Prof. Falendra K. Sudan
Economic integration is the key driver to overcome economic developmental challenges and achieve sustainable economic growth in Jammu and Kashmir. There is an emerging consensus that by pooling the existing development capacities, endowments and energies, the state can overcome its development challenges. The complete economic integration of Jammu and Kashmir with India would allow the state to not only achieve sustained and robust economic growth, but also enhanced movement of goods, services, capital and labour, socio-economic policy coordination and harmonization, infrastructure development as well as the promotion of peace and security.
In Jammu and Kashmir, there is need to focus on economic integration with India by emphasizing on market integration, industrial and infrastructure development. Market integration would be advanced through consolidating and promoting free flow of trade. Existing infrastructure in the state was designed to export resources and import basic necessities to meet the food and other requirements of population and development. It is imperative that we should reverse this by linking Jammu and Kashmir economy with rest of India to diversify and beef-up the value-adding production for speedier economic growth of the state.
Economic Integration of Jammu and Kashmir with India will help facilitate an economic arrangement between different regions of the state with other states marked by the reduction or elimination of trade barriers and the coordination of related conducive policies. Economic integration will lead to reduced costs for both consumers and producers, as well as to increase trade between the states taking part in the agreement.
Current status
India is playing an increasingly important role in promoting economic integration and cooperation in Jammu and Kashmir. India is already playing pro-active role in economic co-operation. The closer co-operation and faster economic integration have helped the entire state to grow stronger and become better prepared to counter the negative impact of the ongoing conflict. Jammu and Kashmir is also willing to work together with its neighbouring states with greater enthusiasm and push ongoing co-operation and economic integration to a higher level.
Economic integration has become a popular trend after new agreements and negotiations in recent years but hiccups remained to be tackled to sustain the outcomes. Against such a background, bilateral and multilateral cooperation between Jammu and Kashmir and India on the one hand and Jammu and Kashmir and other states of the Indian Union need to be conducted in a wide range of fields including transportation, infrastructure, energy, facilitation of trade and investment, tourism, environment, agriculture and health.
Recent increasing participation of Jammu and Kashmir in Indian economic development has cemented the state’s image as a trustworthy partner and won acclaim too. Thus, trend of economic integration of Jammu and Kashmir with India is gaining momentum and is the driving force behind recent peace initiatives. India’s consistent and pragmatic approach to these initiatives is helping improve connectivity, expand trade, and create jobs.
India’s role and participation in economic development initiatives of Jammu and Kashmir is on an equal footing has built mutual respect and trust. In this context, international organizations like the World Bank, United Nations Development Programme (UNDP), the Asian Development Bank (ADB) and other international financial institutions have been indispensable players in economic cooperation by disbursing funds and giving technical support to various development projects in Jammu and Kashmir by counter-guarantee by the Government of India.
Clear planning, consistent interaction, and concrete projects are key ingredients in successful economic cooperation and integration, which has led to increasing trade volume among the participating states significantly. While strengthening trade ties in traditional fields, Jammu and Kashmir and other states of India also opens the door for exploration of new areas. The demand for more goods and services from growing middle class indicates more business opportunities in Jammu and Kashmir.
Strengthened economic ties also draw Jammu and Kashmir closer and bridge gaps between other states of India, which are in different development stages. The Government of Jammu and Kashmir, civil society and academicians now agree that economic integration, which is the key for sustainable development and common prosperity, should progress at an even faster pace. To this end, India should play a stronger role in facilitating and coordinating participation of other states in speedier economic integration of Jammu and Kashmir. The slow pace in economic integration in recent past could be a case in point due to lukewarm government’s attitude and ongoing conflicts. If not for this irritant, all the three regions of Jammu and Kashmir could echo strategically, painting an even brighter picture of economic integration in current scenario.
Ways ahead
Economic integration of Jammu and Kashmir with the rest of India is a boon and key to sustainable growth. The time for Jammu and Kashmir to take a lead in Indian economic growth had come, for which it is needed to accelerate structural reforms so as to generate more sustainable growth over the long term. One way to ensure this is complete economic integration of Jammu and Kashmir with India. The structural transformation has almost always been driven by growth in trade. In recent past, this has largely occurred due to strong, mutually reinforcing linkages between competitiveness and trade, which called for a deepening of economic integration to put an end to the lower pace of growth and development for which there is need to build strong infrastructure to support wider trade and development initiatives.
Jammu and Kashmir’s long-term vision is to transform its economy to a vibrant middle income status. Over the last two decades, the growth rate has averaged better, but there has been little structural transformation of the economy and transforming Jammu and Kashmir into a modern and prosperous state could best be secured through a deepening of economic integration with India under the auspices of the new political regimes. The main advantages of economic integration for Jammu and Kashmir with India and other states include access to markets, competition that will enhance efficiency and productivity, and improved access to factor and material inputs. However, these elements will only be realized, if there is genuine economic integration with no restrictions on the movement of goods, services, labour and capital within the states of India. If individual states bow to sectional interests and try to maintain protection for domestic producers or domestic workers, the benefits of economic integration for Jammu and Kashmir economy will be lost.
It is emphasized that the strides made by Jammu and Kashmir in achieving economic growth must be accompanied by speedier economic integration with rest of India by making efforts to boost long-term competitiveness, if the state is to ensure sustainable improvements in living standards of its population. Economic integration is a key vehicle for helping Jammu and Kashmir to raise competitiveness, diversify its economic base and create enough jobs for its young, fast-urbanizing population.
In order to unlock the growth potentials of Jammu and Kashmir, there is need to map out the key policy challenges in establishing closer economic integration of Jammu and Kashmir with rest of India by focusing on following suggestions and policy initiatives.
Jammu and Kashmir’s competitiveness as a whole trails other emerging states of India – especially in quality of institutions, infrastructure, macroeconomic policies, education and technological adoption – while big gaps persist between its highest and lowest ranked states of India. Thus, there is need to assess Jammu and Kashmir’s success in creating the social and environmental factors that are necessary to address or mediate these gaps.
Jammu and Kashmir’s exports remain too heavily focused on primary commodities and its share of total trade in India remains low, despite numerous economic measures and domestic market liberalization. Inter-state trade is particularly limited. Therefore, there is need to identify cumbersome and non-transparent state border administration, particularly import-export procedure, the limited use of information communication technologies (ICT) and persistent infrastructure deficit as major barriers to higher levels of economic integration and to address the challenges particularly pronounced for landlocked Jammu and Kashmir economy.
Jammu and Kashmir’s infrastructure deficit presents a serious impediment to economic integration, a problem that is made more pronounced by growth in consumer markets and urbanization. Developing adequate and efficient infrastructure will assist Jammu and Kashmir economy to increase productivity in manufacturing and service delivery, contribute to improvements in tourism, agriculture, horticulture, health and education etc. and help deliver more equitable distribution of state wealth. Thus, there is need to understand how developments in energy including hydropower, transportation and ICT can be deployed to maximize the benefits of economic integration.
Generally public-private investments aimed at accelerating export facing-industries and their supporting infrastructure, growth poles represent important ways of building productive capacity and boosting economic integration through the attraction of investment. Therefore, there is urgent need to look at how best practices can be deployed to deliver further benefits across the three regions of the Jammu and Kashmir.
(The author is presently the Head, Department of Economics, University of Jammu, Jammu.)
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