January 2017 News

Of Rotting Industries And Choked Roads

2 January 2017
Greater Kashmir
Ejaz Ayoub

Srinagar: Economic policies are guided by one main objective and that is to improve peoples' quality of life. History stands testament to the fact that nations with superior production capabilities emerged successful and skimmed the cream of being first movers. In addition to soaking unemployment pressure, industrial sector adds value to the local agrarian and mineral output of a region. The pace and quantum of growth manufacturing sector adds to the economic output of a region is matchless. This is the reason why states like Maharashtra in India and Sindh province in Pakistan have such powerful growth trajectories. Both places have vibrant industrial sectors resulting in fast growing GSDPs with one of the least unemployment rates when compared to other states of their respective countries. When we talk of Jammu Kashmir, our industrial sector contributes slightly over 1-5th of state GDP. Like agriculture sector, industrial sector too has seen a drastic drop in its contribution to the state economy over the years. If we drill a bit deep into numbers we see that almost 50 percent of our industrial output is actually contributed by construction sector and the support from manufacturing is slightly less than 30 percent (overall only 6.5 percent to 6.8 percent in total GSDP). Many industry experts have attributed the failure of JK's industry sector to our geographically disadvantageous position. However, matter of the fact is that the much-highlighted disadvantageous position is a result of failed geo-political policies rather than an unsolvable geographical curse. The geo-political restrictions created after 1947 has resulted in a situation where our strategically located region of Kashmir is pushed to one dark isolated corner of the Indian map. The decades old imposed isolation has not only forced our overall economy to shambles but it has also severely affected the industrial ambitions of the people of JK. The recently announced industrial policy, as a cosmetic measure to attract investment, attempted to create a provision for providing land to non-state subject holders on lease in industrial estates. Policy makers must understand that industries don't need just land for operations, they need sufficient linkages to raw material and market places. Due to imposed enclosures our industries have no option but to rely on comparatively difficult to reach Indian states for raw material. The supply has to pass through an extremely difficult terrain of Pirpanchal, adding costs, supply bottlenecks and time over-runs. The production of our manufacturing units is then aimed at a very small local Kashmiri market. There is a whole list of reasons for this small market targeting. First being the mindset. Talk to any factory owner in our industrial estates, they will never imagine of supplying their produce to neighboring states. For them even supplying to Jammu division is out of question. Reason is the inability to compete on price. The input cost of raw material that reaches to Kashmir based manufacturing plants is loaded with add-on transportation costs which eventually passes on to the market price of finished goods. This pricing disadvantage stops us from exploring new markets, the foundations of which reside in the unnatural routes from where the raw material is transported. Second, is a very limited demand. Factories operating in places like Haryana and Punjab, which are well connected with all the surrounding regions through a network of rail links and highways, most of the times run on full capacity and hence reap the benefits of 'economies of scale'. Our factories on the other hand due to small demand from a very limited local market find it difficult to even run on 50 percent capacity, resulting in choked margins and at times even losses. Kashmir's only allowed linkage to rest of the world pass through 'Jawahar Tunnel', a passage through extremely difficult terrains often at the mercy of weather vagaries. These unviable corridors are consequences of an unsettled geopolitical riddle. These routes are logistically difficult and economically unviable for trade. For thousands of years till 1947, Kashmir had access to vast Central Asian businesses through better trade links. Our geographical proximity to Central Asia and linkages with the Silk Route ensured our importance as a trade gateway during ancient Indo-Central Asian trade. The road towards north part of Kashmir along Jhelum is so far considered as the best link Kashmir has with central Asia. Another route to Tibet through Demchok connects Kashmir with vast Chinese markets. One more route passes through Kishenganga valley and from there to Skardu joins the Gilgit route across Khunjrab pass to Central Asia and Xinjiang of China. The best route through Baramulla towards Muzaffarabad is the easiest link, which can be traversed without taking the risk of passing through difficult mountainous terrains. Since 1947 these ancient routes have been completely blocked and we have no option but to traverse through unnatural difficult routes in search of raw material, markets and trade. On the other hand there is this 'China Pakistan Economic Corridor' (CPEC) changing everything in the neighborhood. CPEC is acting as a giant magnet attracting everything that speaks commerce. It is so bankable that it has compelled countries like China, Russia and Iran to change their respective foreign policies. The good news for us is that this mammoth multi-billion dollar project is just 176 km away from Srinagar. The possibility for Kashmir to act as a gateway to CPEC for India is immense. Linking India to CPEC via Kashmir will solve all our local industrial problems and access to new sources of raw material and global markets will become a reality. The idea might even hold the key for resolution of a seven-decade old dispute between two nuclear giants. It's time that New Delhi and JK Government revisit the closed chapter of road links again and mould this never-ending conflict and animosity into prosperity, commerce and lasting regional peace.