J&K’s Industrial Policy 2021-30, up for some tweaking, is a masterpiece in bureaucratic creativity. The first and the most elaborated item of the operative policy is a 100 per cent subsidy on DG sets, the beasts belching greenhouse gases. Kashmiris, believed to be heavily subsidised, it turns out, even choke on government subsidised smoke.

Not to be misled, the government — unelected earlier, elected now — is environmentally very conscious. Right after incentivising pollution, it makes sure to provide a 60 per cent subsidy on pollution control devices.

Behold the genius: Step 1: Spend Rs 100 on subsidising pollution. Step 2: Spend Rs 60 on subsidising pollution control. Step 3: Self applaud for creating a “sustainable and balanced” ecosystem for industrialisation. Welcome to the land where the government first pays the arsonist to burn the house down and then subsidises the fire fighters to put it out.

Shorn of the platitudes and grandstanding the policy is nothing, but a patchwork of concessions in the form of tax exemption, capital subsidy, waiving/reduction of utility user charges, or cheaper allotment of land. Besides being subject to circular conditionalities and endless discretionary control, that availing any or all is a nightmare. Ease of business rankings notwithstanding.

The industrial policy of 2021 marked a strategic shift to “industrialize” J&K by explicitly incentivising larger external capital investments by scaling subsidies with size and open eligibility. Earlier policies were protective, favoured smaller-scale investments and supported local entrepreneurship through preferential public procurement. Even as this policy relies more on leveraging central government incentives, given the limited capacity of the state government, going down the road of “industrialisation via incentives” will be fiscally stressful for J&K.

Indeed, the incentive to industry model has becomes a mug’s game across the country. Gujrat, for instance, offers capital........

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