Kashmir’s Economic Downfall

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In the absence of an enduring vision about the fate of Kashmir’s political destiny, little can be done to accelerate forces of economic development in the region

Bilal Gani

MORE than a year since the abrogation of Article 370, J&K’s economy is going deeper into a crisis. In August last year, a complete communication blackout and lockdown was enforced after BJP-led central government scrapped Article 370 and suspended J&K’s constitution. This lockdown continued into the next year and extended further due to the Covid-19 pandemic. The effects of this double lockdown have been devastating on Kashmir especially its economy. Twelve months into it, there’s little to no hope of improvement.

Current State of J&K’s Economy 

In a report, “Jammu and Kashmir: The Impact of Lockdowns on Human Rights” compiled by The Forum of Human Rights in Jammu and Kashmir, civil rights members said that, “the August 2019 lockdown plunged the state into a sharp downward spiral. By the end of December 2019, economy of the valley was in dire straits”. This was because, in the first four months of the lockdown, industries in J&K suffered a loss of about Rs.17,878.18 Crores (roughly USD  2.4  billion). Job losses in  the  valley were under half a million (497,000). According to the preliminary loss assessment report by Kashmir Chamber of Commerce and Industries, service sector including Tourism took the biggest cumulative hit. It lost Rs 9191 Crore in the first 120 days that followed the abrogation of article 370. The sector also witnessed 1, 40,500 job losses.

According to a news report by Scroll.in, as per statistics provided to Parliament in December last year, tourist figures declined from over quarter of a million in 2018 to just over 43,000 between August and December’19.  As a result, an estimated 144,500 jobs were lost in the tourism and handicraft’s sector alone.

Even after a year, this number has only increased. In a recent report, the Kashmir Chamber of Commerce and Industry (KCCI) put economic losses in Kashmir Valley in the last year at Rs 40,000 Crore. These figures estimate a loss of about 11% of J&K’s economic output.

The prolonged lockdowns from August 2019 till date led to low demand, fewer purchases, and reduction in satisfaction. This in turn affected turnover, margins, market share and overall business performance. For instance, the fruit industry, which is one of the state’s largest producers lost around 1.35 lakh metric tons of its crop, due to restricted transport facilities. According to the MHA, by January 2020, the National Agricultural Cooperative Marketing Federation of India (NAFED) had only purchased Rs.70.45 Crores worth of apples, while the average revenue from apple sales used to be around Rs. 14,000 crores per annum.

Is There a Way out?

In his book, “How an Economy Grows and Why it Crashes”, Peter Schiff presents three important aspects that characterise a robust economy. The first aspect is the prevalence of production over consumption. The second is improving the deteriorating economic situation through savings and the third condition is that the economy needs deflation and not inflation for prosperity. Unfortunately, Kashmir is becoming more and more of a consumer state.

However, economic growth also depends on a degree of economic freedom. In the words of leading economic analyst for South Asia, Zahid Hussain,”economic growth and political stability are deeply interconnected. The uncertainty associated with an unstable political environment reduces investment and the pace of economic development”

Over the years, intense political conflict in Kashmir has hampered any heavy industry to thrive and prosper. The absence of sustainable peace and the presence of frequent shutdowns not only results in the loss of human lives, but also makes the society economically weak.

Since last August, there has been limited to no physical movement in Kashmir. Internet bans in Kashmir have proved harmful for the economy. It has devastated supply chain and caused a colossal demand shock. The absence of high speed internet facilities has also affected businesses to a large extent. In the absence of it, it has become difficult to switch to e-commerce even as the pandemic has made the world rely on the digital to avoid big losses.

When the brutality of conflict surrounds every sphere of life, people’s lives are bound to become chaotic and anarchical. The landscape of Kashmir is swiftly changing around a particularly compelling narrative. The India Government’s policies are detrimental to Kashmir’s economy and are damaging its sociology. People are in an economic quandary and in a practical dilemma over how to sustain this crisis. In the absence of an enduring vision about the fate of Kashmir’s political destiny, little can be done to accelerate forces of economic development here.

The author is a research scholar at Central University of Kashmir and can be reached at bilalganiwrites@gmail.com

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