~Recognising the substantial progress that has been made in the peace process in J&K, Nagaland and Mizoram, the Centre has taken several new steps to encourage economic activity and to enlarge employment there.

J&K has had a peaceful election, the Naga peace process has also attained momentum. This needs to be sustained. The key to an enduring peace is all round and sustainable development.

I am glad, therefore, to note that Jammu & Kashmir has presented a zero deficit budget. This is significant coming as it does after deficit budgets born of strife and insurgency. This has been made possible by a Central assistance of Rs. 2, 950 crore, that I have sanctioned for the State. This is also an increase in Central assistance to J&K in 2003-2004 of Rs. 750 crore.

Similarly, I have now decided to extend a ‘peace bonus’ to Nagaland. An amount of Rs. 365 crore, extended to Nagaland as Ways and Means loans, will now be converted into a ‘one time grant’. This will enable the State to meet all its past liabilities. It will also result in an annual interest savings of Rs. 44 crore by the State. Nagaland should now be able to devote its efforts to schemes and policies aimed at poverty alleviation and balanced economic development.

In the year 2000, I had announced a somewhat similar package to Mizoram. This involved conversion of Rs. 100 crore of loan owed to the Government of India into an outright grant. This has imparted a degree of stability to the State’s finances and given major impetus to developmental efforts.

There is only one key to an enduring peace process, it is sustainable development.~