RBI’s takeover of J&K Bank’s overdraft role raises many questions
Arjimand Hussain Talib
A new wave of anxiety has suddenly engulfed Jammu & Kashmir. The news that the Reserve Bank of India (RBI) has taken over from J&K Bank some of the jobs the latter would do for this state is official now. To most Kashmiris, this step constitutes ‘nationalization’ of their most important institution. And the message that they see in this is not financial but significantly political.
On Friday, all speculations about this matter were put on rest when RBI came up with an official press release mentioning the signing of the agreement between J&K government and itself, making RBI take over from J&K Bank the role of providing overdraft facilities to J&K state.
The official RBI press statement reads, “The Reserve Bank of India has entered into a Supplementary Agreement under Section 21A of the Reserve Bank of India Act, 1934 with the Government of Jammu & Kashmir. Under the agreement, which shall be effective from April 1, 2011, the Reserve Bank of India shall carry on the general banking business of the Government of Jammu & Kashmir and act as the sole agent for investment of Government’s funds.”
It further reads, “On the recommendation of the State Government, the Reserve Bank of India has entered into an agreement with J&K Bank Ltd. whereby J&K Bank would act as an agent of the Reserve Bank of India, for conduct of general banking business of the State Government.”
This statement leaves hardly anything to speculation. In practical terms, it, among other things, means that from April 1 onwards this year, Jammu & Kashmir Bank will not be permitted to provide overdraft to J&K government.
It also means that J&K state will use RBI`s ‘ways and means advances’ for overdrafts to meet cash flow mismatches just like any other state in the country would do.
Jammu & Kashmir government has its own take on the matter. Its argument is that it had itself pleaded before the 13th Finance Commission to give a one-time Rs 2300 crore grant to the state to clear its overdraft with J&K Bank.
In a statement issued by the Finance Department from Jammu a couple of days ago, the government said, “The State Government had vehemently placed before the 13th Finance Commission for substantial grant to the State Government as one time assistance to remove structural debt with the J&K Bank. At present, under an MoU, State Government has overdraft arrangements with J&K Bank for Rs. 1700 crore.”
What makes the earlier argument unconvincing is the point of ‘poor internal resource generation’ that the government raised in its explanatory note. It further said, “However, in view of the poor resource generation from within the State and despite liberal Central assistance, overdraft generally hovered around Rs. 2300 crore on an average.”
The government has emphasised that it was the council of ministers who took this decision rather than an individual or a party. It says, “The Council of the Ministers headed by the Chief Minister of Jammu & Kashmir, therefore, pleaded forcefully with the 13th Finance Commission during their visit to the State and demanded for one-time financial assistance of Rs. 2300 crore to remove this structural deficit. In a rare exception to the request of the J&K Government, the Commission has awarded a grant in aid of Rs. 1000 crore, with another exception of permitting the State Government to raise the balance amount of Rs. 1300 crore for liquidation of loan, over and above the annual borrowing ceiling, with exclusion of this market borrowing, while calculating the State FRL-consistent fiscal deficit.”
That, in effect, means that while the “structural deficit” of Rs 2300 crore will not be entirely liquidated, J&K state will be doing the same for the balance Rs 1300 crore what it used to do with J&K Bank.
Both RBI and J&K government in their press statements have taken pains to emphasise that this arrangement is not something radically new. Both have mentioned the agreement that J&K Government and the RBI have in place since September 1972 for the state’s debt management.
What is also interesting to note is that both RBI and J&K government have emphasised that this new arrangement has not come from the RBI, but rather on J&K government’s “insistence.”
On appointing J&K Bank as Agency Bank by the RBI for J&K State, the official statement says, “Moreover, in the supplementary arrangements with RBI, on insistence of the State Government, RBI has appointed J&K Bank as the Agency Bank for J&K Government to manage all cash operations of the State Government and therefore State Government will continue to discharge all its financial obligations with J&K Bank under the agency Bank Scheme.”
J&K government’s argument is also that this is not a novel development which will impact the state’s financial autonomy. Its point is that RBI remains the sole regulator of all banking institutions, including J&K Bank. That much is fine.
However, its argument that this new system “will entail substantial interest saving for the public exchequer while J&K Bank would benefit by way of the surplus to over Rs. 2300 crore to be injected into various developmental projects” is highly unconvincing. There are hardly any obvious linkages.
The official spokesperson has further said that the government had thoroughly weighed all advantages and ‘perceived disadvantages’ of implementing the “recommendations of the 13th Finance Commission” before giving its nod to this decision. So the question is: was this step taken at J&K government’s insistence or 13th Finance Commission’s recommendations?
A big majority of J&K’s people see any such step a dilution of the state’s special status. They also see it as ‘nationalization’ of the state’s key institutions. And that is a grim message. A lot of state’s indigenous institutions have been ‘nationalized’ over the years. The problem is that such ‘nationalization’ creates greater centralization, challenging J&K’s quest for political autonomy even further.
At the end of the day, Jammu & Kashmir’s case for restoration of political autonomy in practical terms is not about a political luxury, it is about need. Centralisation of powers is always bad for people’s welfare. In J&K’s case it is a recipe for long term instability and political chaos, rather than political reconciliation. This latest step has even the potential of putting spikes in the ongoing peace process being steered by the special interlocutors.
No matter the merits of ‘financial discipline’, steps like these will not help in bridging the trust deficit between Srinagar and New Delhi. These steps also raise serious questions over National Conference’s ability to safeguard the state’s special status, howsoever symbolic that might be.
Saturday, January 22, 2011
Saturday, January 1, 2011
Chaos to dreams
When Kashmiris can wish ‘happy new year’, and mean it
DATELINE SRINAGAR by Arjimand Hussain Talib
For the people of Kashmir, the turn of a year marks just one thing – chaos to chaos. Sixty three years – and even longer – of cynicism leave little scope for optimism, perhaps.
To wish “Happy New Year” sounds little awkward, rather too plastic, in our lives. Some sixth sense says that 2011 just can’t be better for us. It would be just a turn over from one state of anarchy to another.
A change for the better today demands our introspection. And action, too. It is not just our political situation that needs our introspection; we need introspection at personal and societal levels as well.
If what our elders say about the past is any indication, our today’s level of social and institutional degeneration is the lowest we have ever seen. That is what must worry us the most. Our social values – we have for long cherished - and crumbling. Our institutions are going to dogs. Our respect for human life – our own and those of our own – seems not like before. We seem to have resigned ourselves to the slide of the bad times.
Our classical refrain for skirting every good - Ye sha kasheer – yeti shu yethai kane chalaan (It is Kashmir and that is how things move here) is symbolic of a national disease. We need to question it before it is too late.
There are theories and theories about why are we where we are today. But nothing can change the fact that our political situation is our enemy no. 1. A long chaotic political situation has conditioned Kashmiris’ human attitudes and attributes tremendously. The worse happened in the post 90s era. Cumulatively, these attitudes and attributes have shaped what and where we are today.
Today when we compare ourselves with other human societies, we have reasons for worry as well as satisfaction. We are terribly devoid of political and economic systems that are going to survive societies in this highly competitive world. But despite degeneration, we still are one of the most humane societies one can find on this planet.
The first agenda for 2011, as such, must be to define our collective political agenda – something which is based on needs and realism. One of our biggest problems is that no single person today has the ability to do that. It can only happen as a result of collectivism.
To begin with, Kashmiris need a broad internal dialogue. We are highly divided today than ever before. For that, the culture of political untouchability needs to go.
There are many basics that most Kashmiris settle for. Despite disagreements and opposing ideologies – which necessarily need not go – we can still have a common minimum agenda.
For this to happen all native political parties across the political spectrum - like the two Hurriyat factions, NC, PDP, JKLF, Jamaat-i-Islami, etc. -need to sit together and talk. That must bring us to our bottom lines and also distinguish between needs and fantasies. What also needs to dictate this agenda is the realization that no “international intervention” or “attention” is going to change even an iota in our situation as what stands today.
This of course is a big task, but there is hardly any alternative available. New Delhi and Islamabad are tired of the noise we have subjected them to in our differing voices. No one can help any nation talking nonsense in million voices.
And it is not just for a positive political change that we need to do this; it is for our very survival and wellbeing. We need to analyze what does that mean.
Kashmiris are today suffering colossal human and spiritual loss that go beyond the normal statistics of quantifiable casualties and economic loss.
Psychologically speaking, almost the whole Kashmiri population is sick. We are overwhelmed by the strains of professional, family and personal lives, but we have hardly any de-stressors. And all that is impacting our lives. People are suffering and dying - silently.
In the last fortnight alone, 16 people – most of who were in their 40s and 50s – died in my native Srinagar locality. This is an astounding number for a small neighborhood. Most of those who died were suffering from hypertension, which they themselves didn’t know. And I am sure many of us will see such things happening around us if we take stock.
The last 20 years of mayhem have given birth to some grave illnesses in Kashmir. Hypertension, anxiety disorders, obesity, diabetes, hyperthyroidism, low fertility, etc are present in our lives like epidemics. We are undergoing hormonal changes which will impact our future generations as well.
Our long chaotic political situation has a big role in adversely shaping our personal and social lifestyles. Our effective living time is now between morning and afternoon. And we are supposed to squeeze our professional, personal and social obligations in that time. The result is unbearable stress.
One of our greatest strengths – our social support systems – is now stressors themselves, rather than element of catharsis. Our social life has been marred by painful ritualism and artificiality. We hardly enjoy it now. The pulls of modernism and tradition; stresses of insecurity and militarization, dismal public services, insecurities about tomorrow - especially about children - has made a mess out of our lives.
In professional and family relations, mutual distrust and suspicion guide almost our every action. We very rarely appreciate each other’s excellence. We have developed a compulsive love for seeing others’ failures.
But what keeps the silver lining alive on the horizon is our people’s performance outside Kashmir. That makes us to conclude that there is not something wrong with us as people, but the system that nurtures us.
And there is another reason for hope. One of the best things to have happened in the last twenty years is Kashmiris’ unprecedented emigration. Our people are doing remarkably well in diverse areas – from management to medicine, from engineering to trade, from development to media. Some big success stories in our private industry – which are now established brands – are reasons for hope too.
Abnormal times erase the idea of common good to a great extent. Individual survival alone becomes paramount. The post-invasion Iraq and Afghanistan are two cases which reinforce this.
In such troubled times appealing to one’s self interest in setting this mess right tends to work. So our action towards that good could, for instance, be dictated by a concern for the future of our children. Can we afford to give them a worse tomorrow?
By seeking to do all this it is not to aim for utopia. We can at least aim for a civilized society where we can wish each other a happy new year. And mean it.
Columnist can be e-mailed at Arjimand@greaterkashmir.com
DATELINE SRINAGAR by Arjimand Hussain Talib
For the people of Kashmir, the turn of a year marks just one thing – chaos to chaos. Sixty three years – and even longer – of cynicism leave little scope for optimism, perhaps.
To wish “Happy New Year” sounds little awkward, rather too plastic, in our lives. Some sixth sense says that 2011 just can’t be better for us. It would be just a turn over from one state of anarchy to another.
A change for the better today demands our introspection. And action, too. It is not just our political situation that needs our introspection; we need introspection at personal and societal levels as well.
If what our elders say about the past is any indication, our today’s level of social and institutional degeneration is the lowest we have ever seen. That is what must worry us the most. Our social values – we have for long cherished - and crumbling. Our institutions are going to dogs. Our respect for human life – our own and those of our own – seems not like before. We seem to have resigned ourselves to the slide of the bad times.
Our classical refrain for skirting every good - Ye sha kasheer – yeti shu yethai kane chalaan (It is Kashmir and that is how things move here) is symbolic of a national disease. We need to question it before it is too late.
There are theories and theories about why are we where we are today. But nothing can change the fact that our political situation is our enemy no. 1. A long chaotic political situation has conditioned Kashmiris’ human attitudes and attributes tremendously. The worse happened in the post 90s era. Cumulatively, these attitudes and attributes have shaped what and where we are today.
Today when we compare ourselves with other human societies, we have reasons for worry as well as satisfaction. We are terribly devoid of political and economic systems that are going to survive societies in this highly competitive world. But despite degeneration, we still are one of the most humane societies one can find on this planet.
The first agenda for 2011, as such, must be to define our collective political agenda – something which is based on needs and realism. One of our biggest problems is that no single person today has the ability to do that. It can only happen as a result of collectivism.
To begin with, Kashmiris need a broad internal dialogue. We are highly divided today than ever before. For that, the culture of political untouchability needs to go.
There are many basics that most Kashmiris settle for. Despite disagreements and opposing ideologies – which necessarily need not go – we can still have a common minimum agenda.
For this to happen all native political parties across the political spectrum - like the two Hurriyat factions, NC, PDP, JKLF, Jamaat-i-Islami, etc. -need to sit together and talk. That must bring us to our bottom lines and also distinguish between needs and fantasies. What also needs to dictate this agenda is the realization that no “international intervention” or “attention” is going to change even an iota in our situation as what stands today.
This of course is a big task, but there is hardly any alternative available. New Delhi and Islamabad are tired of the noise we have subjected them to in our differing voices. No one can help any nation talking nonsense in million voices.
And it is not just for a positive political change that we need to do this; it is for our very survival and wellbeing. We need to analyze what does that mean.
Kashmiris are today suffering colossal human and spiritual loss that go beyond the normal statistics of quantifiable casualties and economic loss.
Psychologically speaking, almost the whole Kashmiri population is sick. We are overwhelmed by the strains of professional, family and personal lives, but we have hardly any de-stressors. And all that is impacting our lives. People are suffering and dying - silently.
In the last fortnight alone, 16 people – most of who were in their 40s and 50s – died in my native Srinagar locality. This is an astounding number for a small neighborhood. Most of those who died were suffering from hypertension, which they themselves didn’t know. And I am sure many of us will see such things happening around us if we take stock.
The last 20 years of mayhem have given birth to some grave illnesses in Kashmir. Hypertension, anxiety disorders, obesity, diabetes, hyperthyroidism, low fertility, etc are present in our lives like epidemics. We are undergoing hormonal changes which will impact our future generations as well.
Our long chaotic political situation has a big role in adversely shaping our personal and social lifestyles. Our effective living time is now between morning and afternoon. And we are supposed to squeeze our professional, personal and social obligations in that time. The result is unbearable stress.
One of our greatest strengths – our social support systems – is now stressors themselves, rather than element of catharsis. Our social life has been marred by painful ritualism and artificiality. We hardly enjoy it now. The pulls of modernism and tradition; stresses of insecurity and militarization, dismal public services, insecurities about tomorrow - especially about children - has made a mess out of our lives.
In professional and family relations, mutual distrust and suspicion guide almost our every action. We very rarely appreciate each other’s excellence. We have developed a compulsive love for seeing others’ failures.
But what keeps the silver lining alive on the horizon is our people’s performance outside Kashmir. That makes us to conclude that there is not something wrong with us as people, but the system that nurtures us.
And there is another reason for hope. One of the best things to have happened in the last twenty years is Kashmiris’ unprecedented emigration. Our people are doing remarkably well in diverse areas – from management to medicine, from engineering to trade, from development to media. Some big success stories in our private industry – which are now established brands – are reasons for hope too.
Abnormal times erase the idea of common good to a great extent. Individual survival alone becomes paramount. The post-invasion Iraq and Afghanistan are two cases which reinforce this.
In such troubled times appealing to one’s self interest in setting this mess right tends to work. So our action towards that good could, for instance, be dictated by a concern for the future of our children. Can we afford to give them a worse tomorrow?
By seeking to do all this it is not to aim for utopia. We can at least aim for a civilized society where we can wish each other a happy new year. And mean it.
Columnist can be e-mailed at Arjimand@greaterkashmir.com
Subscribe to:
Posts (Atom)