Ladakh International Centres status - Ladakh Union Territory Status: An Economic Imperative Amit Agarwal, PhD Analyst, Traded Risk Stress Testing HSBC Plc London, UK, E14 5HQ Ladakh lies in the state of J&K. Its population is 2,80,000, nearly all of which lives at over 2,500 meters altitude and experience temperatures of -30C or lower. It is well-known that Ladakh is beautiful. But, is it poor? The standard measures of poverty - calorie intake, house ownership, possession of adequate clothing and access to potable water and affordable schooling - all suggest it is not poor. However these measures no longer do justice to Ladakhi aspirations. Industries are nearly non-existent in Ladakh. Yak cheese sells at over INR1,500 a kg in Leh. Yet there is no infrastructure for large scale scientific rearing of yaks. The Yak population has dwindled to 35% of what it was in early 1970s. Ladakh has huge organic farming potential. Yet agriculture remains at sub-subsistence levels. Ladakh’s high altitude bestows it with a unique biodiversity. There are just three other places in the world with people living at such a high altitude - Bolivia, Peru and Tibet. There is almost no scientific, technology or commercial exchange with these regions. Four of the five rivers that gave undivided Punjab its name originate in Ladakh and irrigate crops that feed over 10 crore bellies in Pakistan. Ironically though, water is scarce in Ladakh. Vitamin C deficiency is widespread in winter. Wood is burned to heat homes. Low oxygen density at high altitudes causes incomplete burning. This causes ash build-up in lungs and exposes people to poisonous carbon monoxide. Ladakh’s annual solar power potential is worth over INR30,000 crore. Ladakh needs just 5% of this. It can sell the rest to energy deficit states. Yet it lives off on highly subsidized and polluting fossil fuel. Most hostels and maternity wards lack heating. Most hospitals lack vaccine storage units. Medical instruments can be powered for only few hours a day. Many schools have computers now. Most do not however have electricity to run those computers. Youth unemployment is high in winter. Ladakh is a land of striking beauty. Just as striking is the enormity of gap between its economic potential and its reality today. Ladakh needs financial capital to unleash its tourism, agro and energy potential. Its monetizable savings are too small to facilitate a transformational change. It needs private capital. Will the private sector step in? Can it? Private investments need infrastructure, a trained labor pool, legal infrastructure, law enforcement, policy certainty and a market. Let us take each of these sequentially. Infrastructure. J&K apportions funds based on a region’s population. The approach seems fair for social spending but is without sound economic basis for infrastructure allocations. Ladakh has 2.25% of the state’s population but 52% of its area. With just four representatives in the 87-member state assembly Ladakh is unable to convince the state for a fairer allocation. Thus Ladakh remains inaccessible by road during winter. Commercial flights cannot land in Kargil and in winters Zanskar can only be reached via a multi-day ice trek only after the Zanskar river has frozen over! Trained labor pool. Ladakh does not have a single university. It neither has industries nor skills preservation programs. With dearth of opportunities to practise the knowledge acquired in technical degree programs is soon forgotten. A corporation with a plan to expand in Ladakh cannot just bring in staff from Chandigarh or Chennai as long stays can afflict non-natives with mountain sickness. Engaging local talent is a necessity though unfortunately, not an option. Legal infrastructure. Ladakh has vast open lands. But the law prohibits a non-resident from owning land. This limits capital gains from organic farming and solar power plant projects and thereby impairs their viability. Without adequate adaptation technology solutions developed for Israel or Britain often fail in Ladakh’s extreme climate. To ensure seamless operability the sale of technology solutions and on-demand maintenance services must go hand-in-hand. Ladakh lacks the legal framework to make these happen. Embedding passive solar heating principles in building design can cut down heating requirements by over 75%. No such building laws exist. Pesticide and industrial pollutant free soil and water are Ladakh’s wealth. Ladakh however lacks the legal framework needed to protect its environment. Ladakh needs a fresh legal and regulatory framework. The elites from the Kashmir Valley have not given adequate thought to these matters. One-size-fits all policies imposed from a region where the opportunity set and aspirations are different is stifling Ladakh. Law enforcement. The main role of the police in the Kashmir Valley is intelligence gathering, handling public violence, conducting combing operations and securing sensitive sites. The primary role of the police in Ladakh ought to be protecting heritage sites, ensuring building code compliance, providing accurate information to tourists, ensuring they dispose garbage responsibly, managing disputes between tourists and locals, helping protect wildlife and ensuring industrial wastes are appropriately disposed. The type of policing that Ladakh needs is very different from what the Kashmir Valley needs. Therefore Ladakh should have its own law enforcement model. Policy uncertainty. The Kashmir Valley comprises just 18% of J&K’s area. Since 1947 however the valley’s elites have had the privileged position of representing the entire state in engagements with the central government. The valley’s elites lack the necessary consensus to play their role well: some want further integration with India, some want to turn back the clock and return to pre-1953 status, some want the whole state to be merged with Pakistan and some want the Indian part and the parts occupied by China and Pakistan to be merged into a sovereign. These considerations dominate the minds of the valley elites. However they find no resonance amongst Ladakhis who have always been conscious of their umbilical relationship with India. Increasing internet connectivity has opened Ladakh to innovative ideas for economic advancement. Policy uncertainty amongst the state’s representatives at a fundamental level adversely impacts all arms of the government. Democratic traditions however demand that the valley be given time to decide the course it wishes to take towards integration with the mainstream. Ladakhis have already decided. India needs to hear their voice and facilitate the rediscovery and deepening of Ladakh’s interaction with the neighboring Ferghana Valley and Tarim Basin regions. Market. Ladakh’s natural strengths are in large scale organic farming and solar power plants. Its population is quite small. Therefore Ladakh needs access to external markets. However instead of economics the preferences of the Kashmir Valley elites dominate the considerations about the quantum, location and manner in which Ladakhis gain market access. A classic example is the proposal to set up a 5 GW solar power plant in the Changthang region. This would generate about INR18,000 crore worth of excess power annually that Ladakhis can sell. The valley elites insist that the excess power be delivered to the grid in Srinagar instead of Himachal Pradesh. This would greatly increase transmission losses, involve a much greater capital outlay and leave remove control of Ladakh’s wealth from Ladakhi hands. Ladakh’s economic challenges are structural. They cannot be addressed within an incremental model. However once these have been overcome the solutions would be self-sustaining. Ladakh needs large scale capital infusion to overcome the challenges. This can come only from private sector participation. However the basic elements needed to attract private capital are missing. The reason they are missing is the rather weak voice Ladakh carries in Srinagar or Delhi. This needs to change. A day will come when power in India has been sufficiently decentralized so that local communities decide local issues. At that time demands for statehood or union territory status will automatically cease. Until such time however administrative mechanism in India ought to be tweaked within the ambit of the constitution to allow people greater and direct control over their choice of development model. The gap between Ladakh’s potential and its reality is so large that it borders on the immoral to not allow new administrative structures to emerge. Ladakh needs a union territory status. In the long run that would benefit the Kashmir Valley elites just as well.
Posted on: Sat, 02 Aug 2014 11:43:12 +0000
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