Fruit of economics

The protests in Kashmir over the economic blockade of the valley continued with a Hurriyat march to the UN offices in Srinagar to present a memorandum urging UN intervention for a permanent solution to the Kashmir problem. The people of the valley have a right to feel aggrieved: the blockade following the Amarnath land controversy has throttled the economy and livelihood of the people of the Valley. And once again politics in India has successfully throttled economics compounding an already fraught problem many times over.

From a purely economic point of view, one can hardly blame farmers in Kashmir wanting to sell their valuable but perishable agricultural and horticultural produce — the second biggest source of livelihood after tourism in Kashmir — to markets in PoK and Pakistan (the reason cited for the march to Muzaffarabad) if their access to markets elsewhere in India is closed off. Assocham estimates that the blockade and strife has already resulted in economic losses worth Rs 1,500 crore. There will be a dynamic effect too: an estimated 2.3 billion dollars have been committed in investment proposals in 2007 (up from just 200 million dollars in 2001), which may now be in jeopardy.

The Central government’s response to J&K’s economic problems has consistently been to shower fiscal largesse on the state Government in an attempt to mollify the population. The Centre has been unable to grasp the simple fact that the ordinary Kashmiri farmer or industrialist needs access to more external markets (whether in India or outside), not government money, which is more often than not siphoned off by corrupt politicians.

Objectively speaking, there is no reason why the trading route into PoK and Pakistan should be blocked (leaving aside the current emotional hysteria), even if it is across an international (or disputed) border. The very limited trade between India and Pakistan is one of the most important downsides to the political conflict. Consider this: the value of India’s exports to Pakistan was just 1.8 billion dollars in 2007-08 which is just over 1 per cent of India’s total exports. India exports more to Bangladesh (2.5 billion dollars in value); more even to tiny Sri Lanka (2.7 billion dollars). The figures on imports are even more dismal —Indian imports from Pakistan were valued at a miniscule 287 million dollars in 2007-08. Part of the problem of Indo-Pak trade is in the fact that it is often routed cumbersomely through Dubai. Proposals to open more overland routes to trucks — including between Srinagar and Muzaffarabad are stuck in bureaucracy and politics.

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