Tuesday, 16 September 2008

India, Inc. should sell off its loss-making Kashmir division

If you were the CEO of a multi-trillion dollar enterprise and you had a division that was making losses for years, diverting resources from more profitable divisions, creating bad press for the organisation and contributing to poor employee morale, what would you do?

India, Inc. is an enterprise in exactly that situation. For sixty years since Independence, Kashmir (or more correctly, the Kashmir province of the Indian state of Jammu & Kashmir) has been a black hole consuming endless resources in terms of both money and human life and providing no tangible benefits in return. It's ironic that India, the back-office of the world, which is selling the business benefits of outsourcing to a host of global corporations, has failed to apply the same hard-nosed business principles when it comes to its own affairs. Have the CEO (the PM), his management team (the cabinet) and the board (members of parliament) been managing the enterprise in the best possible way to further the interests of their shareholders (the Indian people)?

This is a case fit for a business school discussion. What should the management do with this chronically loss-making division?

I don't believe the Kashmir question has ever been phrased in business terms before, which is why it has so far been a taboo subject that "patriots" have been expected never to question.

At long last, a section of the intelligentsia has begun to think the unthinkable and voice their thoughts in print. Vir Sanghvi, Jug Suraiya and Swaminathan S Aiyar are 3 prominent columnists who have written up some very eloguent arguments about "letting Kashmir go". I particularly like Vir Sanghvi's article. The well-known activist and author Arundhati Roy (who wrote "The God of Small Things") summed up the collective national fatigue with Kashmir by saying "India needs aazaadi (freedom) from Kashmir as much as - if not more than - Kashmir needs aazaadi from India."

And it's not just a flight of fancy by some elites sitting in their ivory towers. The response to this idea from the general population has been dramatic. A recent poll conducted in 9 Indian cities showed that fully 30% of the country's (urban) population agrees with the idea of letting Kashmir go. So much for an unthinkable idea! I'm sure as time goes on, the idea will gain more supporters. After all, the debate has just begun, and there is already so much pent-up support.

Imagine the benefits that can ensue when a loss-making activity is stopped and funds are immediately available for profit-generating ones instead. India badly needs investment in infrastructure, especially in transport, power and communications. Investment in infrastructure is a multiplier in economic terms. It accelerates economic growth. China has shown the world that growth rates in excess of 10% a year are sustainable. India needs to aim for such a target, and throw every spare resource into achieving that target. The prize is the potential status of being not just the world's largest democracy (already achieved), not just the world's most populous country (projected to happen by 2050), but being nothing less than the world's biggest economy! With a population potentially greater than China's and with more favourable demographics, this is not a pipe-dream. But it requires vision, planning and investment to get there. Worthless diversions like Kashmir are an unaffordable luxury to a country with a far greater tryst with destiny. Kashmir is a needless drain on India's precious resources.

But the idea is still a wrenching one. I grew up in India and the image of the Indian map in my mind is the (untrue) official Indian one with an undivided Kashmir shown as fully Indian territory. That became the "look" of India to me and, I'm sure, to hundreds of millions of Indians. I could almost see a person standing with their left arm around Bangla Desh and face turned westwards. Foreign publications that showed a truer map with the actual line of control as the border were rubber-stamped with the bristly phrase "The external boundaries of India as depicted are neither correct nor authentic", or something of that sort. Yes, the Indian map without Jammu and Kashmir looks admittedly ghastly. It looks like India has been beheaded. That would be my initial, emotional response. A map with Kashmir alone gone would look like India has (literally) lost face. But I can swallow that and look beyond it.

When you analyse and break them down, I guess the only reasons against a sell-off would be national security, logistical complexity, national pride and what I'd call "sunk costs".

The "sunk costs" argument is the easiest to debunk. Essentially, this is saying, "India has spent so much money and sacrificed so many lives to retain Kashmir. If we give up Kashmir now, it will be a waste of all that money and all those brave soldiers would have died in vain." The argument against it is simple: "We should stop throwing good money after bad, and we will prevent even more soldiers from dying unnecessarily by putting a stop to this pointless exercise." After all, the Kashmir situation doesn't look like it is going to turn the corner anytime soon. Why put up with this haemorrhage in good money and good men indefinitely?

National pride is a trickier issue. There's no rationalism here, so it's hard to argue with someone with a strong opinion. However, the issue can be reframed in a number of ways.

1. The prosperity of India is far, far more important than the retention of Kashmir. Our national pride should be in our socio-economic achievements, in bringing prosperity and egalitarianism to an already democratic society. Kashmir is tiny compared to the current and potential achievements of India.
2. Kashmir is needlessly giving India a bad name. We are being equated with a colonial power. We, who struggled to get the British out of India! We, who sympathise with Tibet to the extent that the Dalai Lama and his followers have enjoyed political asylum in India since 1959. We, who are overwhelmingly opposed to the American war in Iraq. How can we now behave the same way as a colonial oppressor and stay on in a place where we're clearly not wanted?
3. Even the Soviet Union allowed its republics to secede. Where is the shame in letting a recalcitrant province go its own way?

I don't know how convincing these arguments will be, but as I said before, the debate has just begun, and there will be more and better arguments.

That leaves national security and logistics.

The national security argument can cut both ways. What I call the "domino theory" held by many hardliners says that giving up Kashmir today will require India to give up other territories tomorrow. I'm not convinced, and I think this is just paranoia. Secessionist movements in other parts of the country have been tamed without territorial concessions, and it must be remembered that none of them has been a festering wound like Kashmir. [We will create more festering wounds unless we move quickly to redress the legitimate grievances of victims upon victims of communal violence in our country.] The point is, the Kashmir situation has probably deteriorated beyond the point where a solution can be found within the framework of the Indian union.

On the other hand, consider the fact that Kashmir has always been the single most important irritant between India and Pakistan, responsible for every single armed conflict between the two countries (except the 1971 war). There has been no progress on a South Asian free trade zone thanks to the antagonism between its two biggest countries. A huge economic bonanza awaits the region once the Kashmir issue gets settled. When the economies of the region get inextricably intertwined, war becomes an increasingly distant possibility. Strategically, there is in fact a strong national security argument in favour of letting Kashmir go.

Finally, the tricky issue of logistics. We remember the horrors of Partition in 1947. The last thing we need is another massacre with the body count running into the millions. India needs to float the idea of a coming "velvet divorce" gently and years in advance. It will allow people to make their plans and execute them without panic. There's also the messy issue of compensation for hundreds of thousands of Indians who have been forced out of Kashmir by the threat of violence. That's actually a tractable problem. Displaced Kashmiris within India can be generously compensated with a fraction of India's budget for Kashmir for a single year.

I know I'm advocating that India should let Kashmir go, but my guess is that most Kashmiris, faced with a stark choice, will vote with their feet and wind up in India anyway. India is the biggest engine for economic growth this side of the Himalayas. The Kashmiris' options are unfortunately quite limited, and uniformly unsatisfactory. They can either create an independent landlocked state for themselves with no resources and no industry and be an instant basket case, or be absorbed into a troubled Pakistan with its sputtering economy, perilous law-and-order situation (which puts it on a collision course with the US over terrorism) and very uncertain prospects overall. As an independent country, they will probably be humiliatingly dependent on India anyway, and the terms they receive will be far less generous. They're probably best off where they are (a much-pampered province within India), but I (just like an increasingly large number of Indians) am now skeptical whether the status quo is in the best interests of India.

If the Kashmiris finally get what they have been agitating for, it could turn out to be their worst nightmare, and India's lasting relief.

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