Himachal Worries In A Prosperous State

On a cold spring morning, if one looks up from the wide mountain highway that leads up from Kalka, the bright sunshine, striking the smoke billowing from thousands of coal fired heaters in government offices, creates the illusion that Shimla Town is on fire. The impact is dramatic and at the same time threatening. It is prosperity that allows the government to heavily subsidize the use of coal, yet its use turns the stagnant morning air into a choking brew, which does enormous harm to the residents of this state capital and hill resort.

The conflicting impression of promise and threat also describes the condition of Himachal Pradesh in general. The state has the highest living standard in the Himalayan region, belying the myth that mountain regions by their very geography must be poverty-stricken. Himachal provides its people with a higher income, better employment, superior social services and more efficient government than the adjoining regions of Uttar Pradesh or the Nepali hills beyond. According to D.S. Thakur, a researcher at the H.P. Vishva Vidyalaya in Palampur, the state has created "a new concept for the development of hill economies" through the scientific transformation of agriculture, horticulture, animal husbandry and other areas. And, "The development experience of Himachal offers pertinent lessons for the integrated mountain development of the entire Great Himalayan Hill Region," he says.

Such is the prosperity of Himachal that a well-travelled Indian Foreign Service officer, now retired, says that Himachal "comes closest to being a Himalayan Switzerland."

However, progress has its down side. Himachal, in a sense, is walking an economic and environmental tightrope. Its economy is dependent upon the plains and the fragile ecology of the mountains. Himachalis are precariously reliant on a handful of products and industries, and the market conditions in neighbouring Punjab and Haryana. Shimla politics has become more and more rancorous, and the civil service is widely believed to be slowly losing the "touch of the Raj," which refers to a time when the best of the Indian Civil Service came here to serve in the summer capital of British India. In addition, Himachal's government officials have been slow to respond to problems that often come with economic growth: inequity; migration; pollution; environmental degradation; and unfulfilled expectations.

Unequalled Record

Statistics clearly show that the 4.3 million people of Himachal have a development record that is unequalled in the Himalaya. They have a literacy rate of 43 per cent (up from 17 per cent in 1967), compared to 40 per cent of the affluent Punjab, 26 per cent of Bihar and an Indian national average of 35 per cent. More than 14,444 of the state's 16,916 villages – 85 per cent – have safe drinking water and the goal is to raise that to 93 per cent by 1990.

The state has 76,138 primary schools, 1,096 middle schools and 925 high schools. There are 38 colleges and three universities. Himachal University, which opened in Shimla only in the early 1970s, has both an engineering college and a medical college. The state also has a network of 57 hospitals, with a total of 3,800 beds available, 40 community health centres, 153 primary health care centres manned by doctors, 218 dispensaries and 1,389 sub-centres with paramedics. Further, more than 1,300 public buses ply 193 routes over 16,213 km of roads. Almost every village in Himachal has electricity.

The state domestic product (SDP) of Himachal Pradesh increased from IRs 223 crores in 1970-71 to IRs 301 crores in 1980-81, to IRs 406 crores in 1986-87. The per-capita income of the state increased to IRs 2,908 in 1986-87, up from IRs 2636 the previous year, making it sixth in India after Punjab, Haryana, Maharashtra, Gujarat and West Bengal. For a planner from Kathmandu, Thimphu, Nainital or Lhasa, these healthy statistics are staggering.

Gas Canisters, Topless Mountains

Signs of Himachal's development can be found in more than statistics, however. Shimla grocery stalls are full of affordable fresh produce. The Government ration shops dispense basic cereals at rock bottom, subsidized prices. On the Kalka-Shimla highway -wide and roomy by hill standards -there are large night-time reflectors, more commonly found on European autobahns and while natural gas is rarely found in most Himalayan urban centers, the red natural gas canisters are ubiquitous in even the most remote tehsil towns of Himachal. The street vendors of chai and samosas have discarded kerosene and firewood long ago in favour of the clean blue flame of gas.

When Shimla decided it needed an airport, so that Vayudoot's Dorniers could fly in tourists, engineers selected a nearby hill and, at considerable cost, simply lopped off the summit. Three years of blasting and earthmoving created an incongruously flat-topped mountain that can be seen for miles around.

Why is Himachal doing so well? A Himachal University economist says that what Himachal had during its formative years that the other states lacked was "a political leadership with a clear perspective on hill areas development." The economist, and others, give credit for this perspective to the late Y.S. Parmar, who, as chief minister, ruled the state with an iron, but benevolent, hand through its first decade.

Hill Development

Himachal became a separate state in 1948, carved out from the Punjab hill states, and it initiated planned development in 1951 with its First Five Year Plan. It is currently in its seventh plan period. Initially, the highest priority was given to transport and communications until the fourth plan period (1969/74), when the emphasis was shifted to water and power development. On the whole, agriculture, social and community services, and industry came next in the official planning agenda.

Highways have been central to Himachal's development. While other hill districts of India delayed road building until the Indo-Chinese war of 1961, and then allowed border roads to be built for strategic reasons under Parmar's leadership, Himachal built a network of highways that had an economic purpose.

Of course, political pragmatism alone could not have put Himachal high on the economic charts. Geography helped. Unlike other Himalayan districts, which straddle economically depressed plains such as northern Bihar and eastern Uttar Pradesh, Himachal has reaped the economic benefit of its proximity to Punjab and Haryana, among the most prosperous and dynamic of the Indian states.

Himachal is the only major state in the Indian Union which is almost entirely mountainous. This has helped focus the work of Shimla's politicians and planners. "Hill development" is the only kind of development they have to concentrate on. The eight hill districts of Uttar Pradesh, on the other hand, have to compete with sixty odd plain districts for allocations and boondoggles. As a matter of fact, says one analyst, both the U.P. hill districts and Himachal "started out in the 1950s with the same initial conditions in terms of education and infrastructure." Today, the activists of the restive U.P. hills look to Himachal's success and ask, "Why not us?"

Himachal also had Shimla. When the British anointed it their summer capital in 1850, the ridge top gaggle of village houses was gradually transformed by the building of a railway, public works, schools, and the growth of a civil service and associated work ethic that stood it in good stead when independence and statehood arrived.

Apples and Potatoes

The apple is Himachal's main industry; bigger than tourism, potatoes and the income from Himachal's sons in the armed services. Introduced here by Samuel Evans Stokes, a naturalised American whose descendants are prominent Shimla residents, the apple has taken the state's economy on a roller coaster ride. Rather than develop mountain agriculture, which, as in most hill areas, is of the subsistence variety, Himachal put all its efforts in horticulture development. In the beginning, apple cultivation was concentrated among the rich estates of Kotgarh and Jubbal, but it has now spread among middle-income farmers as well, in seven of Himachal's 12 districts. Starting from 1,200 tonnes annually in 1950, horticultural production (mostly apple) in Himachal has grown to 4.5 lakh tonnes annually. To help manage the State's horticultural produce, the Himachal Pradesh Marketing Corporation (HPMC) was started in 1974, with the help of World Bank. It has set up grading and packing houses, cold storages, fruit processing plants and transhipment centres. HPMC's processing facilities have allowed the use of low grade apples which would otherwise have gone waste. The Corporation has also been innovative in its marketing efforts. For example, it was the first to introduce juice vending machines in India, making juice available to the public at reasonable prices. HPMC has also started distributing fruit concentrates in the northern Indian states.

While apples are its chief crop, Himachal also proclaims itself the "potato state" of the Union. The soil and climate of the state are proper for growing virus-free potato tubers. Table potatoes are harvested in July, while seed potatoes are exported in September, in time for planting in the plains. Potato production has nearly quadrupled in the last 35 years, even though the area under cultivation has only doubled. The crop is grown in all 12 districts, but main producers are Lahaul-Spiti and Kinnaur districts. Nearly two thirds of the potato crop is exported to other states, in particular Gujarat, Karnataka, Maharashtra and Madhya Pradesh.

Potato seed export brings in about IRs l0 crores, annually, to the State economy.

Himachal might also be called the "vegetable state." Cabbage, cauliflower, peas, hill capsicum, tomato and beans are all produced during periods when they are in high demand in the plains. Ginger produced around Sirmour district is a commercial crop popular with marginal and small farmers and mushroom farming received a boost when the government established a Mushroom Centre at Solan in 1977. There are presently 350 registered growers of mushrooms in the state, even though the actual growers are somewhat fewer. One species of mushroom exported to Europe brings IRs 5 crores to Himachal.

Power and Industry

Himachal has 25 per cent of India's entire hydroelectric potential, another enormous advantage for the state. The Himalayan rapids of the Sutlej, Giri, Ravi, Beas and the Jamuna, have a potential of 12,000 megawatt, of which, about one fourth has been tapped. In 1967, Himachal generated only 3.7 million Kwh, but by 1982 that figure had jumped to 540.5 million Kwh. More than 50 per cent of the electricity is exported from the state, providing a substantial and stable source of state income. With power export such an important part of the economy, Shimla has decided to proceed with the massive Nathpa Jhakri project, which is expected to produce 1,200 megawatts when it is completed ten years from now.

Another unique characteristic of Himachal is that, unlike many other hill areas, it has its own indigenous business community, the Soods, who hail from the state's Kangra District. This means that much of the income from commerce and other business activity has remained in the hills, rather than be siphoned off to faraway corners in the plains.

With home grown entrepreneurs and a government which encourages entrepreneurship, industries large and small are gaining foothold. There are now 97 medium to large scale industrial firms in the state, representing investment of about IRs 333 crores. There are over 16,000 small scale units, which employ 70,000 persons and represent a capital investment of IRs l70 crores. The small and large industrial sectors are becoming increasingly diversified, producing cement, engineering and electronic products, watches and fertilizer. Then, there are more than 55,000 units, which can be classified as "household industry."

Upscale Migrants, Tourists

The migratory pattern is also different in Himachal. The destitute villagers from the hills of Uttar Pradesh and western Nepal descend to the plains to work as "Gorkha" darbans, restaurant busboys and highway labourers, but the migrants from Himachal grab the high end of the market, owning and driving taxis in Delhi and Bombay, working as high priced cooks, joining the armed services and working as clerks and mid-level employees in government offices in the plains. Within Himachal, there are three lakh workers in the "modern sector," 70 per cent of them employed by government agencies. Actually, much of the menial labour work in and around Shimla is carried out by migrants from Nepal and Kashmir.

Tourism is another big money maker. Shimla caters almost exclusively to Indian visitors. Ten years ago, this hill station had 30 hotels. Today it has 100. The peak period is spring and autumn, in addition to the weeks around Christmas and New Year's, when the folks from the plains come up to look at and touch snow. During New Year's Eve, rooms are simply not available, for even IRs 300 a night. While the tourists from the nearby plains prefer Shimla, increasing numbers of foreigners and metropolitan Indian visitors prefer the northern destinations of Kullu and Manali. Dharamsala, the "Little Tibet," is where the Dalai Lama holds court and the Tibetan micro-economy and its touristic cachet adds lustre to the state as a whole.

The Down Side

For almost every bright facet to the State's good fortune, there is also a sobering aspect.  Much of the state's prosperity has been built on the basis of a few crops and industries which depend upon the vagaries of climate and the market conditions in adjacent states. For these reasons, while doing comparatively well, the economy is in a constant state of disequilibrium, pushed and pulled by events beyond its control.

"What is most worrying is that the political machine left in place by Parmar has begun to unravel and this directly affects the economic well-being," says the economist from Himachal University. In the late 1970s, the political uncertainty and debilitating political rivalries have diverted attention from more pressing tasks of government. While the political process has become more cumbersome, the public sector has expanded exponentially, inevitably leading to a loss of government efficiency. Today, there are more than one hundred public agencies packed into Shimla's ridge-top main streets. One or two additional enterprises are added every year, mostly to please particular special interest groups.

In 1987/1988, drought and floods caused severe losses in agriculture in some parts of the state. A target of 13.6 lakh tonnes of food grains had been established, but only 9.3 lakh tonnes were produced, a decline of 20 per cent from the previous year. Industrial production was also affected and the total losses and damages from the excessive rains were estimated at IRs I72.5 crores.

Apple Blues

Apples, even more than most other crops, are extremely vulnerable to weather and market conditions. Mid-July to mid-October is the apple picking season and the produce is often stranded because of landslides triggered by summer rains. HPMC, the public sector marketing agency, has not been effective enough in helping derive the optimum from the apple crop. For example, while it has built processing centres and warehouses to store the apple crop, HPMC does not have the latest equipment to wash, brush and wax the apples, which is important for proper preparation and good marketing. In the beginning, when apples were a sellers' market, the marketing inefficiency did not hurt. However, the production of other hill states and the abundant production within Himachal itself has turned the apple into a buyer's market. It has not helped that the apple trade has, as one observer put it, been traditionally "ridden with manipulations, exploitation and profiteering by the private traders." HPMC has not been able to supplant this system. Since the Corporation has been unable to buy up apple stocks, nor market the produce effectively, individual growers with little resources often have to do their own marketing, sometimes travelling as far afield as Calcutta and Madras.

While the apple trade might have some problems, others see it as the problem. Overwhelming reliance on this one crop has got economic planners worried. Hence, they are pushing for diversification in citrus production, especially in the low hills of Una District. But the "apple lobby," made up of many prominent Himachal families and quite a few out-of-staters, is strong and benefits disproportionately from subsidies, and an almost tax-free atmosphere. The large orchard owners, while they constitute only a small proportion of the state's population, are said to receive subsidies worth over IRs 6 crores. Small apple orchards with below 100 trees are not economical, so the small holder tends to lose disproportionately. There are also the complaints that the sizeable profits from apples are wasted in conspicuous consumption in Shimla, Chandigarh and Delhi rather than being invested to make the economy more resistant to outside forces.

Potatoes Too

While the problem with apple industry might be one of equity, with potatoes the question is about the very viability of the crop. The seed potato industry is in crisis because of increasing competition from Punjab and Uttar Pradesh, where growers have better economies of scale. Also, buyer confidence has been lost due to irregularities in the certification of seed potatoes. False labelling has ruined the reputation of the Himachal potato. Poor marketing has caused further damage.

For all these reasons, this past year's potato seed crop went abegging. In January, more than 6,000 tons of seed potatoes, worth IRs 2 crore, were rotting in mile-long stacks by the roadside in Shimla, Kiratpur and Manali. A recent agreement between Pepsico, the multinational food giant, and the Punjab government has put a further pall over the industry. Pepsico, as part of the deal, is expected to make a large investment in Punjab agribusiness, bringing prices down and driving Himachal's mountain terraces out of the market.

The other major source of revenue, tourism, has also proved a weak base upon which to build a strong economy. This is primarily because tourism is seasonal and comes to a standstill during much of the winter and the rainy season, mid-June to mid-September. Furthermore, Kullu or Manali lag far behind Ladakh, Bhutan and Kathmandu, in terms of "name recognition" among foreign travelers.

Even the industrial diversification programme has run into problems, and the industry today accounts for only 5.3 per cent of SDP. According to some estimates, as much as 40 per cent of the small scale industrial units in the state are "sick." Economists believe the concentration of large scale industrial activity in the geographical periphery to the south does not help economic integration. Industry is affected by the high rates of electrical power; surprising for a power surplus state such as Himachal. According to figures compiled by a Himachal industrialists' guild, the power rate is IRs l.03 per unit, which includes a winter surcharge. By comparison, it is 44 paisa in Jammu and Kashmir and 69 paisa in Punjab.

For all the advantages it might have in relation to other Himalayan hill areas, Himachal is quite disadvantaged compared to Punjab and Haryana. This is because Himachal mostly imports finished goods while it exports unprocessed or semi-processed goods, it lacks a skilled workforce, and transportation is more difficult than in the plains. With much of the forests gone and the remaining earmarked for conservation, there is little scope for raising revenue, except by harnessing the rivers.

Environmental Woes

As Himachal's economy has grown, some of the price has been paid by the state's mountain environment. The attraction of income from apple production has led to the unplanned expansion of apple to marginal areas. Mountain forests have been cut to make way for apple orchards and apple fields. In addition, as the export of apple crop increases, the more of its own forests and those in neighbouring hills are cut down to make apple crates. Strict regulations are now being considered, so that the wooden crates, preferred by buyers because they protect the fruits, will be replaced by cardboard boxes. However, it is not yet clear how well this shift will succeed, given the vested interest of the so-called "forest mafia" in maintaining its profits.

And, it is not only the forest that has suffered. According to one study, "unscientific methods of cultivation" have created a high intensity of soil erosion. As a result, it is estimated that 18.8 lakh tonnes of topsoil is lost every year from the cultivated lands. Unregulated limestone quarrying, especially around the Sundarnagar area, has also affected the environment.

Urban areas have also been affected by the economic boom. Shimla town has changed drastically, for the worst, over the past three decades. Zoning laws have been ignored and a building spree has severely strained services. The bridle paths, planned by the British for sedate evening strolls, are chocked with automobiles and trucks. Every day when offices empty, outbound commuter traffic jams the two main roadways out of the town, almost to a standstill. Shimla had a forest cover of 80 per cent in the late 1970s, but today that figure is down to 45 per cent. There is rising incidence of eye disease and skin allergies, which scientists associate with the increase in smoke and carbon content in the air.

Problems abound. Yet, the government has been persistently goaded by an aware citizenry to learn from past mistakes and implement progressive programmes. In December, Chief Minister Virbhadra Singh, quoted in the Hindustan Times, said that his government had "effectively curbed the activities of the forest mafia" and had "introduced massive afforestation and social forestry to increase green cover." Another indication of the declining influence of timber merchants is that a previous Chief Minister was forced to resign on account of an adverse High Court judgement, relating to the activities of the forest mafia.

Convinced that the local people must have a stake in afforestation drives, the government has begun a social forestry scheme known as Project Umbrella, which encourages the planting of saplings chosen by the villagers. 24,031 hectares of land have been afforested in the past three years.

In January, in order to diversify its tourism earnings, Shimla announced a long-term plan to switch emphasis from seasonal tourism to "pilgrim tourism." To that end, it opened a IRs 3.5 lakh tourism inn on the banks of the holy Rewalsar lake in Mandi District. In yet another diversification effort, Shimla's authorities have decided to promote the breeding of rabbits for wool. They recently imported German Angorra rabbits and set up a small farm in Palampur, from where to distribute to entrepreneurs. The authorities have also approved IRs 25 crores for a ten-year development project to help improve the competitiveness of Kangra's tea produce.

The government is also considering addressing the unemployment problem by opening up the low-end job market to volunteer youths, thus providing 20,000 new jobs. According to a government handout, for IRs 250 to IRs 400 a month, young school graduates will be hired as "volunteer" teachers, panchayat librarians, and salesmen for agricultural products.

According to its critics, the Government can tinker with modest social forestry programmes and seeking alternatives to tourism, but ultimately it must direct its attention to the actual foundations of the state's economy. They say the main task is to reduce the influence of the "apple lobby," so that there is more equitable sharing of the state's income. They also call for more stringent control over government employees, who retain exceptionally high salaries, allowances and perks.

These arguments were summed up by Najm-ul-Hasan, a commentator in the Times of India: "The rural majority that is the poorest of the lot in Himachal, has begun to feel resentful of the privileges that the rural elite and government employees enjoy."

Trouble, it seems, does brew even in paradise.

~By Mana Man Singh