COMMENTARY: What are the challenges of the revival of the business sector in J&K?

By Arka Chakraborty and Kasturi Guha / For JKPI

On 18 August 2020, the Jammu and Kashmir Government constituted a high-level committee headed by Advisor to the Lieutenant Governor, K. K. Sharma, for “relief and revival of the business sector” in the Union Territory.  The announcement came one day after a delegation of Kashmir Chamber of Commerce and Industry (KCCI) called on Lt Governor Manoj Sinha seeking “constitution of a committee for the revival of the businesses in J&K”.

The committee was tasked with holding meetings with the Business fraternity of Jammu and Kashmir and asked to submit a “consolidated proposal” by 1^st September 2020 for the consideration of the J&K Union Territory government and the Central government.

According to the order issued by the General Administration Department (GAD) Government of Jammu & Kashmir, the committee comprised of Advisor KK Sharma, Financial Commissioner, Finance Department, Commissioner/Secretary, Industries and Commerce Department, Commissioner Secretary, Tourism Department, and Chairman, Managing Director, J&K Bank.

According to the series of DIPR-JK communiqués, K. K Sharma held meetings and listened to the opinions, suggestions and demands of various stakeholders in order to compose a “comprehensive document with broad-based suggestions”. While the committee forms a proposal for shaping the future of business and generating employment in the UT, it becomes imperative to look into the current socio-economic status of the erstwhile state.

On 24 March 2020, when the Government of India ordered a 21-day nationwide lockdown that got elongated by almost four months in view of the COVID-19 pandemic, the newly created Union Territory of Jammu and Kashmir was already experiencing a lockdown – declared as a “security measure” by the government following the revocation of the erstwhile state’s special status – since August 05, 2019, and another lockdown brought about by the pandemic was a double whammy for the people.

The August 05 lockdown coupled with a complete internet shutdown brought online start-ups like Bizzverts Adds (a digital marketing agency), Lal Chowk (an online enterprise that provided rare books on Kashmir), and FastBeetle (an online courier service) to a standstill. About 80% of the people associated with online businesses lost their jobs during the internet shutdown.

The president of the Kashmir Chamber of Commerce and Industries (KCCI),  Sheikh Ashiq Hussain, said that almost 4000 female-led online enterprises in Kashmir have been suffering huge losses for the want of the high-speed internet. “The employees of these enterprises have lost their jobs (about 100,000 people) and are forced to migrate out of the UT in search of a livelihood. Most of the women among these employees are worse off as they don’t have the freedom to travel outside in search of jobs and many of them are the sole bread earners in their families.”

Trade and transport, which supports 23% and 7% of J&K’s labour force of 44 lakh people have been disrupted due to the communication and logistical issues. The manufacturing sector that employs 3.5% of the workforce in Jammu and Kashmir has also reported huge losses.

The Horticulture Sector in Kashmir also suffered losses due to the lack of sincere and creative bureaucratic intervention. For example, the imposition of the lockdown without consideration for the cherry and strawberry production blocked their supply chains (comprising of labour, material and finished products) both inside and outside the UT which resulted in an unprecedented fall in sales. Cherry and strawberry, due to their almost exclusive cultivation in Kashmir as compared to the rest of India, have the potential to turn into major agro-based industries and generate employment. Instead, 12000 tons of cherry and a comparable amount of strawberry rotted in the fields due to lack of demand and supply owing to the extraordinary circumstances. This too could easily have been prevented by investing in processed food products like jam and jelly.

Tourism, one of the highlights of the Kashmiri economy suffered heavily in 2019 and continues to suffer as no tourists are expected to visit the Valley in 2020 and 2021 due to the Pandemic. The devastation of the tourism sector and the communication blockade have terribly affected the Handicrafts sector which employs around 3 lakh Kashmiri artisans and generates an income of around Rs. 1700 crores annually. The latest data shows that Kashmir’s economy has lost Rs. 4000 crores due to the ongoing crises and 5 lakh people have lost their jobs.

Floriculture has also been hit hard with the Indira Gandhi Memorial Tulip Garden experiencing a slump in visitors during the last Tulip season and the initial forays into exporting flowers across the country coming to a halt.

The healthcare and education sectors are also in crisis because of the continuous suspension of high-speed mobile internet services in the Union Territory except for Ganderbal and Udhampur districts. The restoration of 2G internet from January 15, 2020, has done little or nothing to mitigate the online business sector disruption as the sector requires high-speed 4G internet to function properly.

Bureaucratic inaction and the lack of sound policy decisions, as cited above, have worsened the situation further. The unemployment rate spiked from 15% to 22% in the region within just two months following the imposition of lockdown last year and has shown an increasing trend since then.

Given the impact of double lockdown in Jammu and Kashmir, the business sector in the region needs extra support in comparison with the business sectors of the rest of the country. A journalist puts it like this, “While the rest of India complained about laces for their running shoes, Kashmiris entered this deadly race barefoot.” However, as we discern the commonalities between the statements issued by Advisor K. K. Sharma (“… the Government is keen for ensuring the revival of business and trade activities in the Union Territory of Jammu and Kashmir like other parts of the country which have been badly impacted due to the Global Pandemic”), it looks like the government is looking at J&K’s economic situation through the lens of homogeneity. Speaking of which, the problems unique to the economic situation of J&K may not find a place in the “comprehensive document”, and as a result, UT’s worst-ever financial and economic crisis will remain half-solved.

Conclusion 

The Government of India must take the measures necessary for the security and stability of the UT, given its strategic importance, and help the people to mitigate the challenges imposed by such measures at the same time. For instance, if the ban on high-speed internet is ensuring security and stability in Jammu and Kashmir, it is also causing economic instability in the region. And these opposites do not cancel each other out.

Now moving on to the situation imposed by the pandemic. Any decision with regard to the relaxation COVID-19 SOP guidelines, as demanded by the business fraternity of J&K, needs to be weighed very carefully. However, the fulfillment of demands like the relaxation of electricity bills, financial assistance, the release of pending payments, exemption of Bank EMIs during the pandemic period and tax waiver should be prioritized.

Most importantly, the uniqueness of the plight of business owners and employees has to be taken into account if a nuanced solution “in line with the local needs and demands” is to be arrived at.

 

References

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