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As pandemic plays havoc with Kashmir economy …

The pandemic is creating havoc in Kashmir as its shock is far beyond the spread of the disease. Besides impacting the well being of one and all, the pandemic has impacted the livelihood of the weaker sections of the society —daily wagers, small trades, laborers, street vendors, hawkers, salespersons, waiters, receptionists, shikara walas, bus drivers, and conductors,  auto-rickshaw walas, and so on and so forth. Some people belonging to these sections are literally on the verge of starvation. They are approaching NGOs and Bait-ul-Maals for help. Various NGOs and volunteers have started serving food packets to these needy in different parts of the Valley.

The ongoing lockdown —considered the only logical way for breaking the chain of infections— is further devastating the already devastated economy in the Valley. Horrible, the health experts predict Covid might stay active for quite a while, thus the economic experts say that the people must be ready to face the worst. They say there is no hope for the respite, even if the lockdown is removed; because people have already lost the buying power, and the supply-and-demand system of the market is badly hit.

Although, Lieutenant Governor administration in J&K has recently announced to provide Rs 1000 per month to all registered construction workers, ponywalas, palkiwalas, pithuwalas for the next two months, apart from releasing Rs 55 Crore for emergency use under State Disaster Response Fund (SDRF); experts emphasize that the relief needs to be provided to all those working sections who have been hit hard by the second wave of COVID-19. They say the government must come forward not only with a relief package for the weaker sections but also with a rejuvenation package for the dying business units.

Pertinently, the pandemic, in terms of its impact on the economy, has particularly affected tourism, handicrafts and transport industries.  Experts say that the handicrafts sector, which provided a livelihood to a large section of the Valley, will be affected for a long time because buying handicraft items will be the least priority for the buyers even after the pandemic ends.  Similarly, the prospect of the tourism industry is also predicted as bleak in the near future.

To gauge the depth of the ongoing economic crisis, KASHMIR IMAGES spoke to some concerned people. They say that given the magnitude of the calamity, and uncertainty about the span of the pandemic, hundreds and thousands of people are at the risk of falling in extreme poverty.

Here are the excerpts:

Professor Nisar Ali
Former Head, Department of Economics at Kashmir University Former Member, State (erstwhile) Finance Commission, J&K Government

The service sector that generates 55 percent of J&K’s GDP is badly hit by the situation caused by Covid. Our transport and tourism industries got halted, and eventually, a major chunk of the labour force with these sectors is idle these days. Similarly, the labour force with our construction industry is badly affected. Normally, construction industry contributes 20 percent of the total income of J&K. According to my estimation 6 to7 lakh people are working in this industry. These people are certainly on the path of starvation because their economy and daily earning are shrunk.

This entire situation will have an adverse impact on Jammu Kashmir’s total economy. Our GDP will come down like it did last year. At current prices, our GDP is at 1.5 lakh crore, and according to my understanding, it may fall to 1 lakh crore.

Only a robust bailout package from the government can help in this situation. A bail-out package for the sufferers will help keep the economy moving. That is what governments in the US are doing since the outback of the pandemic. Both, the former government headed by Trump and the present regime led by Biden offered bailout packages to its citizens, and everyone in the country was the beneficiary of these packages. Whereas in our part of the world, even the worst-hit labourers did not get any help from the government. This exhibits the sorry state of affairs here.

The government should bail out at least the labour class, by transferring cash into their accounts directly. This section of the population is badly hit because they have lost their livelihood due to the situation created by the pandemic.  Each of them must be given 5 to 10 thousand rupees cash to enable them for the market consumption. This kind of bailout package will in return help our overall economy.


Sheikh Ashiq Ahmad
President, Kashmir Chamber of Commerce and Industry (KCCI)

The KCCI has requested for both the relief and the revival measure from the government, though, the business revival measures can only be taken after the pandemic ends. We will be able to prepare a proposal with estimation of the losses only when situation starts getting normal. We hope the government itself would ensure a welfare package for the revival of businesses; because everybody knows that we would need an out of box solution for the problems caused by the pandemic. Therefore we need to be patient until the ongoing medical emergency ends and life starts moving on. This is not the right time for making any proposal in terms of business revivals, simply because we are yet to know the future behaviour of the Covid. As of now we must pray for getting rid of this disastrous pandemic.

However, we have requested government for an immediate relief measures particularly for the weaker sections of the society, whose livelihood is worst hit by the pandemic. Although, the recent relief package for the tourism sector announced by the LG administration is meagre, but we welcome the initiative. Also, we have requested for the relief packages for all other deprived sections whose survival is at stake due to the unprecedented situation caused by the Covid. Every beneficiary should get at least rupees five thousand a month as relief.

Shakeel Qalandar
Former President, Federation Chambers of Industries Kashmir (FCIK)

The pandemic has devastated Kashmir’s economy further. Earlier we used to face business losses due to the political uncertainty only, but now we have fallen prey to the situation caused by the Covid as well. While gauging the existing crisis, we also need to consider past crises. For example, we cannot ignore the fact that Kashmir has faced 3000 days of business interruptions due to lockdowns, hartals, and curfews during the past three decades. The lockdown imposed here post-August 5, 2019, which halted the wheel of our economy for months, can be placed as a recent example in this regard.

As if the past devastation to our economy was not enough, Covid has added to the troubles. Last year, we had to close down every business activity soon after the outbreak of the pandemic and now again we are facing the same situation. Be it the service sector or the manufacturing sector, these lockdowns have not only impacted the industrial output but also caused loss of livelihoods to the labor class. That means we not only have to get businesses out of the clutches of losses but also have to take care of the labor force. And here the government has to play its role. To ensure that the laborers belonging to both organized and unorganized sectors do not starving, the government must provide them with cash assistance by transferring money into their accounts. Since some of them are registered with MGNREGA and others with industrial and trade units; it is the responsibility of both the Centre and UT governments to ensure these laborers are helped immediately, as their survival is at stake.

Likewise, businesses should be compensated as well. To begin with, the government should at least compensate fixed expenses —bank interests, salaries of the staff, electricity fees, etc— to the business unit holders because the business units are ought to incur these expenses whether they work or not. Most of the business units will not be able to sustain unless the government comes with a helping hand to them at these times of crisis.

Last year, the government tried to help businesses by restructuring or rescheduling their loans. They were provided with new loans in the name of working capital, without giving any concessions and waiver on their existing loans. This mechanism has caught our business units into a debt trap as the debt accumulated due to reasons beyond their control. Given the experience, the government must take genuine initiatives to help the businesses and laborers.


Haji Muhammad Yasin Khan
President Kashmir Traders and Manufacturers Federation (KTMF)

In times of crisis, governments are morally bound to come forward to help the people particularly the sufferers or those who are vulnerable. In this pandemic, everybody is suffering, and so is the business community. Since every government has a social security system in place, we are expecting government would come with a helping hand to us by utilizing this system. It is evident that businesses have met huge losses during the past two years of the pandemic. As president of KTMF, which represents more than 4.5 lakh shopkeepers and business units, I can confirm that the weaker section of our society is starving. Even those who are supposedly well off, are with empty hands. Many of them did not have money to give Zakat in Ramdhan, simply because they have no cash left with them. Businesses, whether roadside vendors or big industrialists, have suffered huge losses during the past two years.

The government needs to understand the gravity of the situation, and it should come forward with business revival and relief packages to help. Once an 80 thousand crore package was announced here, but in reality, people did not get even 5 thousand crores from this announced package. People at the helm need to understand that the business community is the one that pays taxes and most of the tax revenue reaches the government through business units. Therefore, a vibrant business means good revenue to the government.

Bank loans and subsequent interest are one of the biggest burdens of businesses. Most of the shopkeepers are getting declared NPAs by the banks, because of their inability to pay the EMIs. In the given situation, we expect the LG administration to form a powerful committee to look into this matter to find a way out for easing this burden on business.

Unfortunately, the administration does not bother to let us share our problems with it. We are not being offered a hearing. Last year, we were taken on board while deciding R 1350 crore rehabilitation package. However, of this announced package, only 750 crores have been released so far. Since we are facing one of the greatest crises, both Centre and UT government must pay heed to woes.

Sheikh Mohammad Yousuf
General Secretary, Kashmir Transporters Welfare Association

Kashmir’s passenger transport industry comprises 60 thousand vehicles —Buses, Mini Buses, Sumo cars, and Auto-Rickshaws. And from a common person to someone who holds the highest chair in the government, everybody knows that the transport industry in the Valley has suffered huge losses during the past three years. We have estimated that the industry has suffered up to 7000 crore rupees losses till now, and these losses are increasing with each passing day. Eventually, 1.5 lakh people affiliated with this industry are the direct sufferers. They represent the same number of families, mostly poor and living below the poverty line (BPL). The pandemic has pushed the families toward further deprivation.

We have been pleading for the compensation day in and day out but nobody pays any heed. We had brought our miserable situation to the notice of former LG Girish Chandra Murmu and then we informed the sitting LG Manoj Sinha as well. We have been told that government has some massive package for the revival of the transport industry. However, as of now, we have seen nothing except a meager and poorly disbursed rehabilitation package, which provided five thousand rupees each bus owner and rupees three thousand to each Sumo and Auto-Rickshaws owner. Those who had not got their vehicles insured got nothing. The families of drivers and conductors are literally starving these days.

Since our vehicles are standstill, they are getting damaged with each passing day. We do not earn a single penny from these vehicles but have to spend for their maintenance, insurance, and document updating. Since most of the vehicles are bought with bank financing, the bankers pressurize for the EMIs, which we are unable to pay. Everyone affiliated with this industry in Kashmir has a story of his miseries, poverty, and unemployment to tell. However, nobody seems to have time to hear one.


Ejaz Ayoub
Economic Analyst

Kashmiris used to have enough economic resilience to face crises with the help of their savings meant for frequently witnessed income shocks on account of cyclical unrests. However, the three lockdowns in three constant years have depleted their strength to a large extent. Even though the post-August 2019 lockdown along with the communication gag chocked the economy at a large scale, people in Kashmir coped with it because of their resilience. They also managed last year’s lockdown to some extent. However, this time, handling the brunt of the pandemic situation and the ongoing lockdown is proving difficult for everyone here. Our savings and therefore the risk appetite for absorbing another income shock has depleted drastically. Most of the people are in debt. Thus, their resilience is at an all-time low, and their very survival is at stake. This situation has created an overall economic uncertainty and even the salaried class has stopped spending and purchasing due to this uncertainty.

Given the fact that Kashmir’s overall economy is largely driven by government spending and consumption, the lack of consumption has caused the low demand in the market, pushing the economic deprivation further. Even people restrained spending on the occasion of Eid. This whole situation has impacted the poor section of society the most. They have started losing livelihood. This section of the population is on the verge of starvation. That is why the local NGOs have started distributing food kits to the needy in many areas. However, given the magnitude of the problem, these NGOs cannot do much.

In this scenario, the government has to come forward to play a big role because it has all the resources to bail out the people in this hour of crisis. Though the government has recently announced a 53 crore rupees relief package, given the scale of the crisis, the amount is meager. To ensure people living below the poverty line (BPL) do not starve, the government must provide direct cash transfers. It should not be a big deal for the government. For example, out of a total of 2.5 million households in Jammu and Kashmir, 2.5 lakh are BPL; if the government decides to provide Rs 2000 to each family living under BPL constantly for three months, the total package will be just 150 crore rupees, it is not a big deal.

Also, to push the consumption and demand in the market, the government can provide advanced salaries to its employees. Since government employees comprise one of the biggest sections of our society, providing three-month advance salaries will help boost up the overall demand instantly. We have around 5 lakh employees here getting 3000-3300 crore rupees as their salaries and pensions. That means almost every third household has a government employee. Enhancing their buying capability by providing them three-month advance salaries would eventually help to keep the wheel of the economy moving.

Further, the government should come up with a well-planned business package for the business units. Unfortunately, last year’s government initiative to restructure loans of the business unit holders pushed them further to debt rather than bailing them out. These businesses require a reliable package. It is imperative because they are already in debt, and they cannot sustain the shock of present crises without rejuvenation package. The shock to our businesses is much chronic and deep compared to twin pandemic lockdown victims of mainland India. Our economic response therefore too has to be customised accordingly in scale and size.

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