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With spring on anvil, Kashmir biz expects economy to blossom

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Appreciating government interventions, business class expects more hoping with opening up of the markets, banks will also open up to support the business expansions and start-up projects through their various lending schemes

With constant disruptions during the past more than two years, Jammu and Kashmir’s economy finally seems to gaining its feet. The stakeholders hope that with a drastic decline in Covid cases, reopening of educational institutions, and approaching of spring season might help a restart of trade and industry in J&K, which has suffered huge economic losses due to the frequent lockdowns since August 2019.

The stakeholders, however, expect the government to take adequate helping measures to save the sunken businesses and start-ups, and to ensure a speedy and steady recovery of the losses. For instance, the transport industry, which has suffered most during all this time, can rejuvenate only if the government comes forward with a helping hand to the transporters.

Experts say that in a changing scenario, the banks -particularly J&K Bank which is the biggest in UT with a 75 percent market share – have to play an important role to lift up the businesses that have been grappling with constant losses for quite a long time.

Pertinently, the banking sector in J&K has also been facing tough times in terms of piling up of the NPAs and Stressed Assets, and with the lack of credible borrowers during the past three financial years. Experts say that since the growth of the banking sector is also dependent on the flourishing of businesses of the people, they must come up with some regulatory measures to ensure a smooth restructuring and settlements of the bad loans, and also with fresh lending on easy terms and conditions.

While the economic activities are opening up in J&K to know about the hopes, expectations, and apprehensions of stakeholders, KASHMIR IMAGES spoke with some of them. They have kept their fingers crossed with the hope that the dark days will go away to pave the way for a thriving business season ahead.

Here are the excerpts:

    Ejaz Ayoub
Economic Analyst

Jammu and Kashmir has been grappling with the economic losses caused by the frequent lockdowns, for more than two years now. Since August 2019, there has been no respite in the region’s dilapidated economy. All the major sectors like trading, construction, manufacturing and tourism witnessed a serious blow. Lockdowns terribly impacted the market demand and eventually caused job losses and an increase in unemployment.

Now, since the Covid cases have been drastically dropping at a right time – when winter is paving way for spring – we hope that the economy might experience a period of healing and recovery as J&K, as an economy, is desperately looking forward to a very normal business season ahead.

For instance, J&K should expect a good tourist inflow in the coming days as the Covid cases all over the country ar showing a remarkable downward trend. Similarly, with the reopening of educational institutions, it is expected that the trading sector will start thriving again because when students and others who are affiliated with the education sector come out in a routine, they tend to give impetus to demand.  The sales in the trading sector, eventually, are expected to ensure job creation.

Importantly, the government has announced some big-ticket infrastructural projects such as a housing project, dry ports, and malls in the Union Territory (UT). In that case, we should expect demand in the construction sector, which caters to more than seven lakh people – contractors, engineers, skilled and semi-skilled labours and so on.

Above all, we are hoping that UT’s budget will come up with a good share of capital expenditure that will help to reduce liquidity squeeze in the region.

Moreover, we hope that with opening up of the markets, banks will also open up to support the business expansions and start-up projects through their various lending schemes. Presently, the banks operating in the region have tightened their lending since last 8-10 quarters, due to piling up of bad loans and stressed borrowers. If you look at the balance sheet of JK bank – the biggest bank in the UT with over two third market share – you will notice a slump in credit growth in the past two-three years. But now we can hope that as people start approaching banks for finances to restart their businesses, banks too would look up to the opportunities and after the three-year-long economic winter, we might see a spring in this season – 2022.

Having said that, I must also tell you that still there might be some impact of the global slowdown on our economy in terms of the continuous slowdown of our exports and remittances from our people working abroad. Also, with rising prices of crude oil in the international market, we might see further inflation in the coming days.

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

The pandemic has shattered businesses throughout the world. However, in case of Kashmir, businesses have also been getting damaged due to political uncertainty.  The Covid caused roughly 55,000 crore rupees losses to our businesses and industry in 2020 and 2021. Plus, we have met with losses of about 2000 crore rupees due to the weekend lockdowns, which were imposed early this year.

Having said that, I think the time has come when we need to re-energize and rejuvenate ourselves to start afresh as the pandemic is vanishing now. While doing so, we must appreciate initiatives by the administration that it has started taking to help the restart of the businesses. For instance, the government has recently taken a number of initiatives to help the handicraft industry. These initiatives include the Geographical Indication (GI) tagging to the Kashmiri handicraft items. This will enormously benefit this sector.

I am pleased to see that tourism is picking up in Kashmir. We hope for a good tourist inflow this year. At this point, I would request the administration to look into the demands of tour operators and the transporters, so that they are well prepared to serve and facilitate the tourists. They have some genuine demands which they have already put forward to the government. Also, the KCCI has requested power tariff amnesty for commercial, industrial consumers. Given the situation that businesses have been facing here during past more than two years, the government must look into our demands.

Further, we have requested a revival and rehabilitation of business loans. We hope the government will come up with some stimulus package to lift the businesses of depression.

Then, we have some issues related to the GST. I hope the administration would be kind enough to ensure to solve all these problems facing J&K’s trade and industry.

      Shabir Ahmad Matt
Chairman, All Kashmir Transporters Welfare Association

It is known to everyone that the transport industry suffered the most because of the post-August 2019 lockdown followed by the pandemic lockdowns in 2020 and 2021. The vehicles remained mostly off the roads during all this time and the owners suffered doubly because they had to pay the insurance premiums, taxes, and bank EMIs despite zero revenue from their businesses.

Usually, a bus has an annual insurance premium of up to 70,000 rupees. The token tax was doubled after the central laws were implemented here following the abrogation of Article 370. Then, we had to spend on the maintenance of the vehicles to ensure they remain functional.

These expenditures, with no income, broke the back of Kashmir’s transport industry – which has as many as 830 buses; 40,000 Tavera & Sumo cars; 6500 Minibuses; and 12, 000 Auto Rickshaws. The industry caters to more than three lakh families – of drivers, conductors, owners, mechanics, painters, and so on – in the Valley.

Now, with the situation getting normal, we request the government to waive off the taxes and bank interests of the transporters so that they will be able to restart their businesses. The pending loans should be restructured and the repaying period should be extended. This is the least that the government can do for us.

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

We have started seeing an upward trend in terms of business activities for the past few months. Kashmir’s horticulture has done well last season, and we have got 15,000 crore rupees as the revenue from this industry. Tourism is also picking up for past few months. Most importantly, the reopening of educational institutions has generated hopes for everyone. For instance, the reopening of schools will help activating the transport industry, which has suffered most during past more than two years. And, subsequently, the general trade will start getting dividends from all these activities.  We are really looking forward to a good business season ahead.

However, the traders are facing some legitimate problems, due to unprecedented circumstances that prevailed. We hope the government will come forward to bail out the traders.  For instance, some traders have turned NPAs since the outbreak of the pandemic. Given the nature of the banking business, banks cannot do much on their own. The administration has to understand that the pandemic was not created by any of us and the loss caused by it was not our choice. Therefore, the government should come forward with a stimulus package to bail out the business from the economic trouble. The business community, after all, plays the role of the major tax payer for the government. Making the community strong will eventually help the government.

      Ghulam Rasool Siah
Chairman, Kashmir Houseboat Owners Association (KHOA)

The tourism industry had came to a halt when the government issued an advisory asking Amarnath pilgrims and tourists to leave Kashmir on August 2, 2019 – just a few days before Article 370 was revoked and a lockdown for several months was imposed here. And after that as the tourism activities started gaining momentum, pandemic hit the world and a lockdown was imposd in March 2020 across the country.  Due to this situation, the tourism industry in Kashmir remained defunct for about two years. Like most of the hotels and the guesthouses, houseboats remained unoccupied all this time.

However, during past several months, we have seen a good tourist inflow. Even at present, there are a large number of tourists in the Valley. Today, most of the total 912 houseboats – in Dal Lake, Nageen Lake, River Jhelum, and Chinar Bagh – are occupied by tourists.  We are looking forward to more inflows of the domestic as well as the foreign tourists in coming days and weeks.


        Imran Murtaza
President, Industrialists Association Khonmoh (IAK)

Usually the business activities remain down in Kashmir, in winters. And it is always the month of March – a while before the spring starts – that rejuvenates an active life in the Valley. Several things happen in this season: people who go outside for their businesses, or just to stay away from harsh winter, start returning home; educational institutions are thrown open after the winter vacations, and tourists from outside begin coming to the Valley. Therefore, the spirits generally remain high in Kashmir these days.

However, the past two years – 2020 & 2021 – were depressing because of the pandemic. All the business activities remained defunct during all this time. But, since Covid is fading, this March is going to start with lots of hopes and expectations.

Personally, I am hopeful too. But the ground realities regarding the trade and industry in Kashmir force me to be sceptical. The ground reality is that most of the industrial units have suffered huge economic losses due to the constant lockdowns since August 2019. They have spent their working capital for paying salaries, taxes, bank EMIs, and so on, despite zero revenue during this period. Presently, most of the industries in Kashmir are not in a position to do business because they lack capital.

Our industrial sector needs an overhauling, and here comes the role of administration and the banks.

For instance, the banking sector lends finances to the industries on 12 percent interest. This is the same interest rate that they get from an industrialist from lively places like Delhi and Mumbai. Banks must understand that Kashmir’s industries need a helping hand in these tough times – while they are gasping for capital. I would suggest banks should lower their interest rate to help the recovery of the industry here. Similarly, the government must ensure that the pending documentation and updation process is speeded up. Sadly, the concerned departments have made the system so complicated that getting licenses, permission certificates from the pollution control board and other departments, or inducing a partner into the business is a months-long process. A number of start-ups are unable to begin their units just because their cases are lingering.

Therefore, I would say that restarting industries after frequent disruptions is possible only if the government lends its helping hand.



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