Chapter 2: USHERING INVESTMENTS

Introduction

• Government spending in J&K in 2018–19 accounted for 57% of the entire gross state product and was mostly funded by the Central Government. This showed an over reliance on the government and an underdeveloped private sector.
• Its road density was less than one-fifth that of Himachal Pradesh, and unlike that state, it was unable to take advantage of its enormous hydropower potential.
• Around 40% of the J&K government's overall revenue came from the Centre.
• J&K's per capita net state domestic product, at Rs 94,000, was less than half that Himachal's, at Rs 1,76,000, in terms of economic output.

Framing Economic Policies

• The Union Territory has financial disadvantages because of its location, particularly in terms of transportation costs.
• Promoting the production of goods and services in specialised industries or market niches where consumers are ready to pay more is an appropriate strategy for such high-cost economies.
• This makes up for the drawbacks of expensive transportation.
• This region produces renowned international handicrafts. J&K is also noted for producing high-quality, low-volume goods like walnut and saffron, among other things, and grows the majority of the nation's apples.
• Millions of tourists frequently travel there. It also has certain rare minerals, high-quality labour, and plenty of hydropower resources.

Attracting Investment

• In terms of investment and industrial growth in the UT, the Jammu and Kashmir Industrial Policy 2021–30 is the leading policy. It will support balanced development because it promises to provide a greater incentive for investment in remote areas.
• Given the importance of the goal of creating jobs, the Policy's goals and the industries it has chosen to concentrate on are all very labor-intensive.
• They encompass both the traditional industries that the UTs are known for, like as tourism, handicrafts, and horticulture, as well as emerging ones like IT, ITES, healthcare, etc.

Tourism

• Unexpectedly, J&K has never been among the top 10 States or UTs for tourism, either in terms of total visitor numbers or as a percentage of its population.
• By offering assistance and funding for the creation of 75 new tourist attractions, the current UT Budget aims to boost the local tourism industry while increasing equity in this highly elastic industry.
• Making the new areas more accessible requires focused public investment in transportation and urban infrastructure.

Horticulture

• Budget measures in horticulture include a focus on cold storage capacity expansion, an improvement in apple production through high-intensity orcharding, and assistance for high value and low volume agro-products such aromatic and cash crops and vegetables.
• If productivity is raised to international levels, the size of his industry might increase fourfold. In addition, fruit value addition, which is currently relatively low, could have a large positive impact on growth and employment.

Trade and Investment Abroad

• The Comprehensive Economic Partnership Agreement (CEPA), a recent trade agreement between India and the UAE, has been used as an additional (and distinctive) strand of its strategy to attract markets, investments, and tourists.
• Due to the UAE's closeness to and familiarity with J&K, the Gulf Investment strategy aims to capitalise on these connections and opportunities.

Effect on Investment in J&K

• The UT government reported receiving investment offers with an estimated employment potential of 2.37 lakhs and a value of nearly Rs 51,000 crores.

Way Forward

• The government's economic strategy is to create a new J&K that will be home to an increasingly mobile India eager for world-class locations to tour and experience. It will continue to sell its handicrafts, which are the result of millennia of expertise and culture, to the globe with increasing vigour. Its horticulture industry will grow to produce fruit and fruit products that can be compared with the best in the world.