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Article 370 revoked: How Articles 370, 35A killed Jammu & Kashmir's economy

The sluggish growth in investments in the country can be gauged from a precipitous fall in new investments which declined over 19 per cent in 2018/19 compared to the new investment proposals made in 2017/18.

twitter-logo Niti Kiran   New Delhi     Last Updated: August 6, 2019  | 08:52 IST
Article 370 revoked: How Articles 370, 35A killed Jammu & Kashmir's economy
Article 370 revoked: J&K saw a sluggish growth in investments

In a recent interview to a TV channel, Prime Minister Narendra Modi stated that Article 35A and 370 held back development in Jammu & Kashmir "There must be investment and job opportunities in Jammu and Kashmir. Article 35A, 370 have been standing in the way of development. No one goes there to invest. We can build IIMs, but professors are not ready to go there as their children don't get admission in schools. They can't find homes. This ends up harming the interests of J&K. Pandit Nehru's policies stand as an obstacle for J&K today. It needs to be reviewed," the Prime Minister said.

On Monday, Modi-led government took a historic decision by revoking Article 370 of the Constitution that grants special status to Jammu and Kashmir. The revocation follows the Centre's introduction of the Jammu and Kashmir Reorganisation Bill in Parliament. Home Minister Amit Shah, who addressed the Rajya Sabha said that the state of Jammu and Kashmir will be bifurcated into two Union Territories - the Union Territory of Ladakh and the Union Territory of Jammu and Kashmir. The Union Territory of Ladakh will not have a legislature.

The situation in the valley continues to be tense and uncertain amid this big development. In the meanwhile, we assess the employment and investment scenario of 'Heaven on Earth' over the years.

The jobs crisis

The current slowdown in Indian economy is well depicted in the labour market conditions as well as the unemployment rate of 7.9 per cent in June 2019, which was, in fact, the highest in 33 months i.e. since September 2016. According to Centre for Monitoring Indian Economy's (CMIE) monthly time-series data on unemployment, Jammu & Kashmir had the highest monthly average unemployment rate of 15 per cent between January 2016 and July 2019 among all the states. It is more than double the national monthly average unemployment rate of 6.4 per cent during the period. This was followed by Haryana and Kerala with an average rate of 13.7 per cent and 10 per cent, respectively. A total of 13 states had a 43-month average unemployment rate more than the national average.    

Manufacturing goes nowhere

Historically, most of the manufacturing activity in the state has remained restricted to the state's inherent capacities in agriculture and handicrafts. With the passage of time, the policy makers and the industry continued cobbling many other relaxations that led to a variegated basket of industry incentives. At one point of time, state government was offering a set of as many as 14 different incentives to the industry. But the delay in sanctioning of the incentives and the disbursement process could not create the desired results. Government spending on industry sector as a per cent of the GSDP has not really picked up in recent years and the total capital expenditure on industry sector declined to Rs 114 crore in 2016/17 from Rs 153.4 crore in the previous year.

Investments - Poor show

The sluggish growth in investments in the country can be gauged from a precipitous fall in new investments which declined over 19 per cent in 2018/19 compared to the new investment proposals made in 2017/18. This was the fourth consecutive year of a decline in new investment proposals and Jammu & Kashmir was no exception. It led to a drastic fall in the state's share in total new projects announced across the country from 4.3 per cent in 2013/14 to 0.02 per cent in 2018/19. Although,  historical data indicates that except for the year 2013/14 when the state's share in total new investment proposal rose to 4.3 per cent, the average remained below 1, at 0.8 per cent in last 14 years between 1999//2000 and 2012/13.

Also read: Article 370 revoked: J&K's depressed property prices will shoot up 50%; locals to gain

Also read: J&K Crisis Live Updates: History will judge whether it was historic or not, says Kapil Sibal

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