over its economic substance. The result is that what could have been an important step in the long-term development of J&K and also have a bearing on the resolution of the impending issue, is today nothing more than an exchange of emotions.
Not that it is too late even now. For the cross-LoC trade to succeed, the government needs to establish financial networks to back the trading of goods and services, communication networks to help traders exchange business information on a real time basis, significant transport networks and regulatory work to determine trade and the legal network involving a dispute settlement mechanism. These are generic constraints.
Yet, interestingly, and quite importantly, Cross LoC trade from Jammu is doing much better than that from the valley. This is so despite the same binding constraints facing both the provinces. The reason for this differential performance is to be found in the important though oft neglected factor called the “culture of trading” or to broaden the perspective, the “culture of entrepreneurship”.
What is brought home rather starkly is the lack of entrepreneurship and enterprise in the valley. This feature is one of the main reasons for the lack of enterprise development in Kashmir. By and large the producer mentality, emanating as it is from the crafts as well as the horticulture sector, dominates the trading and value addition aspects of business.
As such it is not surprising that even though Kashmiris are the producers of fruits and crafts, its trade and marketing is dominated by others. Even the simplest organizational forms of trading like the commission and forwarding agent (C&FA) hasn’t yet been localized.
The impact of this pattern of economic activity is that trade becomes profitable not for the producers but for the intermediary. Much of the consumer surplus is actually absorbed by the trader. This is not only an individual income issue. It has macroeconomic implications as the terms of trade become adverse for the J&K economy. This happens because there is a resource outflow rather than an inflow to our local economy. The solution is to see the entire activity from production to trade to sale as one integrated act so that we are able to maximize the profitability as also prevent leakages from the system.
Not that it is too late even now. For the cross-LoC trade to succeed, the government needs to establish financial networks to back the trading of goods and services, communication networks to help traders exchange business information on a real time basis, significant transport networks and regulatory work to determine trade and the legal network involving a dispute settlement mechanism. These are generic constraints.
Yet, interestingly, and quite importantly, Cross LoC trade from Jammu is doing much better than that from the valley. This is so despite the same binding constraints facing both the provinces. The reason for this differential performance is to be found in the important though oft neglected factor called the “culture of trading” or to broaden the perspective, the “culture of entrepreneurship”.
What is brought home rather starkly is the lack of entrepreneurship and enterprise in the valley. This feature is one of the main reasons for the lack of enterprise development in Kashmir. By and large the producer mentality, emanating as it is from the crafts as well as the horticulture sector, dominates the trading and value addition aspects of business.
As such it is not surprising that even though Kashmiris are the producers of fruits and crafts, its trade and marketing is dominated by others. Even the simplest organizational forms of trading like the commission and forwarding agent (C&FA) hasn’t yet been localized.
The impact of this pattern of economic activity is that trade becomes profitable not for the producers but for the intermediary. Much of the consumer surplus is actually absorbed by the trader. This is not only an individual income issue. It has macroeconomic implications as the terms of trade become adverse for the J&K economy. This happens because there is a resource outflow rather than an inflow to our local economy. The solution is to see the entire activity from production to trade to sale as one integrated act so that we are able to maximize the profitability as also prevent leakages from the system.
