back to my school days, I was poor early 1990s you were speaking at a
See, what Grameen Bank did has always
at sciences. In my higher secondary Seminar in Delhi where you
been a part of our operations. What all
examination, I failed in Chemistry. This disapproved of land reforms policy of
we have in Jammu and Kashmir is small
made me to change the choice of my Sheikh Mohammad Abdullah and Mufti
and tiny enterprises and financing them
subjects. I shifted to Amar Singh College spotted you there as the right person
is a part of our portfolio. However, we
in Srinagar and took up Arts stream –with suited to his ideology.
can not exclusively devote ourselves to
this sector alone and we need to look at Economics as one of the subjects.
the big enterprises as well. Meanwhile, I developed keen interest in I don't know any such thing but let me say
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.
(Laughs) This reflects a total lack of Economic Advisory Committee to the
information and understanding. Our total Prime Minister, headed by Mr Bimal In 2002-03 two persons had suggested me
lendings are of more than Rs 23,000 Jalan. Later, I met Mr C Rangarajan, who to work with Jammu and Kashmir
crores while what all Jammu and Kashmir was then Deputy Governor of the Reserve government –KC Pant and Dr Manmohan
government owes is something around Rs Bank of India and I was made a member of Singh. In fact, I had settled down in
2000 crores. Therefore, it is only eight the Finance Commission. When Mumbai when Dr Manmohan Singh called
per cent of the total interest which we Rangarajan retired from the RBI as me in Delhi and asked to go to Kashmir.
get from the government. 92 per cent of Governor, he recommended me to Mr KC
our interest earnings are from outside Pant for a role in the Planning
the government. So where is the question Commission. What role do you aspire to take up after
of linking bank's growth to the poverty of your term with the state government
government? and the Jammu and Kashmir Bank is
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?
What would the J&K Bank look like two then I moved to the newspaper (Business
years later? Standard)
I have already worked with the
organizations you have named. Honestly
Regional in origin Some experiences from Business speaking I want to retire after my present
National in profile Standard…? assignment. I am saying this from the
International in quality of operations core of my heart.
Well, that was the stint I enjoyed most in
Can you please share with us something my life. I was sitting at a powerful Can we see you performing a larger role
about the making of Dr Haseeb Drabu position and my writings wielded a lot of in Jammu and Kashmir politics?
–the economist? People don't know impact. The Corporate world sometimes
much about you. appeared worried. My regular column in
the Business Standard would often come No, I am happy with what I am doing.
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

Epilogue Ø

January 2008
The Journey to a Friend’s House
IS NEVER TOO LONG

This Month Remind Your Friends, That You Care!


That, You Care for Their Intellectual Growth

Jammu and Kashmir’s Monthly Magazine

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S P E C I A L R E P O RT S
TRANSPARENCY

Tackling Corruption :
Trends Reversed?
Zafar Choudhary

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
ahead of schedule amidst 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 main opposition National 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
M i n i s t e r s ' ( Pe e r z a d a M o h a m m a d
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. NC MLA’s protesting against corruption in legislative assembly

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Interestingly, while the government all


along goes on defending the ministers, The most high profile case of
even a cursory glance at the Kundal
Committee report would reveal that the Mufti regime against corruption
Forest Minister (Qazi Mohammd Afzal was the one which involved a top
and his predecessor Tariq Hameed
Karra, though not identified by name) IAS officer Ajit Kumar.
have been nailed 24 times for approvals
to the wrongs for which the officers had
been indicted and severe strictures In August 2006 Azad sacked 15
passed against them. It makes one to officials for established case of
doubt on whether head of the probe
panel compiled his report sparingly or corruptions against then. Most of
the government is turning blind to all them were small fishes. The high
those paragraphs (in the report) which
conclude that the scams had approval
profile name in Azad lists was of
Defensive : Azad in assembly
of the Ministers. The Ministers, Sayeed Asghar, then director
however, continue to stick to the chair Commission's affairs. It has been lying
and government refuses to read those headless for close to two years now. The rural development, Kashmir
lines. SAC did receive an overwhelming public
response against corruption. More then
1700 application have so far have been The crusade against corruption
The Paradox :
received and many decisions delivered was renewed with more vigour
against senior Ministers, top
Remember the first session of the bureaucrats and other functionaries in and resolve when Azad took over
present assembly and first promise the cases of corruption and misuse of as CM in Nov 2005.
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
Interestingly, among its first few
Peoples Democratic Party leader and organization was re-energised to weed cabinet decisions, the Azad led
Deputy Chief Minister Muzaffar Hussain out corruption from public life. Radha
Baig, “I asked Mufti saheb that I want to
government reinstated Ajit
Vinod Raju, a police officer of high
do something big for common good, integrity, was brought in by Mufti
Kumar suspend by Mufti
please suggest me what it should be... regime to wield the tough baton of war government on corruption
he asked me to work on a legislation for against corruption.
setting up of State Accountability
charges. Not only this, Kumar
Commission (SAC).” With powers and was given an honourable
During Mufti's tenure as Chief Minister
status of the High Court, the
(Nov 2002 to Nov 2005) some 60 officers posting, though he is yet to come
Accountability Commission was
were terminated from the services as clear from the courts. And no
supposed to be the highest anti-
government, claimed established cases wonder that Syed Asghar
corruption ombudsman empowered to
of corruption against them. The most
probe complaints and try public men
high profile case of Mufti's regime
Hussain, sacked by Azad
including the Chief Minister and
against corruption was the one which government in 2006 is now the
Ministers. This underlines the priority
involved a top IAS officer Ajit Kumar. In state secretary of Mufti's Peoples
which the present government has been
fact this reiterated before public the
claiming from the day one. The
government's seriousness of an
Democratic Party. The message
Commission was set up after an
unsparing was against corruption. here is loud and clear. Slogans
inordinate delay, however, a year later
its chairman resigned after going public are for public consumption.
with the allegations that the When Ghulam Nabi Azad took over as
government was interfering in Chief Minister in 2005, he renewed and

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refreshed the war against corruption.


Azad often described corruption as more ‘It is coercion at bottom,
serious challenge before Jammu and
Kashmir than militancy. Like Mufti (who
Collusion at Top’
convened a special session of assembly
to pass legislation on SAC) Azad too
Interview with Dr Ashok Bhan, Commissioner SVO
convened a special session in December
2005 to get amendments in the anti-
corruption law passed in assembly to Since past few years there has been a and by our own monitoring. And the level
make it the most stringent in the tremendous hype that Jammu and of success has been reasonable. From
country. 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 always Interestingly, from the trap cases one
On August 15, 2006 the Azad led
reiterated that weeding out corruption can make a fair idea of where the
government announced termination of
is at the top of its agenda. In fact the corruption takes place most. Out of
the services of 15 government officers for
present Chief Minister Mr Ghulam Nabi these trap cases, the highest (26) were
established cases of corruption against
Azad declared in his first press reported from the Revenue department,
them. The high profile name in the list
was that of Syed Asghar Hussain, Director conference in November 2005 22 from Police, 17 from Engineering
Rural Development, Kashmir. Infact, (immediately after taking over as CM) departments and 12 from Finance and
Asghar and the then Minister for Rural that eradication of corruption makes allied departments. Information about
Development Peerzada Mohammad his priority number one. An all many cases was generated through the
Sayeed both were indicted by the SAC for pervasive and intensified war against whistle blowers.
their involvement in the Rural this deadly menace followed. Two
Electrification scam. Asghar was sacked years down the line, where does Unfortunately, we observed that the
but Peerzada was spared on the grounds Jammu and Kashmir stand today in level of information generated through
that allegations were yet to be proved. terms of transparency in public life? different sources was coming down.
The SAC chairman had said that “the Perhaps they were no more ready to
Minister is neck deep in corruption”. They (Transparency International) talked come forward with information fearing a
However he managed to stay on till shabby treatment from the immediate
about petty corruption. They visited
January 2008 when a legislator made
some ten or eleven departments and did system for taking lid off the rot. This
allegations against him.
some sample testing as how much a matter was discussed at appropriate
common man has to pay for the basic levels. Now the government (also
Interestingly, among its first few cabinet services. Though I am not in full through the speech of the Chief Minister)
decisions, the Azad led government agreement with the scheme of their has send a clear message that whistle
reinstated Ajit Kumar suspend by Mufti testing and choice of samples but they blowers deserve due honour. This is likely
government on corruption charges. Not did a great job in bringing this to further encourage the genuine
only this, Kumar was given an honourable (corruption) menace to focus. The information generation system.
posting, though he is yet to come clear
government was seized of the challenge
from the courts. And no wonder that Syed
and an increased attention came in Apart from the political rhetoric and
Asghar Hussain, sacked by Azad
against the corruption. The Transparency obvious blame game, there is also a
government in 2006 is now the state
International sparked a cause of action feeling that conflict situation also had a
secretary of Mufti's Peoples Democratic
Party. The message here is loud and clear. for all –for the government and for the lot to do with promotion of corruption.
Slogans are for public consumption. public. Your analysis please…

Again going back to the first session of In our working methodology, we too have Your analysis is true. In fact the conflict
present assembly one recollects the tried to target the petty corruption. In situation weakens machinery of the
scathing attack of coalition government fact one has to understand the pyramid government in keeping a check on all its
against National Conference for corruption as a coercion at bottom arms. Conflict situation has definitely
'institutionalizing' corruption. And now as becomes a collusion at the top. Under influenced un upward trend in
last session is adjourned sine die, one this regime of increased focus against corruption. Figures explain this well.
finds the coalition at loss of words when corruption we have tried to nip the From 1990 to 1996, Jammu region
talk of corruption is all pervasive. targets both ways –by public mobilization recorded 76 per cent of the total cases

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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, See, corruption is widespread in country disposals etc.
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
corruption has really been 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
Instead of calling institutionalized, I of the status (of the persons involved). cases –which means around 750
would rather say that corruption here is inquiries a year.
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 initiate suo motto proceedings based end of the day. If we look at the
huge but silent scandal. The amount due on your in-house research? statistics of past few years, of the total
to the beneficiaries ranged from Rs 200 cases registered between 1990 and
to Rs 500. They (the poor beneficiaries) We generate information at different 1996, 64 per cent could not be proved;
would be happy to get this amount but no levels. There are very few people who between 1997 and 2002, 66 per cent
loud cries if this did not reach them. So, would approach me directly. But they could not be proved. The trend
some officials considered the second meet our officers and share information. improved post 2002. 73 per cent of the
option. They (officials) did not send Another way is through written total cases registered between 2003
money to a large number of complaints. However, the written and 2005 were proved. As we compile
beneficiaries. The amount was swindled. the figures of cases registered between
complaints have not proved very
Now you see (for example) SICOP or 2005 and 2007, it will emerge that as
productive. Proceedings are initiated
Super Bazaars. They are supposed to many as 90 per cent have been proved. I
after we are convinced (to a certain)
supply materials to the government am happy to inform you that out of 65
level that prima facie there becomes a
departments and run their affairs out of cases registered in 2005 there is only
case.
the earnings on sales. But in connivance one case which is still under
with traders they overcharge the items. investigation –all others have been
And what about anonymous 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
has the government as their counter- Yes, that is what I have tried to explain. Vigilance proceedings, as we see, take
guarantor. Same is also the case with idle In fact, on getting such complaints we too long to reach a conclusion. We
purchases in various departments, ask our officers to first check reputation have often seen cases taking 15 to 25
particularly the Engineering of the person against whom a complaint years and in many such cases the
departments. has come. If our test check reveals that 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
corruption in Jammu and Kashmir? understand in such long proceedings
There have been many allegations but How many complaints of corruption do the damage to the reputation of an

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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-
We are seized of the issue and are the person (investigator) is immediately waiting, another top IAS officer, the
concerned about this slow pace. (In fact) changed and action is initiated. Not many Principal Secretary of General
this is a loss to us also. For last ten years people know that the appointments in Administration and you shared the
the average conviction rate has been Vigilance Organisation are clearly by a honours. Does this selection give to
12.5 per cent. Because of delays people high powered committee headed by the understand that honesty prevails only
loose interest in cases and they generally Chief Secretary (DGP is also a member) at the top and the rot has
forget (what had happened). Slow pace is and many things are taken into account accumulation at the bottom only?
detrimental to the success in rate of while making selections. We also keep on
conviction. (Not surprising in this shifting people. Another thing (which I We I am not the right person to answer
scenario) that 400 cases are still pending would like to mention here) that we have this question. But I personally believe
before courts. This may take another few done away with the system of having that such awards of appreciation should
years to clear these cases and during this specialists for particular nature of cases. go to the people who have ten to 15
time you get new cases also, thus, This has been done to ward off the risk of years of service to go. This can be a
pendency is carried on. You may know, breeding vested interests. 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
Your reputation of an honest and exceptions. law brought in the crusade against
efficient officer has very few parallels corruption?
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
(I must assure you) there is a definite forthcoming, there is also problem of having it in place.
system of checks. But let me say that obtaining credible evidences but in case
whatever we have achieved today, the of bottom you have many complainants.
So far, we have taken over properties
credit for all this goes to our investigators (Simplifying further) in fact, the bottom
worth Rs 3.5 Crores in 12 cases of
for the courage (they have demonstrated is the collection terminal. But this not a
corruption. Now a new trend has come
in being above board). I would again say matter of policy for us, what all we need
up. The people (with dubious money)
that there may not be many people who is specific complaints and credible
are going in for Benami properties
can approach me but you must evidences.
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.

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REFUGEES

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.

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
Pa k i s t a n R e f u g e e s r e q u 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 Having lawfully acquired immovable are even disqualified from being
majority. With another tenure coming to property in the state, and he has been members of the village Panchayat under
an end this year, their demands will be in ordinarily resident for not less than 10 Section 6 of Panchyati Raj Act , 1989.
deep freeze for yet some more time. years prior to the date (May 14, 1954). They, however, have the right to vote in
Lok Sabha elections.
THE GENESIS OF THE PROBLEM: Any person who, before the fourteenth
day of May 1954, was a state subject of Men like 83-year-old Jaggu Ram, say
During the Partition, 5,764 families class I and class II and who having they voted once immediately after the
(47,215 people as per official records) migrated after the first day of March Partition when Justice Mehar Chand
migrated from West Pakistan and settled 1947 to the territory now included in Mahajan took over as the first Prime
in parts of Jammu, Kathua and Rajouri. Pakistan returns to the state under a Minister of the Jammu and Kashmir. But
No land was allotted to them, but these permit of resettlement or for permanent after, the rules changed, Article 370
families did occupy some government return issued by or under the authority of came into force and they lost their voting
land and evacuee property, which later any law made by the state legislature rights. Ram says disillusioned by this
they were allowed to retain with certain shall on such return be a permanent discriminatory attitude of Jammu and
conditions. In all, over 46,466 kanals was resident of the state. Kashmir government, these families had
occupied by these families. But this was once even decided to leave the state and
the land they cultivated, but never Since the West Pakistan refugees were settle down in Punjab. But it was then
owned. not residing in the state territory, they chief minister Sheikh Abdullah who asked

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REFUGEES

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 relief
Between conversations, refugees like 70- regrets. Some have meagerly paying
year-old Mohan Lal say that once forms private jobs, some take tuitions, and the Those living on Custodian land and
h a d b e e n d i stri b u te d th e n for rest hope that some day there is a property should be allowed to repair
registration of West Pakistani refugees. change. 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 formalities
took 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 governments and para military forces seats of power. And unfortunately, just
education and even professional degrees like this one, they benefit a few at the
again require state subjects. Getting a Centrally sponsored schemes should be cost of thousands.

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S P E C I A L R E P O RT S
DELIMITATION

Delimitation Farce For a


‘Khush-hal’ Kashmir
Anmol Sharma

The rationale for including Delimitation daily, “For the third straight time, the
Commission in the Common Minimum Azad disrespected and sacrificed Mangat People's Democratic Party (PDP), the
Programme of the coalition government Ram Sharma for the sake of salvaging his main coalition partner in Congress led
was not only to end the disparity in the own incompetence, by remarking Government, boycotted meeting of the
number of the assembly seats but also to 'Punditji to is tarah ki assurances dete political committee …. as Abdul Rahim
end the political, social, and economic rahte hain' (KT, 16th Jan' 2008), and in Rather (Leader of Opposition in the
hegemony of one region over another. that way turning the senior most party Assembly) and Prof. Bhim Singh also
However, the truth is that it remained far colleague into a cheap sitcom stooge. didn't turn up, the meeting held in
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
Government…delimitation of
carelessly fooling around in the futile Chief Ministers are explicitly guilty of
constituencies at present juncture will
parleys and JKNPP leadership meanwhile ignoring and snubbing the
lead to neglect of some areas." (DE, I will
intermittently grabbing the agenda like constitutionally guaranteed
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
whistle with the ego of being a While addressing a press conference as
clichéd, it would nevertheless, be
international demagogue in the Assembly Co-ordination Committee Chairman and
pertinent to point out that the provisions
Hall of the Jammu Darbar. PCC (I) President Mr. Azad declared
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
elections… the setting up of Delimitation Then, he tried to place the carrot in front
Assembly, all of them belonging to the
Commission, Mr. Azad assured the of the donkey by floating a separate,
National Conference, embarked to
gathering that Congress will leave no unrealistic, and impracticable idea of
delimit the assembly segments based
stone unturned to remove discrimination increasing the number of seats in each
upon the obsolete 1941 consensus. The
with any region or sub-region of the region by 25%, which he very well knew
bar was discriminatingly set at 60,000
State' (DE, 11th Feb' 2004) before hand that JKNPP, NC, and PDP
voters for each assembly seat at Jammu
would never support. To quote a local

Epilogue Ø
18 ×
January 2008
S P E C I A L R E P O RT S
DELIMITATION

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,
It would be very interesting however to from nowhere his 'Sheikh Chilli' ideas of unconstitutional, and void abinitio. Still
see the how Farooq and Co face the the like, 50 seats each should be given to he displayed the fixation of doing those
Jammu electorate in the forth coming both the regions. kinds of things for the reasons best known
assembly elections. Farooq and his party to him and his leader.
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 To illustrate an example by present predicament very well when he
lame excuse that delimiting would mean referring a local newspaper, 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. 'Former Minister for baitha hai, anjam-i-gulistan kya hoga.”
Education and senior Therefore, the citizens must exercise
If anything really, came in the way of their votes sensibly this time so that they
National Panthers Party do not elect persons who make fool of
setting up this Delimitation Commission,
it was the obdurate and intransigent legislator from Ramnagar, themselves are not opportunists, and
mentality of the representatives of take the people, who elect them, for a
Harsh dev Singh has said ride.
Kashmir. Their apprehension was that
delimiting constituencies would increase that his Party will move
the number of seats form Jammu and if
the demand of JKNPP to give eight
reservations to the people from POK
bills regarding delimitation
of assembly seats with 50
In Jammu City
living in Jammu were also met, it would seats each for Jammu and
polarize the power in the hands of non-
Kashmiris. That is the reason perhaps, Kashmir regions…' (DE,
Get your copy of
why Mehbooba termed the caucus 27th July' 2006, Bills for
meetings discussing delimitation as
“mazaak” and a futile exercise, which
50:50 Assembly seats, 5 yr Epilogue
she naturally never attended. LA term being moved:
Harsh) delivered
The biggest tragedy with Jammu is that it
lacks politicians with oratory and
leadership qualities like in Prof. Nirmal
Singh or Mr. Ashok Khajuria. Bhim Singh To illustrate an example by referring a
at your
on the other hand is in the habit of local newspaper, 'Former Minister for
making such fantastical statements, like
the one he had made in Parade Ground,
Education and senior National Panthers
Party legislator from Ramnagar, Harsh
doorstep
“Mahabharata will start if delimitation dev Singh has said that his Party will move
commission etc., is not constituted” (DE bills regarding delimitation of assembly
29th May' 2003), that now nobody takes him seats with 50 seats each for Jammu and
seriously enough. Harsh Dev Singh who is Kashmir regions…' (DE, 27th July' 2006,
sadly notorious for losing his temper in
public meetings and debates in the
Bills for 50:50 Assembly seats, 5 yr LA
term being moved: Harsh)
Call :
Assembly Hall has also contradicted himself
many a times on the delimitation issue. Interestingly, the number had actually 9419180762
Epilogue Ø
19 ×
January 2008
I N F O C U S
THE MONEY MOVEMENT

Budget 2008-09 :
Political Courage Sans Innovation ?
Dipankar Sengupta

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.

Backdrop Government) took the politically continued throughout the duration of


courageous step of postponing the this coalition government.
For one this is the last budget that is budget and going in for a “vote-on-
being presented by the Congress-PDP account” instead as the budget framed One aspect of this effort is the
coalition government as it completes its was under-prepared and in a mess. The introduction of “zero-deficit” budgets.
full tenure of six years. The budget numbers about to be presented were Another aspect of this effort can be seen
speech delivered by fictitious and lacked credibility. It was i n t h e
Mr. Tariq Ahmed rationalization of
TABLE 1: BUDGET AT A GLANCE
Qarra resonated with (in Rs crore) taxes and single-
this theme as he minded and even
Items 2002-03 2006-07 2007-08 2007-08 2008-09
described the narrow stress on tax
upward economic (Pre-actuals) (BE) (RE) (BE) collections. How
trajectory traversed (RE) has this strategy
by the State in the A Revenue Receipts 7524 11981 13555 13901 15316 fared? In absolute
last six years leaving B Revenue Expenditure 7442 10212 10763 11855 12089 numbers, the
others to infer that it Revenue Surplus (A-B) 82 1769 2792 2046 3227 State's own tax
was indeed this revenues have risen
C Capital Receipts 1771 2182 2712 3453 3127
government that was from 936 crores in
D Capital Expenditure 2391 3951 5504 5499 6354
responsible for the 2 0 0 2 - 3 to 2 2 9 9
economic upturn. He Capital A/C Deficit(C-D) -620 -2182 -2792 -2046 -3227 crores in 2007-8 and
went further. The E Total Expenditure 9833 14163 16267 17354 18443 are projected to
minister also F Total Receipts 9296 14163 16267 17354 18443 rise to 2666 crores
claimed the Budget Deficit (E-F) -537 0 0 0 0 in 2008-9. As a
restoration of proportion of State
Fiscal deficit -1881 -1509 -2011 -2737 -2330
financial governance Domestic Product
Primary deficit -722 -308 -760 -706 -730
and discipline which this means an
in turn enabled the increase from 6.2%
State government to spend increasing realized that not only would the plan size in 2002-3 to 10.2% in 2007-8 and is
amounts in capital formation. have to be brought down to more 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

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20 ×
January 2008
I N F O C U S
THE MONEY MOVEMENT

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
this sector by undertaking reforms the It is well known that the sector that
The first indicator of the magnitude of
most visible and politically difficult contributes the most to employment is
the task that lies ahead was described by
examples being the metering of agriculture. The sector that has grown
Dr. Drabu himself when he pointed out
connections and the hiking of power most rapidly is the Arts and Crafts sector
that salaries alone exceeded the State's
tariffs. It is to the credit of the employing 340,000 artisans. Other
own revenues! The estimated salary bill
government that the independent sectors that have also grown are tourism
in 2008-9 is 4771 crore rupees which is
auditor has certified to the central especially in the Jammu region while
government that the state has achieved
the benchmarks mutually agreed upon by Memo Items:
the Centre and the State governments. Gross State Domestic Product 16980 29115.26 32172.24 32172.24 35872.05*
Own Revenues/SDP ratio (%) 8.9 13.7 14.7 15.4 16.1
The nature of fiscal reforms whether Tax Revenues / SDP ratio (%) 5.75 8.6 10.1 10.2 10.6
they are in the realm of generating Fiscal Deficit / SDP ratio (%) 11.07 5.2 6.2 8.5 6.5
resources or changing the composition of Salary+pension+int/rev rec (%) (A) 56 47.6 44.5 53.6 47.7
expenditure increasingly in favour of
capital formation (from 23% in 2003-4 to projection 
*  on 
an 
assumption 
of 11.5 % 
growth.
32% of total expenditure in 2007-8) has
occurred in a milieu of increasing double the 2002-3 figures of 2394 crore tourism in the Valley has exhibited some
transparency the most important rupees when the coalition assumed signs of recovery. It is not necessary given
manifestation of which is the publication power. Thus the increase in the salary bill the Coalition's stated goal of
of the annual Economic Survey of the during the Congress-PDP rule is more employment creation that the budget
State a practice that has been prevalent than the increase in tax revenues! The allocates funds to sectors depending on
in other states. This document which is a second is the massive outflow on account contribution to employment or even
commentary on the State's economy of power where expenditure on power growth. That would be simplistic and
describes the context in which the massively outstrips revenues although on even unnecessary. For example the
budget making exercise takes place so as this count the state government can be dynamism of the Arts and Crafts may not
to make debate on the budget more credited with bringing it down (by raising need heavy financial assistance given
meaningful. revenues more than threefold from 268 local entrepreneurship and effort. Thus
crore rupees in 2001-2 to a projected 922 the quantum of funds spent in this case
We are perhaps seeing the beginning an crore rupees in 2008-9). will be less important than the quality of
era where the state of Jammu and intervention required.
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 Kashmir in the company of other state On the other hand productivity in the
being looked as a state that can and few of which enjoy healthy financials and state's agricultural sector (which
should stand on its own two feet. Indeed, not a state that has to be constantly accounts for 29.44% of the SDP and
when it was announced that the state bribed into submission! This however is supports 80% of the population) is below
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

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21 ×
January 2008
I N F O C U S
THE MONEY MOVEMENT

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 advantage of this
outlay. What is embarrassing Figure 1. opportunity. On the other
is that for certain heads, Where does the rupee come from? Composition of Revenue Receipts hand the government has
particularly Rural Resources from the Centre Own resources 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
23% 34% 38%
expenditure was at a time when most
approximately 149 crore colleges in the state are
77% 66% 62%
rupees only! Similarly, running with the help of
against the plan outlay contractual lecturers hired
allocation of 238 crores 2002-03 2007-08 2008-09 on a temporary basis.
committed to irrigation and (Projections) 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 Figure 2. cleverer policy and one that
allocated budget for a Where does the rupee go to? Composition of Total Expenditure would also be politically
sector that needs it most Resources from the Centre Own resources acceptable would be to set
and employs the most up technical institutes or
number of people is polytechnics that would at
alarming and makes a 24% least equip students with
32% 34%
mockery of the claim that skills needed for the job
this budget is an market. Clearly, much of
76% 68% 66%
“employment budget.” This the capital outlay of 70
underutilization of the crore rupees on colleges
allocated amount is also is to 2002-03 2007-08 2008-09 could have augmented the
be expected, given the size (Projections) 26 crore rupee allocation
and topography of the state, made to technical
the centralization of its governance and towards educationists and health institutes. Here unfortunately, the
complete disempowerment of workers from the day the coalition budget falls, a victim to a lack of
Panchayati Raj Insitutions in the state assumed office would have delivered imagination and innovation on part of the
who could have otherwise been impressive dividends cumulatively over coalition.
entrusted to plan and execute some of five years. This is while it is impossible to
these investments given their proximity do anything about the government The areas that consume the greater
to the farming community. Thus, in this employment at any single point in time; shares of the capital outlay are Social
case a budget allocation made in a vital incremental changes can have significant Services (1283 crore rupees or 26.2 % of
sector comes undone because of cumulative effects even in the medium the proposed total capital outlay), power
governance and the centralized term. (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
The other area in which the budget is a stated government goal of “employment proposed total capital outlay). General
victim of government paralysis and lack generation” are serious. It is well known Economic Services have been allotted
of innovation is evidenced in the runaway that given the lack of institutions that 567 crores (11.6 % of the proposed total
salary bill. It is a paradox that the size of impart technical skills, the employability capital outlay). The sectors that directly
the state government is so large when of people who graduate from colleges is affect the productivity of the economy

Epilogue Ø
22 ×
January 2008
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
and distribution (812 crore rupees) with take advantage of the generous scheme demonstrated (although few have
generation getting a modest amount (285 of subsidies that are in operation. A noticed) how false is the stereotypical
crore rupees). The impact of investment better indication of investor intent is the image of the state as one that has to be
in power generation will come later when surge in the demand for land in the continuously bribed into submission.
apart from hard infrastructure the designated industrial estates and the The lack of political innovation or vision
financial health of this sector improves government is responding to these is demonstrated in the failure or refusal
with the reforms in place. Admittedly, in signals as evidenced in the allocations to empower Panchayati Raj Institutions
this area deadlines have been met. made to the industrial estates. of the state. It is also demonstrated in
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 construction
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
Figure 3.
Where does the rupee go to? (In greater detail) prevented a commendable turnaround in
government finances into being a
spectacular one.
Security
Maintenance 3%
8% Others Others
10%
Salaries
9% GLOSSARY OF TERMS
Security 24% Salaries
4% Power 30%
10% Vote-on-Account
Power Pensions
10% 6%
Interest Capital Exp As opposed to a Budget (which is a
10% 34%
Capital
Expenditure Interest complete set of accounts, including both
9% Pensions
28% expenditure and receipts and which lays
5%
out both the manner in which the money
2002-03 2008-09 is to be spent and how it is to be raised), a
(Projections)
vote-on-account which is resorted to
mainly by care-taker governments deals
Gram Sadak Yojana. This investment is government itself, the shortcomings of with only with the expenditure side is a
vital as connectivity in this mountainous the budget become all too evident. This device by which the government obtains
state is still weak. Increasing per se is not the fault of the budget. The the vote of the legislature for a sum
connectivity is a vital precursor to the budgets are after all periodic sufficient to incur expenditure on various
exploitation of the state's bio-resources expressions of the state's long term items for a part of the year. This is a stop-
and mineral wealth, indeed all economic economic policy. This in turn is gap arrangement that enables the
activity. dependent on political management of government to function till the budget is
the necessary difficult decisions that approved by the legislature.
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 Zero-deficit Budget
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 A zero-deficit Budget is merely one
corresponding reforms continue and
manner the state's tax revenues have where estimated receipts and estimated
investors grow more confident. As things
grown a feat not matched by many expenditures are equal implying all items
stand today, where industry is
states special category states or of expenditure have been budgeted only
concerned, the State holds a unique
otherwise. It is also evidenced in the after identifying the resource to fund
position where the proportion of
manner that power reforms have been them.
phantom or nonexistent units of the total

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23 ×
January 2008
I N F O C U S
THE MONEY MOVEMENT

Revenue Account Revenue Receipts recovery of its own loans advanced to


State Corporations, Co-operative
The revenue account comprises Revenue receipts are all those incomes Societies, etc., and are entered in the
which do not incur repayment liability. capital account. On the outlay side of the
expenditures covering the routine
These include, in addition to the State's capital account, there are expenditures
administration of the State, such as
own revenues, grants from the Central corresponding to the State's own
wages, salaries, maintenance and investment outlay and disbursements,
Government for the financing of State
repairs, telephone expenses, day to day Plans, as well as non-plan grants. which are comprised of repayment of
office running expenses and other State public debt and the loans and
overheads. Expenditures relating to the Capital Receipts advances made by the State to the
creation of assets - and this includes most various entities. Thus, both the capital
(but not all) of Plan expenditure - are in Capital receipts include internal debt, and debt portions of the Consolidated
the Capital account. loans from the Center and the State's Fund are under the Capital budget.

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.

Epilogue Ø
24 ×
January 2008
I N F O C U S
THE MONEY MOVEMENT

‘Figures Fuged,
Statistics Faked’

Abdul Rahim Rather

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
Instead, the Finance Minister should have The survey conducted by country's happy with performance of the coalition
drawn a comparison on what NC leading magazine India Today in its series government for its deviation from the
Government had achieved from Rs of “Best and Worst States” is an political and economic agenda. Does an
45,000 crore spending in its six year rule independent analysis of the shift outsider need to tell them about the
and what the coalition regime did with Rs economic condition of Jammu and scenario.
87,000 crore. Kashmir since the coalition government
took over from National Conference. In Then the Finance Minister claims that the
In case of more spending the growth rate 2002-03 when we had just demitted coalition government has brought
of Gross State Domestic Product (GSDP) office, the India Today survey placed Jammu and Kashmir out of the fiscal
too should have gone up. However, this Jammu and Kashmir at 12th rank in terms mess. I would rather say that they have
was not the case. The Economic Survey of agriculture production while the latest actually pushed Jammu and Kashmir into
has showed that during 9th plan period, survey places us at 16th rank. Continuing a fiscal mess. Whether dishonoring of
State's growth rate was 11.98 but it went with the present trend of ignoring the Government cheques by Government
down to 9.96 during 10th plan. agriculture sector we may soon be at 20th Departments is hallmark of credibility of
Agriculture and allied services accounted rank. Similarly, in the primary health the Government"? As per my information
for 5.92 per cent in 2001-02 when sector, we were at number one during generated from credible sources, as on
National Conference was in power but 2002-03 survey but the latest survey has January 14, (two days ahead of the
this again came down to 1.32 per cent placed us at seventh rank. This is enough presentation of budget for 2008-09) bills
during 2004-05. for the government to understand as amounting to Rs 548 crore were pending
what they have done to the state's in the treasuries while Rs 165 crore worth
e c o n o m y. In infrastructure bills were pending in the Secretariat
The overall economic scenario has been
development, the State's ranking has treasury alone which including salary of
following an unhealthily trend over all
gone down from 8th to 11th, in consumer the employees. Overdrafts of the
these years. Take for example; the state's
market from 6th to 8th and in law and Government with Jammu and Kashmir
imports are increasing. This is not a
order from 13th to 15th. Bank have gone up to an all time high at
healthy sign. The import of grains and
Rs 2250 crore. Limits of both normal and
pulses was 86 lakh quintals in 1999-2000
There is deterioration in every sector. power ODs has been exhausted.
which had gone upto 89 lakh quintals in
Take the example of power sector. Employees were not getting their own
2005-06, an increase of 2.67 lakh
despite the Government's claim of GPF. Ministry of Railways' money kept
quintals. Similarly, import of vegetables
reforms in power sector including with the Government for payment of
was 9.73 lakh quintals in 1999-2000
increase in tariff, installation of meters compensation to the people has also
which was now 23 lakh quintals, a jump
etc, the power losses have gone up from been used. Cheques issued to earthquake
of 13.84 lakh quintals. Fodder's import
Rs 559 crore in 2002-03 to Rs 1281 crore victims are getting bounced. How can the
has gone up from 4.79 lakh quintals to 11
this year and are projected at Rs 1295 Government, in such a situation, boast of
lakh quintals. What does all this show?
crore next year. a zero deficit budget"?. Isn't it fudging of
figures and postponing of liabilities.
While the imports are following an
upward trend, at the same time, our The Finance Minister has claimed an
exemplary performance of the coalition One must understand that the Over
agriculture production and exports have

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January 2008
I N F O C U S
THE MONEY MOVEMENT

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 They talk about the fiscal discipline The situation which has assumed over
Zero Deficit, as claimed by the Finance and bringing the state out of the mess. these years is the one where no political
Minister, on last day of the financial year, Look at the figures and find out the would like to take the responsibility of
the Over Drafts should have been Zero. claims for yourself. On April 1, 2002, the Finance Minister and no bureaucrat
But in the present case this is more than Jammu and Kashmir had a total debt would accept the assignment of Finance
Rs 2200 Crores. Isn't it fudging of figures? burden of Rs 9800 crores and, Secretary. I am surprised, under such a
I remember, when we had demitted therefore, the per capita debt was at gloomy scenario; the Finance Minister
office, the Over Draft was Rs 817 Crores. Rs 9703. If we compute the figures as describes the budget as 'Zero Deficit'. It is
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
talked about Venture Capital Fund, accordingly the per capita debt would ABDUL RAHIM RATHER is leader of
Employment Mission and Self Employment be Rs 20,375. Is this the fiscal opposition National Conference. He was
Schemes. But nothing has been seen discipline, the coalition government Finance Minister of J&K till 2002.

June 2007

Epilogue Looking Beyond “K”

because there is more to know May 2007


Peace Process

April 2007
PDP-Congress Coalition
Schism
ARE YOU MISSING YOUR
March 2007
EARLIER STORIES ? Baglihar

February 2007
The Promise Ahead

Write to
editor.epilogue@gmail.com January 2007
Book of the year

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January 2008
I N F O C U S
THE MONEY MOVEMENT

‘We Have Brought Turn


Around In Economy’

Tariq Hameed Karra

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.

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 Imports as a percentage of GSDP (import too in relation to NSDP, the numbers have
wrong. You can't run with the hares and intensity): This has not increased. been based on the new series of 1999 -
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
from exports and hence there is a 2006-07 has mentioned as Rs.16779. I
Let us take economic growth, for resource flow from the country to the have made an assumption 6.5% growth
example Economic Survey has showed state. During NC rule there was a net for the current year and 7% growth for
that during 9th plan period, State's resource outflow from the state to the the next year and, based on such
growth rate was 11.98 when went down outside. assumptions with regard to growth ,I
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
growth of 12 percent in 9th 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
inflation and 6 per cent was real growth. Per Capita Income
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.
On rising imports, I have a couple of Income (PCI) during the period 1997-98
points to make:- (Rs.7128) to the year 2002-03 (Rs.7675),
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
and as I showed, per capita income has As regards the Per Capita Income 10th plan and by 0.31 per cent in 2000-01 and
increased, it is quite consistent and Rs.19899 for 2008-09, the following two declined in 2001-02!
expected that imports will rise. changes/aspects need to be understood:

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January 2008
I N F O C U S
THE MONEY MOVEMENT

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 correcting 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
Any criticism, based on this Presiding Officers of both the
survey, is subject to three House of Legislature on
major limitation:- 22.01.2008 for laying in the
House as prescribed under
rules.
This is a survey based on
sample method of survey. This
can not be a substitute for a There is no question of any
Government's report. deliberate attempts to delay
the presentation of the
Reports.
Data generation and
reporting has been a problem
in J&K. It is not clear as to II. FRBM
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
or have not done better. Any Draft rules since prepared
slippage in position does not and legally vetted by Law
necessarily mean hat our Department on December 7,
performance has gone down. 2007.
The performance of other
states may have improved. Rules formally approved and
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
you graphic details on every single Govt. of India have suggested that the
Receipts”. The discrepancies arose on
developmental work that we have done. State Act should be brought in line with
account of the two overdraft accounts
So where is the need to repeat it. the national act with regard to the cut off
and the processes relating to inter-OD
date for :
transfers.
SPECIFIC BUDGET RELATED ISSUES
Eliminating 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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January 2008
I N F O C U S
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 One has to see the income also. expenditure.
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.
1,000, then I am less indebted than you assumed the character of a “structural
even though my absolute debt is higher. deficit”. We need to break the current
An amendment bill has been drafted for Similarly, if my income has gone up 20 per level of overdraft into two components-
submission to Cabinet for approval. cent and debt has increased by 10 per a long term liability and a short term
cent, I am not worse off. Nor am I in a “ways and means” facility. We could
The issue highlighted by Hon'ble Leader debt trap. Please, do more sophisticated possibly look at meeting the first
of Opposition on presentation of economic analysis. component through a combination of
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
As soon as FRBM rules are notified, all funds. This will rise as and when
and perhaps the only way to go forward
requisite information on prescribed government employment rises. Hence
is to replace the structural part of the
formats will be placed before this House. pensions also rise.
overdraft by a long-term debt.

It is also assured that after the required IV. Overdraft


V. Position in Treasuries
statements are prepared and presented
before this House; an independent At the outset, I must say that, as a part
agency will be engaged for evaluation Hon'ble Leader of Opposition referred to
of the last year's Budget Speech, the
and authentication of the performance the position on January 14, 2008. Let me
Government took the decision to share
as reflected by the statements. give the specific details.
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
may be referred to wherein it had been OD-I = (-) 2092.57 crore
stated that, over the years the OD-II = (-) 195.64 crore
Hon'ble Leader of Opposition had stated
that state had a debt of Rs 9,800 crore on overdraft with JK Bank has shown = 2288.21 crore
1/4/2002 which comes out at Rs 9,703 significant increase. Power deficit has
crore per capita while as on 1/4/2008, been one of the major reasons for this. Total Pendency as on 14.01.2008 in all
the debt will touch Rs 20,561 crore (Rs The overdraft stood at Rs. 2,190 Crore – the Treasuries of the state was Rs.551.66
20,375) per person. Rs. 1,942 crore as normal overdraft and crore. The amount includes amount
Rs. 248 Crore as power account payable to FCI Rs.85.00 crore.
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
Overdraft has to be seen in relation to crore and not Rs 165 crore.
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 expenditure, the overdraft Total pendency under Salary, Pension and
unpaid, which I propose to pay. Baglihar
amounted to 15.33 % in 1996-97. The wages as on 14.01.2008 was Rs 6.06
bonds, I have paid.
percentage worsened to 18.37% in 1997- crore. The demand was cleared on the
98. On March, 31, 2007, the ratio stood same day.
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. 2007 was Rs 2,110 crore i.e. below the the treasuries in the state relating to
Suppose, I have a debt of Rs 1,000 and March 2007 level. The Government will salary/pension /Wages/ CDF/TE-OE-

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January 2008
I N F O C U S
THE MONEY MOVEMENT

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
I. Placement of Raw Tobacco & Bidis in excise duty on liquor sold through CSD to
Gratuity Commutation payments stand Zero percent rate category under VAT the tune of Rs.60 crore
cleared upto 20.12.2007.
The Empowered Committee of State This concession accounts for 15% of the
G.P.Fund payments have been made upto Finance Ministers took the decision for total concessions provided throughout
18.12.2007. placement of raw tobacco and bid is in the country.
zero percent rate category.
Contractors/Firms, Material/ Supplies The Government is seized of the concern
and Self- help-Group payments stand of ex-servicemen of the state. A Cabinet
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.
As regards pendency as on 22.01.2008 Committee
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
crore stand cleared. percent VAT category for purposes of It was solely with the intention of
providing relief to the common man that
uniformity and to check diversion of
the Government went ahead with the
VI. Expenditure of Rs 45,000 crore Vs trade.
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
The simple point I have made is that in health hazards of these demerits goods are yet to do so.
the past money was spent on salaries and and believes that it requires educating
I have used it for capital expenditure. the consumers about the ill effects of
DEVELOPMENT ISSUES
The most telling achievement that these and other like goods.
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 to the defence personnel both serving as maximize the limited working season for
crore and the Actual Receipts were well as ex-servicemen in the state. implementing and monitoring plan
Rs.14080 crore schemes.
Excise duty concession on liquor sold
The variation between Total Receipts, through CSD is available to the personnel Accordingly, the meeting between
Revised Estimates and Actuals is 0.1 % of the army forces. Hon'ble Chief Minister and Deputy
Chairman, Planning Commission for
Total Revised Expenditure Estimates for finalizing the Annual Plan 2007-08 was
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

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January 2008
I N F O C U S
THE MONEY MOVEMENT

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
The delay in the receipt of SoF tended to their plans approved by the District will now pick up. Besides, HUDCO loan of
neutralize the advantage of early Development Boards, which met during Rs.100 crore has not been released due to
finalization of Annual Plan 2007-08 the month of June, 2007 and first week of default on repayment. Similarly, the LIC
outlays. On 5th of April 2007, Planning July, 2007. loan (Power Sector: 95 crore, PHE: 20
and Development Department crore) loan has not been lifted so far due
authorized all the Departments and II. Current year's expenditure to some outstanding.
District Development Commissioners to
incur expenditure on on-going schemes If we compare the expenditure of the Power Sector is the major consumer of
upto 25% of last year's approved plan current year with the last year ending plan funds, both under the State Plan and
outlays both under Revenue and Capital November, the %age of expenditure the PMRP etc. The utilization of funds,
components during the current financial under Capital Component for the State as however, in this sector has been low
year. a whole for 2006-07 was 30.71%, and for under the schemes like APDRP,
the current year it is 30.47%. Similarly, Strengthening of T&D etc.
The approval of the Planning Commission under the District Plan, the expenditure
for the Scheme of Financing for Annual under the Capital Component during last In actual terms, the work done on the
Plan 2007-08 was received in the year ending November was about 32.72% ground is much higher than the
Planning and Development Department and during the current year it is about expenditure incurred. It always picks up
on the 9th April, 2007. In order to ensure 28.19%. The main reasons for the low during the last months of a financial year.
that developmental works do not suffer, expenditure are:
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
In so far as the District Sector is staff has not been posted yet. Similarly, 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
expenditure upto 50% of current year's Power Reform grant of Rs. 300 crore was
expenditure is the fact that the new
approved plan outlays on on-going not released - short fall Rs.300 crore.
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
The district plan outlays could not be scheme was put forth. Amounts for EAPs
developmental activities.
taken as final at that stage because of are included in Plans by design and
the then on-going exercise for redrawing usually remain unclaimed - shortfall
Against the tied allocation of Rs.355 Rs.298 crore.
the boundaries of the districts. The
crore under Externally Aided Projects
Re v e n u e D e p a r t m e n t i s s u e d 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
districts were again obtained from the Against the loan of Rs.635 crore, only an reimbursed was Rs.163 Crore. Hence less
Heads of Departments and final outlays expenditure of Rs.73.49 crore has been reimbursement - shortfall Rs.171 crore.
communicated to the districts on June made ending November,2007. It took
15, 2007. some time in finalizing the priority of
As will be seen from above the total short

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January 2008
I N F O C U S
THE MONEY MOVEMENT

fall of Rs. 931 crore is on account of such communication, the District be prepared/finalized and construction
schemes for which the amounts are Development Commissioners were also agencies also had to be nominated.
either not spent till money is received or authorized to utilize funds upto 50% of
in respect of schemes for which GoI is the outlays. 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
dated the 22nd May, 2007. In order to hampering developmental activities.
As neither the District Plan outlays nor align the District Plan outlays with the The projects for infrastructure
the State Sector outlays could be district boundaries notified by the development and agencies have now
finalized in the absence of the Scheme of Revenue Department, it was considered been approved by the Committee
Financing (SoF), it was considered expedient to have further consultations constituted for the purpose and most of
expedient to authorize the District with the Heads of Department. Finally, the staff has also been sanctioned.
Development Commissioners to utilize based on these consultations, District Keeping these points in view, the
funds upto the extent of 25% of last Plan outlays were communicated vide expenditure is expected to pick up.
year's approved outlays for ongoing this department's letter No. DP-16/2007-
V. Agriculture growth
schemes. This was done vide Planning 08/PS-901 dated: 15.06.2007. District
and Development Department's letter Development Boards met in the months
of June and July (First week) to approve The main reason is the reduction in the
No.DP-16/2007-08/PS-901 dated:
their respective District Plans. allocation of IWDP project. While as in
05.04.2007.
2001-02, the allocation of IWDP was
Rs.56.66 crore which represented about
The SoF was received from the Planning In due course, authorization was also
3% of total plan allocation of Rs.2,050
Commission only on the 9th April,2007. given to the District Development
crore, the allocation of this project in
Immediately on receipt thereof, an Commissioners to the utilization of 100%
2006-07 was Rs.51.42 crore which
exercise was initiated in consultation of outlays under District Plan, 2007-08
represents about 1.47% of the total plan
with the Administrative Secretaries and vide this department's letter No. DP-
outlay of Rs.3,500 crore excluding PMRP.
the Heads of Department to work out the 16/207-08/PS-901 dated: 08.08.2007.
outlays for the District Plan and the State
Sector Schemes. In respect of the district If allocation on account of IWDP is netted
The total expenditure in case of districts
outlays, this exercise was initially carried out, the relative %age capital outlays as a
upto November, 2007 is 32.67% of which
out on the basis of the recommendations share of total capital outlays for
46.28% is the Revenue and 28.19% is the
of the Bloeria Committee, which was not Agriculture & Allied Sector for 2001-02
Capital. Statement showing district-
final at that stage. It was, however, and 2006-07 work out to 4.2% and 3.4%.
wise outlays of Revenue and Capital and
considered expedient that while the % expenditure ending November 2007
acceptance of the report of the said is given in the table annexed at 'A'. Moreover, in respect of Agriculture
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
exercise, District Plan outlays were expenditure of Capital component is
amount of Rs.90.77 crore was also
conveyed vide this department's letter about 31% and in case of new districts the
available under the Centrally Sponsored
No. DP-16/207-08/PS-901 dated: %age expenditure of Capital component
Schemes (which include Central Share of
09.05.2007. While doing so, it was is 24.41%. This shows that the
Rs.84.13 crore of Central Share) during
stipulated that except in the case of expenditure of newly created districts is
2006-07.
Kupwara, Kargil, Leh, Poonch and Rajouri comparatively less as compared to the
Districts (not affected by ongoing old districts. This is because of the
following reasons: VI. Industrial production
exercise for re-organisation of district
boundaries) the outlays may be treated
as provisional as these may undergo In case of new districts Rs.5.00 crore In respect of Handicrafts, the production
changes after finalising boundaries of the each was earmarked for infrastructural has risen from Rs 821 crore during the
other districts. Through this development for which projects had to year 2003-04 to Rs 950 crore during the

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January 2008
I N F O C U S
THE MONEY MOVEMENT

year 2006-07. Out of this production, the 2006-07 respectively. considered to address our power sector
exports have risen from Rs 595 crore OTHER ISSUES separately as it was the main issue
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
Power Reform Grant is not necessitated taking of some hard
In respect of SSI, the economic survey something different but 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 forms part of negative BCR reform grant shall cease to be available.
and 6.82% in employment during the in our Resources assessment
period 1998-2005.
statement which is People in the State were suffering due to
increased power cut. Power cuts were
The production by the existing SSI units considered by Planning imposed for 9 hours in a day and even
has been normal and in most of the cases more in some areas.
Commission while fixing
flourishing, an increase of 29% in the The reduction in power cut has meant
investment haws been registered in this our Annual Plan. In view of more power imports hence more
sector in Kashmir Division during the past our huge negative BCR it 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 was considered to address
reduce the sufferings of common people.
Rs 36.07 crore. However, a decline of our power sector separately
around 65% in investment has been
registered in Jammu Division during that as it was the main issue Some facts and figures may also be
quoted in respect of Power Purchase:-
year. In Jammu division, against an responsible for huge deficit.
investment of Rs 100 crore in the year
2005-06, only an investment of Rs 65.74
State Government had to Rs. In crore
crore was registered during the year enter into an agreement for Year Budget Actual
2006-07, only an investment of Rs 65.74 Provision purchases
crore was registered during the year
enforcing power reforms in
1999-2000 605 669
2006-07 due to non-availability of land in order to claim the grant. 2000-01 650 814
the industrial estates. Nevertheless, this
This necessitated taking of 2001-02 670 954
year the trend has been on reverse as
some hard decisions so as to 2002-03 670 661 up to
upto ending November, 2007, 216 SSI
units have been established with an Sept., 2002
ensure reduction in power
investment of Rs 81.81 crore in Jammu
division. deficit in three years when An amount of Rs. 423 crore were
power reform grant shall outstanding on account of power
In large and medium sector, again the purchase ending Sept., 2002 despite
cease to be available. having exhausted the Budget provision of
existing industrial units have been
flourishing as no sickness/ closure has the year. It may also be indicated that an
been reported in this sector during the outstanding of Rs. 1204.66 crore were
past year, which could denote decreased converted into Bonds in the year 2002
production and resultant decline in I. Power Deficit
export. The investment mobilization II. Public Sector Undertakings
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

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January 2008
I N F O C U S
THE MONEY MOVEMENT

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


statutory dues alone stand at RS. 318 workers of 5 ailing PSEs who could be ‘J&K Is Headed For
crore. The PSEs employ manpower force
of around 22500 workers; half of which A Severe Debt Trap’
appears to be surplus.
The financial position of the Interview with
During the current financial year, an PSEs is precariously poised. Mohammad Shafi Uri,
amount of Rs. 40 crore is available with former Finance Minister
As of 31.03.2005, as
Government to provide residuary support
to ailing PSEs in their endeavor of against a total paid-up The coalition government says that
offering GHS/VRS to their employees, capital of Rs. 206 crore, the 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 accumulated losses of the into a financial mess which they
attempt will not only have to implement Corporation aggregated to claimed to have corrected in next five
GHS/VRS but also take some other years. Can you recall your assessment
stringent measures simultaneously. As for
Rs. 1736 crore. The of the economic scenario in 1996
instance: liabilities on account of when you took over as Finance
Minister?
statutory dues alone stand at
PSEs to identify assets free from
encumbrances and make those assets RS. 318 crore. The PSEs Situation in 1996, when we took over
fungible to meet the cost of GHS/VRS, to employ manpower force of after six years of Governor's rule was
pay off statutory liabilities and arrears of quite disappointing. There was no tax
salary/wages and also generate surplus
around 22500 workers; half compliance. People in Kashmir did not
for working capital requirements etc. of which appears to be pay taxes at all and as an effect the
collections in Jammu region too were
surplus. negligible. Same was the case with non-
Not to release any further COLA
installments until the statutory liabilities tax revenue between 1990 and 1997.
and loans are fully discharged. The Security Related Expenditure, a
huge burden on the state exchequer,
considered for exit in the first phase.
was not being fully reimbursed by the
Conceive future business outlook for a Likewise, an indicative list of disposable
central government. I remember, when
long term sustainability on their own and assets of ailing PSEs has also been given
we took over, besides an ailing economy
chalk out business revival plan for the which holds a promise of potential of
the immediate burden before us was
coming five years which will include generating about Rs. 200 crore. The
the implementation of the
replacement of obsolete machinery. Committee have further identified 253
recommendations of fifth pay
units of various PSEs that need to be
commission. We had to clear arrears
Close down units/activities which are closed down.
worth Rs 800 Crores. The debt burden
beyond any scope of revival and was above Rs 1400 Crores.
restructure, both professionally and Since implementation of VRS/GHS is a Infrastructure was gutted. The power
technically, the potentially viable units. sensitive issue, it may take some time for tariff collection was negligible and
implementation. Some Corporations Transmission and Distribution Losses
In other words, budgetary subventions have already initiated action in this were highest. Another serious problem
could come only as last resort for such direction and proposals are under before us was alarming problem of
PSEs as do not possess disposable assets, examination at various stages. unemployment which had to be
or, to fill the gap between the cost of The position is proposed to be reviewed addressed at priority to save our youth
implementing GHS/VRS and the funds by Chief Secretary towards the end of from going astray.
realized from sale/exchange of assets in January, 2008.
the case of others. Was there an easy way out?
TARIQ HAMEED KARRA is Minister for
Kundal Committee while giving model Finance, Jammu and Kashmir No, there was not. Since the issues were

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January 2008
I N F O C U S
THE MONEY MOVEMENT

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
applicable to the North Eastern States general amnesty for the tax defaulters action of the government to show to the
ever since the inception of the scheme and the taxes were rationalized under people that things were not right. In
in 1969-70 but there was a different slabs. Power tariff was revised fact every thing was in perfect order
discrimination in case of Jammu and and an effective campaign was and there was no need to seen a Vote on
Kashmir. launched for tariff collection in order to Account.
recover, at least, the cost of
We wanted this assistance pattern with maintenance. Under a slew of measures I admit there was some debt burden at
retrospective effect which could have to put the derailed system in order, that time but that was due to Center's
written off our Rs 1400 Crore debt interim recommendations (Madhav) default at the commitment. To
burden. We also gave a memo to the Godbole Committee on Financial expenditure in limits, the Center had to
central government for resources to Reforms were implemented. With the release funds which were not released
address the unemployment problem. passage of time some semblance or in time. There was absolutely no need
The case of compensation on account of order returned to the system, tax of seeking Vote on Account.
Indus Water Treaty was also taken by collection improved and thinks started
with New Delhi as our waters are used looking up.
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 first budget of National
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
Unfortunately the Central Government had reached three times higher and we
corrective measures are not
did not help us the way we had wanted had already started gearing up for the
immediately taken up the state is
and the way we rightfully deserved. We VAT regime. My successor (Abdul Rahim
headed for a severe debt trap. This is
did struggle but finally we had to spade Rather) further improved the system.
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
Perhaps I was the first and last Finance towards a serious fiscal crisis when its employees.
Minister who had to take some harsh they had taken over. They say, the

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