Vishal Sharma
J&K’s economic growth story over the last three years has been remarkable. The story’s been remarkable in that even at the peak of covid pandemic, the economic growth never slipped into the negative territory. J&K has seen many upheavals during the last 30 years and every time it has come out stronger. However, it was never expected to hold out on the economic front in the midst of what was a perfect economic storm. But it did !
If GSDP numbers ( at current prices) from the fiscal year 2018-19 ( Rs 159859 cr) to 2022-23 (209752 cr) are anything to go by, then J&K’s economy is not only resilient, but also one that can bounce back and progress in difficult times quicker than that of most other State/UT economies, because, as the clich goes its fundamentals are strong. GSDP during this period grew phenomenally at around 23 %.
In fact, during the past decade, GSDP has grown substantially. From Rs 98367 cr in the fiscal year 2014-2015, GSDP at current prices in the year 2022-23 (IR) is expected to be Rs 209752 cr. This represents an increase of 53 %. GSDP is projected to grow at more than 10 % in the next fiscal year and is projected in absolute terms to be Rs. 230727 cr.
Although, there may be an argument that GSDP at current prices may not reflect the true economic growth in the J&K as it is not inflation adjusted, the gross capital formation, which represents outlays on addition to fixed assets and net changes in the levels of inventories has shot up from Rs 8251 cr in the year 2018-19 to Rs 9739 cr in 2020-21.
GSDP growth is a function of growth in public and private expenditure. This is, therefore, best captured by higher than normal public and private sector spends over the same period. While capex in public sector from 2018-19 ( Rs 11114 cr) to 2021-22 ( Rs 35208 cr) has registered an increase of 68%, which is the highest increase in the last 10 years, private sector spending has also moved toe to toe with the public sector capex.
This is borne out by the private sector contribution to gross value added (GVA), which is tentatively expected to be 75 % (assumed figure) in the year 2020-21. This figure was 63 % in the year 2019-20.
Consistent GSDP growth has expectedly made J&K richer. Today the per capita income of J&K is Rs 165755, which is roughly equivalent to 2072 USD. Per capita income in 2018-19 was Rs 118828 which roughly equals 1747 USD at the conversion rate in vogue then. Increase in per capita income has made average resident of the UT richer and today he has on an average 300 USD more to spend.
Wherever GSDP grows, people end up having more money in their pockets, thus, improving their living standards. Nowhere is it more evident than in the growth of more eateries, more malls, and stores of merchandise in J&K over the last few years.
These places of shoppers and consumers would not have come up or conversely the existing ones wouldn’t have stayed in business, if they did not have consumers. And there would not be any consumers, if the extra money generated by the recent economic growth had not found its way into the pockets of the consumers.
This assertion is further corroborated by the headcount ratio (people below poverty line) in J&K. Today amongst 36 states and UTs in the country, J&K is the 16th best performing UT. Although it’s not something to gloat over and there is a fair bit of ground to cover, the situation is not as bad as it is generally thought to be.
On the top of it is of course the GST growth story, which has even belied our wildest imagination! GST growth in J&K from 2017-18 to 2021-22 has followed an upward trajectory except in the year 2019-20 when it slightly dipped.
In terms of the actual achievement vis-a-vis the annual targets, GST collections in UT have gone from 57.14 % in 2017-18 to 93.47 % in 2018-19 while they have soared to a high of 98.29 % in 2020-21 and to 106.78 % in 2021-22.
Higher GST collections are reflective of higher than normal growth of businesses and businesses grow only when they have consumers to serve! No business grows to create idle capacities or inventories, which are not routinely getting replaced.
The naysayers though would have us believe otherwise. Those with a little or no knowledge of fiscal numbers and the intricacies of the GSDP, headcount ratio, tax rises etc, would say that these numbers tell half the story or no story at all. They say that J&K’s economy has shrunk and that people have become poorer ! Where are the stats to support that argument?
There is another argument that is made by these people about unemployment rate in J&K being the highest it’s ever been. This can’t be far from truth!
MOSPI data on unemployment in J&K reveals a declining trend from January -September, 2022. While unemployment rate in J&K has decreased from January 2022 onwards, the national unemployment rate painfully has gone in other direction, albeit not linearly, over the corresponding period. This is as per the CMIE data, which is often used by some people to clobber the government.
As far employment initiatives undertaken by the government, around 21000 youth have been absorbed in the public sector in the last two years. In addition, 202749 self employment opportunities have been created so far during the current financial year and this number is expected to rise by the time the current fiscal year draws to a close. In fact, there has been a steady increase in the creation of self employment opportunities in J&K from 2017-18 (40723) to 2021-22 (217864).
How would an increase in employment on sustained basis be even possible if J&K was not growing? And to those who are saying that there has been no employment created in J&K, well, they only need to look at numbers. Pythagoras reminds us that numbers rule the universe. He also has a word for those who don’t rely numbers to make their case: “Be silent or let thy words be worth more than silence.” There’s a message in this for all, but for this though they will have to look beyond rhetoric !
( The writer is a Milken IFC fellow on capital markets)
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