THE prime minister's task force on development of Jammu and Kashmir has proposed a whopping Rs 8,302-crore special development package for the strife-torn state. The slew of measures proposed by the task force, headed by C Rangarajan, which sub­mitted its report to Mr Manmohan Singh on Friday, also include a Rs 200-crore satellite business city in the Valley and a special investment zone to attract in­dustry and generate employment in the state. It also focuses on the power sector, tourism and rural development.

The task force was set up by the prime minister in March 2005 with an emphasis that special steps for eco­nomic development and employ­ment generation in J&K were crucial in the fight against terrorism.

The report has recommended the transfer of the 390-MW Dulhasti hy­droelectric project, which has suffered heavy time and cost overruns, from public sector National Hydel Power Corporation to the state government.

This will augment power supply in the state quickly amisubstantially and provide low-level tariff, said the 11-member task force. In net pres­ent value terms, the transfer of the power project would cost the Centre Rs 4,933 crore by way of compensation to NHPC for return on eq­uity and cost of debt services.

Identifying tourism and horticulture as engines of growth, the task force highlighted the need for refur­bishing tourism infrastructure with an investment of Rs 4,000 crore over the next five to seven years to gen­erate 40,000 direct and 1.25 lakh indirect jobs. It said renovation and new construction of houseboats, ho­tels and shikaras should be accelerated and tented ac­commodation should be made available. The taskforce recommended quick-yielding projects like the creation of a special industrial zone with world-class infrastruc­ture, captive power generation and distribution and liberalised labour laws.

The report emphasised that the content and process of development of J&K has to take into account the state's historical, institutional and political situation and deliver quickly on growth and poverty reduction. Among other key recommendation are: Rural roads development programme with an outlay of Rs 1,750 crore, launch market development pro­gramme for horticulture with an outlay of Rs 50 crore, establish an asset reconstruction company (ARC) which will take over the non-performing assets and refurbish the balance sheets of the financial insti­tutions, implement National Rural Health Mission expeditiously and withdraw/reduce entry tax on tele­com to improve penetration.

The task force defined six objec­tives for meeting the development challenges of J&K: Reconstruction and maintenance of existing physical assets, investment in physical infra­structure —power and roads, invest­ment in social infrastructure, con­ducive climate for private invest­ment, balanced regional development and comprehensive fiscal adjustment. The task force identified power as the most critical infrastructure bottleneck for attracting private sector investment in the state and suggested that the strategy in the power sector has to be to man­age the existing capacity more efficiently in the short-term and augment the capacity in the medium term. This would need to address issues like direct and indi­rect subsidies, single-window clearance for projects, lo­gistics support to IPPs and a strong securitization mech­anism. Reforms in the transmission and distribution sectors like desubsidization of tariff, a time-bound loss reduction programme and setting up performance standards for Power Development Department.