Budget 2016: Why government formation will be delayed in Jammu and Kashmir

Government formation in Jammu and Kashmir has suffered a major setback after the Centre skipped announcing any specific allocations for the state in the Union Budget 2016-17, irking its former ally, the Peoples Democratic Party (PDP), whose leaders were anticipating sops from the BJP.

The PDP leaders were hoping that the Union Finance Minister Arun Jaitley — who reportedly met Jammu and Kashmir's former finance minister, Dr Haseeb Drabu recently — would make some announcements for Jammu and Kashmir and give the party some reason to continue the alliance. For weeks now, a group of PDP leaders had in off-the-record conversations with newspapers of the state, said there would be major announcements for Jammu and Kashmir in the coming union budget which would ultimately pave way for government formation in the state.

File image of Mehbooba Mufti. AFP

File image of Mehbooba Mufti. AFP

The PDP has been demanding the return of the NHPC-owned power projects from the Centre, removal of armed forces from civilians areas, withdrawal of the draconian AFSPA from the state, resumption of dialogue with the Hurriyat and Pakistan, along with major economic measures from the BJP-led Centre before continuing the alliance.

According to insiders in the PDP, there were expectations within the party leadership that the Centre would allocate money to the state for buying back two key power projects owned by NHPC in the state.

However, after the finance minister failed to make a statement to this effect, senior PDP leaders told Firstpost that government formation would get further delayed and the party would not give up on its demands before forming the government in the state.

A senior PDP leader told Firstpost that the party had expected major announcements regarding economic empowerment of the state, including the strengthening of the all-important power sector of the energy-starved state which has to foot a bill worth millions to export power from NHPC.

“Of course there were expectations that the budget will set the tone right for government formation in the state. However, the absence of any measures will certainly delay the government formation. It will also impact the parleys that are currently taking place,” a senior PDP leader told Firstpost.

Although the two parties are holding back-channel negotiations to break the ice over government formations, the PDP was waiting for a major announcement in the union budget. "The PDP was eyeing a massive financial announcement in the Union Budget. It is the PDP that must have got disappointed with the budget today,” noted economist and industrialist, Shakeel Qalander, told Firstpost.

Post-2014 floods, the economy of the state has been stagnant in all sectors; be it real estate, retail trade or service sector, there has been a deep lull in the economy in the state, experts say. “Two things could have done; one is the assistance or relief, whatever you call it. Some compensation could have been announced for the communities affected by the floods and some segments of the economy to take off.” Qalander added.

“Secondly, lending could have been made more easier through banks. We still have 37 percent of the credit deposit ration; money is being collected in the shape of deposits by banks, but it is being invested elsewhere in the country. We have a very low CD ratio, they had not given us money. If you double the CD ration or bring it to some credible point, then a lot of money could have been flown in to the economic sector,” he added.

The state of Jammu and Kashmir has largely lagged behind the growth trajectory of the rest of mainland India. Governments at the Centre have tried to give sops by announcing investments in certain sectors In past budgets to balance that lagging behind factor.

But in the budget this year, nothing of that sort has happened, which will further strain the relations between the two parties who were in an alliance till January 7 when the chief minister Mufti Mohammad Sayeed passed away at Aiims, bringing down curtains on the alliance.

"We are in favour of continuing the alliance. We want to work together for prosperity of Jammu and Kashmir. So what if there is no major announcement for the state in the (Union) Budget. We are holding talks and you will soon see a government in office," a senior BJP leader said.

Updated Date: Mar 01, 2016 13:46 PM

Also See