Drabu’s fix for Casuals and Daily-Workers: Hello Patronage and Good Bye Economics!

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Jammu and Kashmir Finance Minister Haseeb Drabu has stated that the government has already initiated the process of working on various modalities to regularize the daily rated employees who have been discharging their duties in various departments of the state government including PHE, R&B and others. Drabu added that there has been a “a lot of mess” created over the issue and no less than 30 categories of these casual and daily rated employees have been engaged. Stripped of accretions and bared to the bone, Drabu is reverting to or accepting the politics of patronage or patronage disbursal that has defined Kashmir- historically and contemporarily.

Governance in the state of Jammu and Kashmir has never been about promoting and expanding public good(s) or merit goods; it has been and continues to be about disbursing patronage goods. One form of disbursing patronage in Kashmir has been to expand the public sector- in contravention to trends elsewhere. Whilst it could be argued that a large public sector has quasi welfare functions and that it could( albeit by a stretch) to be held to be a surrogate for the conventional welfare state under fiscal constraints like a lax tax base and hence state capacity, in the context of Kashmir, public sector expansion serves a political function.  Drabu , who is held to be a good economist, was expected to reverse “ economic inefficiency” and get rid of the slack that holds our economy back is, to repeat, doing exactly what historically his predecessors have done.

The question is what are the reasons for “backsliding” and what would the consequences of the step?

It needs to be stated here that the “grey zone” that casual and daily wage workers and the predicament they find themselves is not their fault. It emanates from the skewed population ratios- increase in the rate of population growth, diminishing agricultural activities, the dual nature of our economy and labor markets and finally the state’s limited absorptive capacity. It may be added that these problems of a structural nature could have been ameliorated considerably by deft, prudent and holistic policy making. But, alas, our political class, instead of remedial policy sought to and engaged in patronage disbursal by creating what we would call an “employment effect or illusion” by absorbing surplus labour into the interstices and margins of the state.  Thousands paid and are paying a price for the manoeuvrings of our political class.   While this class of people needs to be engaged meaningful employment but absorbing them into the state means creating another layer on the state which , in turn, has obvious fiscal (tax and expenditure and hence budgetary) consequences. Moreover what will also happen is that a substantive chunk of our working age population will be shunted off into non productive, public sector employment. This can, among other things, decrease the output of our economy without a commensurate substantive impact on consumption.

How, the question is, can surplus labour be absorbed with taxing the state, its capacity and resources? Our economy is essentially a labour surplus economy with a large endowment of unskilled labor complemented by a paucity of capital. This condition or problem is not peculiar to Kashmir; it is thematic: exists in somewhat different permutations and combinations, across the developing world. But dealing with it by expanding and increasing the scope and size of the Government is a mug’s game. What could have been done is rejigg our economy, and create “comparative advantage defying sectors” with national and global linkages that could create new sectors with backward and forward linkages and thus eliminate inter sectoral imbalances. Key would be to create and encourage productivity and output and hence employment generating sectors that could not only ameliorate our unemployment problems but also create incentives for intersectoral mobility.

All this is admittedly difficult but not impossible. What it would take is will and determination to help Kashmir and not look merely at the electoral cycle. But this constitutes a big ask from politicians and the political class especially at a time when the PDP- BJP Government in Kashmir is reeling from the effects of the protest movement that gripped Kashmir after Burhan Wani’s killing. The Government needs to reconnect to the people. There’s nothing to show and no substantive base to reconnect except through patronage.  It is precisely this that Drabu is doing. Alas!

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