With tens of thousands of jobs gone in last one year and no economic activity visible in the immediate future, most of the businesses are landing on the brinks of collapse, reports Tasavur Mushtaq

Those were the days. This photograph from 2015 autumn shows a scene from the market. KL Image: Bilal Bahadur

Barely 50 meters from the spot where the RDX-laden vehicle hit a CRPF convoy on February 19, 2019, killing more than 40 personnel, an employee of Zamindar Kesar King at Lethpora, was playing PUBG. Caught in the noise of his virtual battle on a smartphone, he did not hear the harrowing, air-piercing thud that even shook parts of Srinagar, almost 18 km away. He even ignored frantic cries from his colleagues to leave. It was only after a broken glasses fell over him that he recognised the crisis and left the shop.

“He might have come here a few times but the fact is that is he is one of the dozen-odd employees who do not come to work anymore,” Mohammad Abid Khanday, the promoter of the Zamindar Kesar King chain said. Apart from an outlet outside Kashmir, he operates at least four shops in Kashmir. “There is no work. After the blast, it took us months for trying to resume the routine and then security forces did not permit the tourist vehicle to park near the shop. Finally, the tourists were asked to leave Kashmir in anticipation of August 5.” The abrogation of the Article 370 came with its unending curfews and now we have Covid-19 shutdown or both.

Khanday said he is sitting over losses making even paying the rent impossible. “We routinely purchase around 100 tons of walnut a year for our own requirements. Since we could not sell it for all these months, its prices have nosedived by more than half. Despite this, we do not get buyers,” Khanday asserted. His chain routinely sells around half a ton of saffron and more than four tons of morel mushroom. “All the stocks are there. Within one month the new walnut will come and right now the morels are waiting to be purchased. But where is the money?”

Morels sell at around Rs 8000 per kilogram and most of it goes to Europe. The virus scare is preventing buyers from actually placing an order. “We could have done something on-line but the couriers take triple the time in delivery these days,” he asserted.

Apart from 2.2 million tons of apple, 15 thousand tons of cherry, Kashmir produces almost 40 tons of morels, 16 tons of Saffron (2017), 2.66 lakh tons of walnut and most of it is either consumed within India or is exported. These main crops are the principal movers and shakers of Kashmir’s peripheral economy. In suburban Kashmir, handicrafts play a major role in economic well-being as the service sector is hugely managed by the urban spaces. But somehow, most of these products are linked to situation, tourism or weather.

Earning To Begging

A year after the abrogation of special status and the sundering of the state into two Union Territories, the Kashmir economy continues to be shuttered and shattered. Fighting battle of survival after multiple onslaughts during the past three decades, the losses this time have surpassed the hopes of a revival. 

In July 2020, Nazir Ahmad Sheikh, a driver by profession was seen begging on the Srinagar streets. Desperate to save his terminally ill son, jobless and penniless Nazir had no option but to appeal for donations.

Deserted Lal Chowk in Srinagar, as all shops and business establishments, shut during a general strike called by All Party Hurriyat Conference on Thursday. (KL Image: Bilal Bahadur)

Living a single-room house with three children, Nazir said circumstances compelled him to come to the road. “I am not a beggar but a bus driver. I have not earned a penny since August (2019) to meet the requirements of my family and medicine for my son,” he said in a video circulated over social media. 

As the appeal got amplified, he received the requisite money as help to manage his meals and medicine. However, unlike Nazir, there are thousands of families whose helplessness dies down, unnoticed and unattended.

Battered Businesses 

The loss to Kashmir’s economy is not the latest. As claimed by an amalgam of over 30 trade bodies, Kashmir has witnessed 3000 days of lockdown since 1990. However, the last year has been severely damaging. In a joint presser in June 2020, the trade representatives demanded measures for the revival of their respective businesses. “The only aim to hold a joint presser today is to raise our voice for the business fraternity across the Valley who have suffered huge losses due to the time to time situation witnessed here,” said Sheikh Ashiq, president of Kashmir Chambers of Commerce and Industries (KCCI). “In particular, our businesses are suffering for the last ten months and we have never come out of the lockdown.”

The public transport is grounded for a year now.. KL Image Bilal Bahadur

Even if the government announced phased easement in the lockdown, the business fraternity, Ashiq said is facing “yet another challenge i.e. lack of cash flow,” adding that such a situation is the outcome of the lockdown since August 2019.

The world is under lockdown since March, Kashmir is closed for almost a year – first half because of Article 370 and the next half (starting from March) because of the virus scare. It is too early to say if the lockdown triggered by the pandemic has succeeded in flattening the curve, but it is already established that the SGDP curve is already running flat.

Struggling Sectors 

Post abrogation of Article 370 and 35-A, life in Kashmir is out of gear, completely. Assuming 120 days for calculations, a report based on a study of 10 Kashmir districts, involving 55 per cent of the total population of Jammu and Kashmir released by KCCI revealed Kashmir’s economy had suffered losses to the tune of around Rs 17,878 crore. While the travel, tourism, and handicrafts have contributed the maximum to this loss, clampdown both physical and virtual, have also made agriculture, horticulture, real estate, and construction sectors to suffer.

The disruption, the report further said has also resulted in the loss of jobs of lakhs of youth. Giving out the numbers, it also said around 4.96 lakh jobs were lost during this period of 120 days. According to a study by the Centre for Monitoring Indian Economy (CMIE), in only the first two months, the unemployment ratio in J&K spiked from 15 to 22 per cent.

The losses had been assessed based on Jammu and Kashmir’s GDP for 2017-18. However, there are sectors with permanent losses. 

In the following months, the estimates suggest Kashmir’s economy has suffered a loss of Rs 40,000 crore and resulted in one lakh job cuts in the private sector during the last 11 months.

The major sector hit by the situation which emerged after August 5 was the tourism industry. Coupled with the deployment of 100 companies of additional troops in valley, the orders issued prior August last year asking tourists and Amarnath Yatra pilgrims to curtail their stay in the valley, the panic paralyzed the industry in its peak work season. Within a few days, the streets were emptied and tourist spots were deserted. If rough estimates are to be believed, nearly two lakh jobs were lost in the sector in the last one year. 

The stakeholders claim that the industry is in shambles. The Kashmir houseboat owners association, a body representing 920 registered houseboats with the department of tourism lament that not a single tourist has visited them.

Even after the government-issued an advisory in October 2019, asking tourists to visit the place, the region almost witnessed a 95 per cent drop in arrivals. People avoided Kashmir for obvious reasons. For many months, only two people were driving to Kashmir – security men and Kashmiris living outside. Post Covid-19, the situation remains unchanged.

Floral Fun: While Iran accounts for about 70% of total world production, the quality of the Kashmiri saffron is considered the best and the finest.

Comparing the situation with earlier “unrests”, one of the representatives of the association, Mohammad Yaqoob said, “this time the situation has completely shattered the industry.” 

“After the abrogation of Article 370 not a single tourist has visited our houseboats. We have witnessed earlier unrest as well, but this has broken our back,” Yaqoon said. “You can understand the quantum of loss that we struggle to manage our meals, leave aside the mandatory renovation of our houseboats.” In the last one decade, Yaqoob says not a single houseboat has been renovated in Kashmir. “Dockyard in Dal exists since 2010, but we don’t have resources to renovate our houseboats.”

Handicrafts on the other side have remained a key economic activity in Kashmir. It involves significant employment of the local workforce and export to different regions of the world. The rough estimates suggest, this sector provides an income to more than three lakh artisans and contributes around Rs 1700 crore to the export economy every year. But post-August 5, in the first five months, the export-oriented industries have suffered a huge blow.

“Our exports have declined by 62 per cent,” said Ashiq of KCCI, adding handicraft items like silk carpets and shawls to the European Union and the USA have come to a complete standstill. “The period before Christmas was the peak season for these exports and we lost that entire season.”

Hospitality sector was generating revenue of Rs 7000 crore a year but is in shambles. Means to direct livelihood to around four lakh people, there are reports of 70 per cent layoffs in the last year. “The last year witnessed complete loss,” said Wahid Malik of Kashmir Hotels and Restaurant Owners Federation.

Man tipping cherries into a box in an orchard in Srinagar outskirts on Tuesday, May 26, 2020, during the government, imposed lockdown to contain the spread of Coronavirus. KL Image: Bilal Bahadur

Besides the loss of business, the other concern for the owners, Malik said the government used their hotels as a quarantine facility but did not pay the compensation. “Around 145 hotels were taken to be quarantine facilities, but no compensation was paid yet,” he said.

Busy in executing the contracts allotted by the government, the contractors this time spend days in isolation. They are not willing to work now. Waiting for pending payments of nearly Rs 500 crore, their representatives allege the government has stopped their previous payments. 

Farooq Ahmad Dar of JK Central Contractors Coordination Committee said the loss incurred since August 5 is about Rs 1300 crore. “Everybody, from contractors to labourers and suppliers involved in this activity is in the loss. The past payments have not been cleared, though the money for new work has been released,” he said, adding “government should release the payment.

The Education Sector

Concerning the large population and involving a significant part of the economy is the education structure. With a network of institutions, local and national, operating in different areas of Kashmir are facing difficulties in carrying out their operations. Incurring losses both academically and economically, the youngsters working in the sector have been shown the door. The loss to this industry is reported to be Rs 300 crore in Kashmir alone.

The apple harvest and grading in progress. KL Image

Alleging that no initiative was taken by the government to help this sector, G N Var of Private Schools Association said: “Post August 5 there was complete closure and now from last few months we are in struggling phase.” No help is coming from any side. “The government had promised that they will give salaries to teachers and help poor parents, but nothing was done,” he said.

The trade-in general has gone through a rough phase. Nazir Ahmad Shah, a representative of Shehr-e-Khaas Traders and Manufacturers Federation, said the losses incurred in all these months are hard to recover. “It is difficult for traders to overcome the losses, “he said adding an appeal to the government for “timely help.”

Only in the transport sector, 1.5 lakh people have been affected directly. With no assistance for a year now, the last time normal movement on the roads was seen before August 2019. 

Curtailed Connectivity 

The cut in the connectivity, initially, all communication channels, and later the continued ban on high-speed internet had serious fallout.  

As the technological invasion has shifted a major part of businesses and other daily life activities from physical to the virtual world, the ban put everything related to the bandwidth to the grinding halt. The lack of internet has thrown a wrench into the life of natives. 

According to Access Now, an international advocacy group that tracks Internet suspensions, the internet ban in Kashmir was “longest ever imposed in a democracy.” Besides this, there are instances where only authoritarian regimes such as China and Myanmar have cut off the Internet for longer.

Though the Jammu and Kashmir administration led by Lieutenant Governor GC Murmu (not any more) told the Union Ministry of Home Affairs that it did not have any objection in restoring 4G internet services or how people would use it, asserting that high-speed internet connection would not pose any problem, the ministry ordered further restrictions on the high-speed internet till August 19. 

The majority of youth working in IT-related sectors showed a door or there was a significant reduction in their salary. 

Banking Burden

The borrowers across the region are struggling to fulfil their commitments towards the lending institutions, which may result in widespread bank defaults. Battling with insolvency, the capital and savings have depleted in the last one year. A consumption-driven economy, the current situation has led to the liquidity crunch severely.

Surviving on the support, there have been multiple rehabilitations to the Kashmir borrowers in the last few years. The latest being Guaranteed Emergency Credit Line (GECL), a fund-based working capital term loan announced by the ministry of finance, the government of India. 

The biggest concern which the business fraternity shares are that the moratorium of six months on interest payment is ending on August 31. After the due date, the working capital accounts and other term loans require interest and instalment servicing. “The businesses have not recovered yet and six months are over,” said Umar Ahmad, a businessman dealing with readymade garments.

Besides this, there has been the intervention of enhancing 10 to 20 per cent of the existing sanctioned working capital to inject liquidity. However, the loans sanctioned have a moratorium period of one year for repayment of the principal amount. 

Earlier also the banks operating in Kashmir had been allowed to rehabilitate loan accounts after 2014 deluge and post-Burhan Wani killing. If bank insiders are to be believed, the rehabilitated accounts have not been yet liquidated. “It a scenario of giving loan over the loan that gets into a sort of debt trap,” said a trader, Abdul Ahad.


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