Modi could help by pulling security forces out of Kashmir's cities.

Photographer: Tauseef Mustafa/AFP/Getty Images

Kashmir Needs Growth, Not a Nobel

Dhiraj Nayyar is a journalist in New Delhi. Trained as an economist, he has worked at the Financial Express, India Today and He is editor of "Surviving the Storm: India and the Global Financial Crisis."
Read More.
a | A

When the Nobel committee awards its 2014 Peace Prize to education activists Kailash Satyarthi and Malala Yousafzai in Oslo on Wednesday, the judges will be sending a message to the winners' home countries: India and Pakistan. More than 65 years after independence, the South Asian nations remain locked in one of the world's longest cold wars, most notably over the disputed territory of Kashmir.

A shaky ceasefire, miles of fencing, and tens of thousands of Indian troops have not entirely eliminated attacks by militants crossing over from the Pakistan-controlled half of the former princely kingdom: As recently as last Friday, multiple assaults left 17 security personnel and infiltrators dead. If more soldiers and higher walls aren't the answer, though, neither is a Nobel prize. Only once Kashmiris taste the fruits of peace and prosperity will they resist the appeal of war.

In the last decade, India has adopted a lighter hand in the Muslim-majority Kashmir valley; recent elections, such as the statewide polls that are currently underway, have been largely free and fair. But during that same period the state's development has lagged far behind the rest of the country. In 2005-06, when India's overall economy was growing close to double digits, the state of Jammu and Kashmir grew only 5.7 percent. The gap has narrowed more recently only because of the country's broader slowdown. Both local and national growth rates hovered around 6.8 percent in 2011-12.

Corruption, neglect and a heavy military presence have undercut some of the state's greatest strengths. Home to several rushing Himalayan rivers, it should be able to generate up to 20,000 megawatts of power according to some estimates; instead it produces only around 760 MW, a quarter less than current demand. Given India's urgent need to move to cleaner forms of energy -- currently more than two-thirds of its power supply depends on coal -- the government should be investing heavily in hydropower projects in Kashmir and beefing up price incentives for renewables.

The state's alpine climate is also perfectly suited to lucrative cash crops, from saffron to cherries to flowers. But for agriculture to acquire scale, farmers need better means to get their produce to markets and ports elsewhere in India. For now, only the southern region of Jammu has decent rail connections to the rest of the country. A project to link up the more heavily populated Kashmir valley has run well behind schedule. At an election rally in the state capital Srinagar on Monday, Prime Minister Narendra Modi vowed to bring greater development to Kashmir. He should start by prioritizing the state in his plans to upgrade India's road-and-rail infrastructure.

Of course, the most obvious avenue for economic growth in Jammu and Kashmir is tourism. Arrivals have grown appreciably in recent years as violence has waned; in 2011-12, 1.4 million tourists visited the state, up from a few thousand annually in the 1990s and early 2000s. But a still-heavy military and paramilitary presence in most urban areas continues to dissuade many holidaygoers. Modi could boost the sector by pulling troops out of heavily populated areas and stationing them along the borders. Apart from making the state more welcoming to outsiders, the move would help ease resentments among Kashmiris themselves. 

Modi hardly mentioned Pakistan in Monday's speech. No matter who wins the Dec. 24 state elections, though, the prime minister should also be looking for ways to lower tensions with India's rival. Previous back-channel efforts to strike a peace deal have reportedly centered around softening the so-called Line of Control to allow freer movement between the two halves of Kashmir. Given the lackluster economies on both sides, the potential for trade may not be huge -- mostly handicrafts and some agricultural products. But any movement of goods, and more importantly people would help normalize relations. After decades of fighting, that's the kind of development all sides should be able to support.

(Clarifies date of Nobel ceremony.)

This column does not necessarily reflect the opinion of Bloomberg View's editorial board or Bloomberg LP, its owners and investors.

To contact the author on this story:
Dhiraj Nayyar at

To contact the editor on this story:
Nisid Hajari at