Should the state rely on economic growth to eradicate terrorism in J&K?

Image Courtesy: Deccan Chronicle

There is a commonly held belief, particularly among politicians that lack of economic opportunities precipitates terrorism. For example, former US President Barack Obama made the following remarks at the Summit on Countering Violent Extremism (February 19, 2015): “…when people, especially young people feel entirely trapped in impoverished communities, where there is no order and no path for advancement, where there are no educational opportunities, where there are no ways to support families, and no escape from injustice and the humiliations of corruption – that feeds instability and disorder, and makes those communities ripe for extremist recruitment…. So if we’re serious about countering violent extremism, we have to get serious about confronting these economic grievances.” Prime Minister Modi also appears to share similar views. In a recent meeting with some panchayat leaders from Jammu and Kashmir (J&K), he mentioned that ‘Vikas’ (development) and ‘Vishwas’(trust) were to be the cornerstones of his policy on J&K (Indian Express, November 5, 2016).

The Indian government has tried many options in J&K but the insurgency has festered nevertheless. We now have plenty of information to take stock of how different policies worked in the past and jettison those that did not work. Based on my research, I am sceptical that ‘Vikas’ will be of much use in countering the insurgency. Let me explain why.

In all fairness, there are reasons to be concerned about the economic performance of J&K. For a long time, J&K has been one of the laggard states in India. Because of geographical reasons, we cannot realistically expect J&K to match the growth rates of coastal states in Southern or Western India. However, J&K should normally match the growth rate of Himachal Pradesh (HP). HP a mountainous state has a similar climate, and depend significantly on tourism. Therefore, HP’s growth rate is a measure of the potential growth rate of J&K.

Figure 1 is a plot of the difference of J&K’s per capita real growth rate relative to HP’s rate; a positive value implies that J&K over-performed relative to HP in a given year. It is evident that J&K underperformed relative to HP in most years. Between 1981-2014, the average growth rate in J&K was 2.5% less than that of HP. This gap is affected primarily by non-geographical factors, such as quality of governance, poor infrastructure, terrorism, etc.and therefore is of concern. The best that J&K can realistically hope to achieve is erase this deficit vis-à-vis HP. So, the question is, whether such an achievement can have a significant effect in controlling the insurgency.

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Figure 1: Difference of the per capita growth rates of J&K and HP 1981-2014

The magnitude of terrorism is commonly measured by the number of deaths due to terrorism. Information on this is available from the South Asia Terrorism Portal. There are three categories of victims affected by the insurgency in J&K- civilians, security forces, and terrorists. My analysis of the data (using a technique called Vector Autoregression) reveals that economic growth does not have any systematic relationship with the number of deaths of any of these three categories. This ties in with the commonly accepted viewpoint of researchers that terrorism has nothing to do with lack of economic opportunities.

Such an opinion has evolved on the basis of several empirical studies. Perhaps the most well-known work on this topic is by two economists- Alan Krueger and Jitka Malecková. One of the questions they asked is, if Palestinian suicide bombers were more likely to be from the poor strata of society. Surprisingly, they found that in Palestine, suicide bombers were more likely to be drawn from well-to-do sections of society. Therefore, poverty is not a motivation of suicide bombers in Palestine. They also wanted to verify if these insights hold for other countries as well. Therefore, they checked if there was any relationship between the average income of a country and the number of terrorists who originate from that country. Again, they found that there is no relationship between the two. My analysis considers the growth rate instead of the average income, and number of deaths instead of the number of terrorists, but the conclusion is very similar.

I am certainly not suggesting that the Indian government should abandon all growth-promoting strategies in J&K. The government is responsible for promoting the well-being of all Indian citizens and therefore should try to increase the growth rate across all states, including J&K. What I am implying however is that it should not expect the problem of terrorism to go away even if J&K starts to grow at a faster rate, say like HP. The insurgency in J&K is a political problem and erroneously viewing it as an economic problem would only lead to a waste of resources without any commensurate gains.Therefore, there is not a strong case for going the extra mile in promoting growth in J&K

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Aniruddha Bagchi is an Associate Professor of Economics at the Coles College of Business, Kennesaw State University, GA, USA. He received his Ph.D. in Economics from Vanderbilt University. One of his areas of research is Industrial Economics. In particular, he is interested in examining the processes and institutions that encourage innovative activity. He has also written on the effect of regulation and economic outcomes.