coronavirus lockdonw, kashmir lockdown, kashmir restriction
A deserted street is seen through a barbwire set up as blockade during lockdown in Srinagar. Photograph by Bhat Burhan for The Kashmir Walla

The back to back lockdowns in Kashmir, first after Jammu and Kashmir was unilaterally stripped of its semi-autonomous status and the subsequent lockdowns amid the coronavirus pandemic, have brought the region’s economy to the brink of collapse. 

A report released by Kashmir’s leading business body, the Kashmir Chamber of Commerce and Industries (KCCI), nearly a year after the first lockdown was imposed, has attempted to quantify the extent to which the local economy has suffered. And the numbers are alarming.

The KCCI’s preliminary analysis estimated the losses in ten districts of the Kashmir Valley division to be a staggering 40,000 crore rupees with over one lakh job cuts in the private sector alone during the lockdown period. These estimates may at best be considered conservative, since they do not account for the vast informal sector of Kashmir’s economy which has been the worst hit.

Even if assuming that the losses are not more than 40,000 crores, how does one make sense of this number? How big or small a dent is it to the region’s economy? 

The most recent government estimate, the economic survey of 2018-19, put the nominal gross domestic product (GDP) of the erstwhile state at 1, 58, 688 crore rupees. Presuming that Kashmir Valley’s share in the total GDP is half, i.e. roughly 80,000 crores, it means that the economy has suffered losses of over 50 percent, an economic catastrophe having no parallel in recent memory.

“Every segment of the economy is bleeding losses due to this situation,” said Sheikh Ashiq, president of KCCI. “When businesses remain shut for such a long time, it is bound to affect each and every sector hard.” 

From agriculture to the famed apple industry, real estate and mining, and tourism and transport, every sector has seen at least a 50 per cent drop in earnings during the lockdown, stated another report on the impact of the lockdowns compiled by the Forum of Human Rights in Jammu and Kashmir–a grouping of unionist politicians and civil rights activists in Kashmir and mainland India. 

The restrictions on high-speed internet have further compounded the crises. Many businesses and start-ups–described globally as the future of business–have been forced into either closure or relocation from the troubled Kashmir to other parts of the country. According to Mr. Ashiq, the suspension of the internet led to a 50 percent decline in handicraft orders alone.

Given the trajectory of the last decade, many would argue that the economy would eventually bounce back. That assumption is not entirely untrue. Even though Kashmir’s economy is accustomed to periodic disruptions such as the 2014 floods or the 2016 civilian uprising, the business community has found a way to handle these bouts of months-long disruptions.

Interestingly, these periods of pauses were followed by phases of quick economic revival offsetting much of the losses incurred during the shutdowns. But this time around, the lockdown is different for a variety of reasons, both in terms of duration and intensity: it has outlasted the previous lockdowns and has permeated to even those sectors which hitherto remained unaffected like the construction sector.

In such a scenario, the business community is increasingly looking at the regional administration and the central government to infuse new life into the economy. On 18 August, representatives of the KCCI met with the newly appointed Lieutenant Governor of J-K, Manoj Sinha, to apprise him of the deteriorating economic situation in the valley. 

Mr. Ashiq headed the delegation and is optimistic. “The L-G immediately formed a high level time bound committee which has to submit its report by 1st of September”, Mr. Ashiq told The Kashmir Walla. In many ways, there is very little that the KCCI or the business community in Kashmir can do in the present circumstances except to hope for government intervention.

But hopes have been dashed before as well. After the initial lockdown was lifted earlier this year, the local business community had pinned hopes on the much hyped Global Investors’ Summit to revive Kashmir’s fledgling economy. The summit which was announced by the Government of India in September last year and was supposed to act as a litmus test for the Centre’s claim that abrogation of Article 370 would change the “perception” of Kashmir and usher in an era of prosperity.

However, the summit was indefinitely postponed with the outbreak of the coronavirus pandemic and eventually forgotten. The future prospects for the summit also appears bleak now considering the fresh economic crises perpetuated by the pandemic. The summit, however, was flawed from the very start, said noted economist and honorary Professor at the Delhi School of Economics, Jean Drèze. “The imposition of a corporate driven development in Kashmir, a sort of Gujarat model, if that means anything, has no resonance with the ground realities at all,” he said.

The abrogation of Article 370, said Mr. Drèze, cannot be justified on the grounds that it would improve economic conditions in Kashmir “any more than slavery can be justified on the grounds that it improves economic productivity.” He further pointed out that there is “not a shred of evidence” in New Delhi’s claim that the abrogation had boosted the economy.

“Remember, prior to this event Kashmir had already achieved high levels of economic and social development. It had much better social indicators than most Indian states, including Gujarat. One reason for this is that the land reforms of the 1950s and 1970s, made possible by Article 370, had laid the foundations of a relatively prosperous and egalitarian rural economy,” said Mr. Drèze.

After the lockdown was lifted in the Valley, albeit partially, last week, some semblance of economic normalcy has returned to the markets but after a year of lockdown, the proliferation of the COVID-19 cases, and the shuttering of much of the global economy; radical uncertainty is still, perhaps, the best way to describe the future of Kashmir’s economy.

In such circumstances if the economy is still afloat in whatever manner, said Mr. Drèze, it is mainly due to the resilience of Kashmiris. “If people have managed to survive, it is partly because they were relatively well-off to start with, and partly because of Kashmir’s strong traditions and institutions of solidarity,” he said. “Had it been like Bihar or even Gujarat, there would be widespread hunger there today, if not starvation.”

To help us make sense of the ground shifting beneath our feet, The Kashmir Walla’s Minaam Shah talked to Jammu and Kashmir’s former Finance Minister, Haseeb Drabu, to weigh in with his analysis and predictions for the economic scenario in Kashmir. Read full interview here.


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