The central government appointed the J&K Interlocutors Group on October 13, 2010.  The Group submitted the Report to the Home Ministry earlier this year.  The Report was made public by the Home Ministry on May 24, 2012. It may be noted that under Article 370 of the Constitution special status has been granted to the State of Jammu and Kashmir.  The power of the Parliament to legislate is restricted to defence, external affairs, communication and central elections.  However, the President may with the concurrence of the state government extend other central laws to the state.  Furthermore, in 1952, an agreement known as the Delhi Agreement was entered into between the state of Jammu and Kashmir and the central government.  The Agreement too provided that the state government shall have sovereignty on all subjects except for matters specified above.  However, since then some central laws relating to other subjects such as environment have been made applicable to the state. This blog post divides the recommendation into two broad headings: political; and socio-economic.  It also looks at the roadmap proposed by the Group to achieve these recommendations. Political recommendations:

  • The Group recommended that a Constitutional Committee (CC) should be set up to review all the central Acts that have been extended to the state of Jammu and Kashmir since 1952.  The CC should come out with its findings within six months.  According to the Group, the CC should review whether, and to what extent, the application of central acts to the state has led to an erosion of the state's special status.
  • The word ‘Temporary’ in Article 370 should be replaced with ‘Special’ which has been used for certain states such as Assam, Nagaland, Andhra Pradesh[1].
  • Central laws shall only be made applicable to the state if they relate to the country's security or a vital economic interest, especially in the areas of energy and water resources.
  • Currently, the Governor is appointed by the President.  The Group recommended that the state government shall give three names for consideration for the position to the President.  However, the Governor shall finally be appointed by the President.
  • Separate Regional Councils for Jammu, Kashmir and Ladakh should be created and certain legislative, executive and financial powers should be devolved to them.  The subjects that could be transferred to the Regional Council include prison reforms, public health, roads and bridges and fisheries.

Cultural, Economic and Social Recommendations:

  • There are 16 centrally sponsored schemes which are mostly funded by the centre.  However, most of the funds for these schemes have not been utilised properly.  The Group recommended that an effective system to monitor these schemes should be put in place.
  • An expert committee to review the state’s financial needs should be constituted.
  • The central government should tap the hydro-electricity potential of the state.  Till date only 15 per cent of the potential has been harnessed.  Additional hydro-electricity projects should be established for which the central government should meet the entire equity capital.
  • Industrial establishments and other buildings occupied by the security officers should be vacated.
  • Financial package of incentives on the pattern given to the North Eastern States should be given to the state.
  • The hilly, remote areas should be declared as special development zones.
  • The restrictions on the internet and mobile phones should be reviewed.

In order to fulfil these recommendations, the Interlocutor’s Group proposed the following roadmap:

  • The ‘stone pelters’ and political prisoners against whom no serious charges have been framed should be released.
  • There should an amendment and review of the Armed Forces Special Powers Act, 1990 and the Jammu and Kashmir Public Safety Act, 1978.
  • The state policy should provide for the return of Kashmiri Pandits.
  • A judicial commission to supervise the identification of bodies buried in the unmarked graves should be established.

The full report may be accessed here. Sources:

[1] Article 371 provides certain ‘special provisions’ with respect to states of Maharashtra, Gujarat, Nagaland, Assam, Manipur, Andhra Pradesh and Sikkim

Reports suggest that a debt restructuring plan is being prepared for power distribution companies (discoms) in seven states - Uttar Pradesh, Punjab, Rajasthan, Haryana, Andhra Pradesh, Tamil Nadu and Madhya Pradesh.  According to some estimates, the combined outstanding debt for discoms is Rs 2 lakh crore.  Discoms have been facing heavy losses.  According to a Planning Commission Report, the cost of supplying electricity increased at a rate of 7.4 per cent annually between 1998-99 and 2009-10.  The average tariff has also increased at an annual rate of 7.1 per cent over the same period.  However, the report shows that the average tariff per unit of electricity has consistently been much lower than average cost of supply per unit.  Between 2007-08 and 2011-12, the gap between average cost and average tariff per unit of electricity was between 20 and 30 per cent of costs.

Average cost and average tariff per unit of electricity (Rs per kWh)

Year

Unit cost

Average tariff per unit

Gap between cost and tariff

Gap as percentage of unit cost

2007-08

4.04

3.06

0.98

24%

2008-09

4.6

3.26

1.34

29%

2009-10

4.76

3.33

1.43

30%

2010-11

4.84

3.57

1.27

26%

2011-12

4.87

3.8

1.07

22%

Source: “Annual Report 2011-12 on the Working of State Power Utilities and Electricity Departments”, Planning Commission State discoms have been losing money due to higher costs than revenues, as well as high transmission and distribution (T&D) losses.  The commercial losses for discoms in India (after including subsidies) increased from Rs 16,666 crore in 2007-08 to Rs 37,836 crore in 2011-12. Reports suggest that the restructuring plan being prepared will be worth Rs 1.2 lakh crore in short-term liabilities.  Half of the proposed amount would be issued as bonds by the discoms, backed by a state government guarantee.  Banks and financial institutions would reschedule the remaining Rs 60,000 crore of debt, with a moratorium of three years on payment of the principal amount.  State governments that adopt the financial restructuring plan would not recover any loans given to discoms before they start showing profits. Under a proposed transition finance mechanism, the central government would reimburse 25 per cent of the principal amount of bonds to states that fully implement the plan.  Also, states that achieve a reduction in T&D losses above a targeted level in three years may be given grants.  Newspaper reports also suggest that states will have to prepare plans for eliminating the gap between the average cost and average tariff per unit of electricity.