Impact of Conflict on Economic Development and its Mitigation:
Case Study -  Kashmir

In recent years the wars between countries have decreased but conflicts between groups in countries or conflicts between the State and the population have increased. Most of these conflicts have turned violent and there is increasing number of causalities associated with them. The resolution of these conflict is very rare if not totally absent. There is a diversity of opinion regarding the cause of the conflict. Development practitioners say that poverty is both a cause and a consequence of conflict. There is statistical evidence for this: most of the civil wars are concentrated in countries with low levels of economic development. Associated with these conflicts are the costs to the effected population – social as well as economic, direct as well as indirect. Conflict makes agricultural production difficult through loss of manpower and at times through destruction of land. Conflict is accompanied by a drop in GDP as resources and manpower are redirected away from productive endeavours.

The main objective of this study is to analyse the impact of civil conflict on economic development in Kashmir and suggest policy measures for the mitigation of the negative impacts. This study focuses on the existing social, political and economic conditions in Kashmir and the analysis as to what are the costs of the conflict in terms of certain variables like GDP, expenditure, agricultural production, manufacturing sector, financial sector and employment. Kashmir region has been disputed since 1947 and the dispute took a violent turn in 1989. Since 1989 more than 70,000 people have perished in Kashmir with the maximum deaths in 1990. Kashmir comprises three main regions Jammu, Kashmir and Ladakh. Ethnically geographically and with respect to religion, the three regions are very diverse. Kashmir – is 90% Muslim, Jammu- which is 60% Hindu and Ladakh which is 60% Buddhist. These linguistic and religious divisions have played a major role in the conflict with the pattern of being an important indicator The violence and the causalities are the maximum in the districts of the Kashmir Valley and some borders areas of Jammu whereas most of the plain areas and Hindu majority areas of Jammu are unaffected by the conflict.

The analysis was done at multiple levels: At the National level comparing the Indian National Indicators with the J&K state, at the Regional level comparing other states of India which have more or less the same composition of the economy. The third being comparison within the J&K state between the conflict affected regions and the region without conflict. The dataset used for analysis has been extracted from the reports of the Planning Commission of India, the department of Census and the publications of the Department of Statistics, J&K Government for the years 1983 to 2001. In the analysis, the year 1989 was considered as the threshold and the before and after conflict scenarios were established for state GDP, expenditure, per capita income at levels of analysis. These figures were compared with the actual figures available which showed the J&K State GDP in 2001 which was significantly lower. The trend in the growth of the state GDP was also compared with the other states and showed the same decreasing trend. In terms of per-capita income the analysis showed that in the pre 1989 phase the annual per capita income of J&K state was higher than that of India and the trend was also upward with the annual per-capita income of J&K much more than the Indian figure.

Agriculture is the mainstay of the economy of the J&K state and the patterns of the average yields show a trend which shows that the in the rice growing region that is Kashmir the agriculture production (predominantly rice) has decreased much below the Indian average despite the fact that average yields before 1989 were always higher than the Indian average. The decreasing trend is very evident from the years after 1989 when the violence started. The same decreasing trend carried over to the manufacturing sector as well. This trend was also evident some of the variables at the district level with the districts of Kashmir Valley showing a decreasing trend in agriculture production, manufacturing sector. The negative effects of the conflict were more than evident in the analysis and the ideal policy interventions are to address the possible objective causes of grievance. On this account, we don’t see much headway at present as it would amount to re-drawing borders, splitting countries. The proposals would include strengthening the production sector both primary and secondary using community driven development models which have multiple foci.