Growing unemployment rate, peaking inflation push J&K to wall
The growing unemployment rate coupled with the peaking inflation is breaking the back of common people, particularly those living below the poverty line in Jammu and Kashmir.
The Centre for Monitoring Indian Economy (CMIE), a Mumbai based business information company, has recently pegged the unemployment rate in the Union Territory (UT) of Jammu and Kashmir at 21.6 percent (in September 2021) —not only higher than the national average (6.9), but also the worst among the other states and UTs in India.
On the other hand, the Ministry of Statistics and Programme Implementation (MOSPI) has also come up with an astonishing monthly retail inflation report that suggests Jammu and Kashmir has inflation at 7.39 per cent —again higher than the national inflation rate, which is pegged at 4.35 per cent in the same report.
Pertinently, the Union government while stripping off J&K’s limited autonomy in August 2019 had claimed the move would pave the way for outside investment; and eventually would push the economic development in Jammu and Kashmir. Furthermore, the UT government had also said that Jammu Kashmir would get private investment up to Rs 25,000-30,000 cr from outside, and five lakh jobs would be generated by this investment.
Soon after the abrogation of Article 370 and 35A in August 2019, the government had promised to provide as many as 50,000 government jobs to the youth of J&K in three months’ time.
More than two years down the line, neither any investment came in so far, nor were the promised jobs given to the people. According to a national newspaper report, only 4300 jobs have been provided to the youths in J&K during all this time.
The worst scenario of unemployment was seen when as many as 5,32,400 candidates — many with bachelors and masters degrees— applied for 8,575 class IV job posts announced by Jammu Kashmir’s Service Selection Board in July-August last year.
The experts say that the recent data regarding the unemployment rate, revealed by CMIE, is undeniable proof that the government has failed to bring policies ensuring the employment generation, providing professional skill to the youth, and boosting industrial activities here during past more than two years.
To grasp more knowledge, and clearer scenario about the unemployment in J&K, KASHMIR IMAGES spoke with some experts and concerned people. Excerpts:
The combination of growing unemployment and inflation is impacting peoples’ lives drastically in Jammu and Kashmir. Many from the vulnerable section of the society – living below the poverty line – are literally on the brink of starvation.
This is the result of circumstances created by the post-August 2019 lockdown coupled with the situation caused by the pandemic. During the past more than two years, a large number of people lost their jobs and businesses due to the lockdowns and communication blockades.
As far as the employment scenario of J&K is concerned; the government of India’s data suggests that out of total 1.25 crore inhabitants (Census 2011), J&K’s labor force (earning population) is around 44 lakh. Thus, over 20 percent unemployment rate in the UT, means we have roughly around 9 lakh unemployed people, here.
Unfortunately, except Govt service and to some extent agriculture, every employment generating sector has been badly hit during the past two years. The trading sector which would provide employment to around one million people in normal situations; and the transport industry that gave jobs to around three lakh people earlier have been the worst hit since August 2019.
In the wake of income shocks leading to the process of cost-cutting in the trading sector, downsizing of employees became the first causality. We have seen hundreds of thousands of layoffs in this sector post-August 2019 which only worsened after the pandemic started spreading in early 2020.
Likewise, we faced a massive fall in the jobs created in the gig economy due to closure of the tourism sector after the post-August and Covid lockdowns.
During these tough times, the only unaffected sectors have been the government sector, which has around five lakh employees; and the agriculture sector that gives employment to roughly 15-20 lakh people across Jammu and Kashmir.
The construction sector, which provides seven lakh jobs, seems to be picking up again. However, this sector provides jobs mostly to migrant workers.
In J&K, besides unemployment, underemployment is also a grave cause of worry. For instance, a qualified engineer, who potentially should be earning around Rs 50 thousand a month, receives a meagre amount for not having a job he or she actually deserves. In fact, underemployment is a kind of curse that our youngsters are grappling with.
As if all that was not enough, we have also lost a huge chunk of revenue from our export market and the remittance from those who would work abroad, due to the worldwide pandemic. J&K’s economy would rely on these two revenue streams successfully during the past three decades of domestic unrest. Exporting handicrafts would fetch us around Rs 1700 crore annually, and likewise Rs 1300 crore used to come as remittances from the people working abroad. Furthermore, a large number of people would get jobs from the different states in mainland India. Most of this revenue got impacted as Covid disrupted the economy everywhere. The impact of the pandemic on the international market has also affected the jobs of our three lakh artisans back home.
The growing unemployment and inflation rate indeed is the biggest socio-economic concern because the combination of unemployment and inflation might cause devastating results at the grass-root level, particularly for the vulnerable class of the society. Many people from this section of society, who earlier would have their own means of livelihood, are now dependent on NGOs, Bayt-al-mals, and other welfare organizations for food and essentials. Thankfully, our society has an established social security network – perhaps because of the chronic conflict situation in place here, which ensures there is no starvation in the society.
To conclude, I would say that the government needs to come up with some effective policies which would ensure stable employment generation.
Sadly, we have been seeing a gulf between the government and people here. Most of the policies, which have been brought in recent years, have failed to support the deteriorated ecosystem. These policies are made in the secretariat by the babus who are disconnected from the people. The government, rather than having a high-handed approach, should reach out to the people and stakeholders while creating the new policies.
Also, the government has been talking a lot about outside investment. But the fact is that no investment has come so far. This is probably because of the political uncertainty in the region. Even the local entrepreneurs are hesitant to expand their businesses here due to the prevailing uncertainty.
Therefore, the government must re-lay the political bridges that have been blown up for more than two years. A civilian government in place would generate trust and help create a stable ecosystem.
Kashmir lacks a business ecosystem due to certain reasons, most importantly the turmoil. The prevailing uncertainty, in terms of frequent curfews, hartals, and communication blockades takes a heavy toll on the livelihoods and the businesses here.
Take an example of Essar Group, a multinational construction company; which had invested hugely to create its first Aegis Process Outsourcing (BPO) here in Rangreth Industrial Estate in Srinagar. This had paved way for hundreds of job opportunities in the Valley. But finally, the group closed down its unit here due to an unfavorable environment caused by the ongoing turmoil. All the employees were fired from their jobs. The last person, a friend of mine, who was asked to quit, was the HR manager of the unit. This happened even before the abrogation of Article 370 in August 2019, and the outbreak of the pandemic.
No doubt that the post-August situation and the Covid worsened the situation in terms of the unemployment in Kashmir, but the fact is that we have chronic problems already existing here, which hinder our business ecosystem.
Presently, most of our employment generates from the unorganized sector. Even this unorganized sector of employment gets hit, every now and then, due to the prevailing turmoil.
Also, the impact that Covid had on the businesses, would take a lot of time to fade. Nothing is going to change overnight. We should be readying for the aftershocks to our economy in near future. One of the aftershock is inflation. Look at the rising fuel prices. We are yet to come out of the Covid era and are yet to restart earnings but the prices of the goods are already skyrocketing. The situation indicates that there will be more poverty and unemployment in the coming days. Many of the traders and industrialists are already in deep debt. Some of them have already been declared defaulters by the banks and they have become NPAs. The interest of their bank loans has been accumulating for the past three years. How can we expect that everything will change overnight?
As far as the international job market is concerned, that too is yet to pick up. Earlier, there used to be some job opportunities from the Gulf countries, every year. But due to the pandemic, these countries have already made hundreds of thousands of layoffs. Now, when they are opening up in the post-Covid era, their preference would be hiring the experienced ones, who they had fired. Usually, companies hire freshers because they demand a smaller amount as salary. However, given the situation, even experienced are ready to work on small salaries at this point in time. This means there will be no scope for fresh candidates in near future.
I get number of resumes, on daily basis, from the candidates seeking jobs. And there are a large number of people who are even ready to compromise on any kind of job. Professionally qualified people are looking for any kind of job to get themselves engaged for their livelihood. That is why I say that we are in a grave crisis in terms of the rising unemployment rate, coupled with inflation. Things might turn uglier in the coming days.
Post-August 2019 situation followed by the pandemic outbreak drew devastating effects on every aspect of life in Jammu and Kashmir and the transport industry was the worst hit.
Since J&K, particularly the Valley remained mostly closed during the past more than two years, the transport sector, which would fetch to at least 2 lakh families here got almost collapsed and eventually many of the people belonging to this industry lost their livelihood. Though we do not have any survey to know the precise details, to my understanding, more than thirty thousand layoffs were made in the transport sector since August 2019. Also, the industry lost prospects for new entrepreneurs because of its pathetic condition.
In the Valley, we have roughly 10 to 12 thousand Auto Rickshaws, 33 thousand SUMOs, five thousand buses, and so on. All of these vehicles mostly remained off the roads during the past two years because of lockdowns. For the year 2019–20, we, with the support of statistical data, gave an estimation of 1850 crore losses to the administration. Two years have passed since then. Today we can say this industry has met losses of roughly 6 to 7 thousand crore rupees during the past three years. Lest we forget, the transporters in Kashmir had met huge losses in the floods of 2014, and then due to the months-long uncertainty in 2016.
Ironically, the government did not make any effort to support the industry or compensate those who lost their livelihood. Instead, the owners of the vehicles were forced to pay taxes and penalties. For instance, a bus owner has to pay for the insurance of his vehicle up to 50,000 rupees annually. If you calculate the depreciation losses, documentation fees, maintenance expenditures, bank loan interests, and so on; you will find that how much a bus owner losses even when his vehicle was off the road and halted due to the lockdown. Now the government is cancelling the registration of old vehicles. This move would force 70 to 80 percent of buses off the roads in J&K, which will eventually impact the industry further and enhance unemployment.
We have seen owners selling the parts of their vehicles to feed their families in the crisis caused by the Covid lockdown last year. In those days, I met a driver near Bone and Joint hospital, who was literally begging to ensure treatment for his ailing child.
The administration provided some food packets to the drivers and conductors, provided two or three thousand rupees to them during Covid lockdown, last year. Obviously, this cannot be called compensation.
The government is yet to come up with a policy that would protect the existing transport industry. Although the government had got some two hundred crores or so for the transport industry under the smart city project, this money was spent on SRTC, which is already declared debt ridden corporation. Most of the money went to paying the debt of the SRTC.
If the government wants to protect the passenger transport industry in Jammu and Kashmir, it has to push money into it. So that the existing industry is safeguarded and the prospective entrepreneurs are encouraged. Long-term loans on low interests need to be given to the transporters under like Credit Guarantee Scheme (CGS). The transport industry has the potential to generate employments if the government supports it with effective schemes and policies. Otherwise, the industry would deteriorate further and cause further unemployment here.
The pandemic has impacted the overall economy everywhere, but the recently revealed statistics tell us that there is more unemployment and inflation in Jammu and Kashmir than in other parts of the country. Given the situation, the immediate question comes to our mind: why is it that Jammu and Kashmir has an unemployment rate higher than the national average or the rest of the states and UTs?
In my view, the answer to this question is that we have faced twin lockdown in J&K: First, post-August 2019, and second due to the Covid. The first lockdown was imposed by the government. And, even our communication links were blocked for months following the abrogation of Article 370. All this happened at a time when our tourist season was at its peak in the J&K, particularly in the Valley. But all of sudden, entire business activities were forced to close down and collapse.
After the abrogation of article 370, the government had claimed that this move would pave way for the enhanced development, and outside investment in Jammu and Kashmir. They had also claimed that the Kashmir issue is settled once for all. And there would be fewer incidents of violence in the future. However, now we see more incidents of violence and the killing of innocents here.
Earlier, after the Balakote strike, the government had claimed that there would be no infiltration from the other side. Now, look at what is happening in Poonch.
Considering this entire situation, I would say that from the rise in the incidents of violence to the enhancing unemployment rate, only the government is to be blamed.
In fact, people in other parts of the country too are facing the same situation in terms of unemployment and inflation and that is why we saw India’s Slide in Global Hunger Index recently. Government should have lend a helping hand to poor people working in the informal sector, which was shattered due to Covid lockdown. There should have been some stimulus, in terms of cash transfers, provided to the poor to enhance their purchasing capacity when the Covid hit the country. That has not happened. Now we are seeing inflation and unemployment growing in every part of the country, and sadly, J&K has the higher rate. The government must be held responsible for all this mess.
Since there is a clear cut conception that we cannot provide government employment to everybody in Jammu and Kashmir, we have more than 15 departments such as Rural Development, Social Welfare, Animal Husbandry, Khadi Village Industries Board, Khadi Village Industries Commission, Floriculture, Agriculture, Horticulture, Tourism, Industries department and so on and so forth which run the self-employment schemes like State Rural Livelihood Mission (NRLM), and Youth Mission, and so on.
These schemes are there to ensure the development of entrepreneurship in the UT and all these schemes are serving the purpose.
As far as the employment scenario in J&K is concerned, we are on a better track. However, the scenario gets changed every now and then because of so many reasons. For example, most of the workforce does not get attracted to the government-sponsored self-employment schemes during the peak seasons of agriculture and horticulture. They prefer to work in the fields and orchards than under the schemes like MGNREGA. Simply because laboring in agriculture or horticulture fetches them more money than the self-employment schemes do. But the workforce returns back to get benefitted from these schemes when agriculture and horticulture seasons are over.
We need to understand that the surveys showing high unemployment rates are mostly based on government schemes. Therefore these surveys are not accurate.
We have plenty of job opportunities in the unorganized sector in J&K, and the situation, in terms of unemployment, is not that grave as it seems to be.