“ There is nothing new in world except the history you do not know.” – Harry Truman

Junaid calls for structural reforms in the state to attract private capital

(Mr. Junaid Azim Mattu, 26, was born in Srinagar. He partly completed his schooling at the Burn Hall School, Srinagar, and partly at the Bishop Cotton School, Shimla. He attended college in America and graduated with a degree in Business and Finance from the Eli Broad School of Business at Michigan State University. He is a consulting financial analyst and telecom-IT entrepreneur based in Srinagar. A seeded national varsity debater throughout his school and college career (his grandfather – Khwaja Ghulam Ahmed Ashai – was one of the founding fathers of the Muslim/National Conference), Mr. Mattu also played under-19 cricket at national level for J&K. He is a founder of the World Kashmiri Students Association (WKSA), a global youth association for Kashmiris based in Srinagar, Kashmir, working on social, economic and political issues through constructive and informed activism. WKSA, as of today has 1,700+ registered members in Kashmir. He is also a nominated alumnus of the Global Young Leaders Conference. He is also the Srinagar District President of J&K Peoples’ Conference, led by Mr. Sajad Lone. In his leisure time, Junaid likes to engage in reading, gardening, watching movies and listening to music.)

Private Sector Revolution

Job creation in the present times, we must understand, is a consequence of business creation and growth. We must also understand and reconcile with the reality that any further job creation in the public sector in J&K would mean greater budget deficits, lesser money for development, infrastructure growth and poverty alleviation, and a more dependent, dormant economy for our State. Sifting through the rhetoric of previous successive State governments, little has been done to facilitate a private sector growth in J&K. Our system continues to be bureaucratic and corrupt to the core. Entrepreneurship in J&K is harder than it ever was. And that is where, hidden behind nonsense schemes and false promises, our answers lie.

The debate on the future prospects of and the urgency of impetus to private sector in J&K has been vague both within the State as well as on the potential investment spectrum across India. While as countless star-studded delegations of corporate leaders from India can visit J&K and speak of increased cooperation and trust in the State and its youth, little of this business has translated and will translate into direct corporate investment in our State. And first and foremost the blame rests within. There is a term in development economics called ‘Sector Ecosystems’. A sector ecosystems is the state of infrastructure, regulation and facilitation that exists in a specific sector. J&K needs improvised, modern and investment-friendly sector ecosystems to attract investment and unfortunately contrary to the ribbon-cuttings and newspapers statements from successive governments, the general, collective ecosystem of J&K’s economy is underdeveloped, underserved and impoverished.

A private Indian company that sees potential in a certain sector in J&K would be faced with the daunting reality of bad roads, inadequate road connectivity, an electricity deficiency and power cuts and to add to the woes – clueless, top-heavy and corrupt State governments that have historically stayed away from regulatory and economic reforms. This in development economics is termed as grave ‘sector ecosystem risk’. And let’s not be naive enough to expect any private business concern driven by the penultimate goal of its bottom-line to overlook this risk and invest in J&K just to ‘encourage’ or ‘embrace’ the alienated people of this State. That’s not going to happen.

So what can be done to sow the seeds for a thriving private sector in J&K? The government needs to bring immense changes in the State’s regulatory environment to start with. All State governments in J&K till date have enacted and enforced rules and policies that have aimed at favoring State and public entities at the expense of private sector concerns. This eco-environment is detrimental to all initiatives that aim to attract investment in J&K – “initiatives” both from business houses of India and State governments in J&K. Excessive regulations and a new age ‘License Raj’ in J&K has immensely hindered entrepreneurial and commercial activities, as entrepreneurs and businessmen have to spend more time and money to comply with these obstructionist rules and regulations than carrying out their productive, valuable business activities. The other issue might be due to regulatory compliance issues due to the State’s “special” status where business enterprises from across the country could be required – in some form or the other – to have a State government agency or a local company as a “partner”. Let’s face it – TATA or Reliance won’t invest in J&K to either grab land or change the State’s demographics. This impression given by State government’s in New Delhi about the people of the State being paranoid and emotional on and around this issue is a perpetuated farce to serve the monopolistic goals of our traditional political parties.

The amount and extent of capital inducement we need in J&K won’t be achieved through subsidies that a deficient, debt-ridden State could possibly offer. The State Government, in tandem with the Central Government should rather provide tax-breaks, low-cost government loans and single-window clearance systems across sectors. Such government-sponsored business inducements could provide investing companies the possibility of making a business more profitable in a shorter span of time.

 J&K’s (as is the case with any potential investment destination) investment attraction as a destination for investment capital depends on its development of infrastructure, its resource availability – both physical and labor, productivity and workforce skills and the development of an investor friendly regulatory environment. The State Government could benefit from the recent HRD initiative of Community Colleges that would provide vocational two-year associate degrees on a credit-based system. Such colleges, if incorporated into the State’s education sector could translate into a new wave of trained, skilled-workforce. J&K needs such an availability of low-cost, skilled workforce that possesses the necessary aptitudes, experience and proficiencies to create, manufacture and provide goods and services that can compete at the national level. The State Government also needs to get its act straight on the infrastructure frontier as well. J&K needs better roads, more bridges, wider highways and other forms of physical infrastructure to make the State a viable investment destination.

Until such reforms take place there won’t be any private sector growth in J&K – visiting corporate delegations or not. And if there is no private sector growth, there won’t be any new jobs. That’s the cold, hard reality.