Repo rate change

Reserve Bank of India (RBI) cut REPO rate by 25 bps (0.25%) to 6 per cent in its third Bi-monthly Monetary Policy announcement earlier this week.

A 25 bps rate cut by it self will not result in a large fall in interest expenses for the businesses but it would make the availability of credit easier. That, however, depends upon how fast the bank’s transfer the rate-cut benefits to the borrowers.

The business scenario in J&K, especially in Kashmir, is quite grim. A rate-cut of this size will not have any measurable effect on it. Businesses are yet to come out of the slack that was witnessed post 2014 floods even after a period of three years. The unrest in the summer of 2016 literally stalled the revival of businesses after the floods. Almost all borrower accounts are in a restructuring mode, thanks to the rehabilitation allowed by the RBI in 2015. The two year moratorium on the repayments on loans will be over by the third quarter of this fiscal. Post that the industry shall have not only to start repaying the bank loans but also provide for the interest costs which were so far being funded by the banks as part of the rehabilitation package. In a situation where the business activity is minimal, there is every fear of businesses going bad because of burgeoning bank loans and un-serviced interest costs.

Add to this the effects of demonetisation which are more severe in the state owing to the fact that the state has had the highest cash-deposit ratio historically.

Also, the confusion around GST implementation and its attendant issues have literally brought not only the manufacturing sector to a grinding halt but have severely impacted the services sector as well.  The disruption because of GST implementation, as per the experts, is going to stay for another half year. Naturally, the businesses are likely to suffer even more till clarity over the new tax regime permeates down to the retailers, small shopkeepers and the artisans alike.

Kashmir’s political situation is far from conducive. Frequent shutdowns, restrictions and overall political climate are acting as dampeners to the economic growth.

In this scenario, it is important for the Government to look beyond politics, think out of box and provide some policy triggers to reverse the slowdown. If that is not done, the negative business sentiment will manifest itself in multifarious ways adding more problems to the already beleaguered government.

Babu’s Adventures

J&K government has attached the services of a 2010 batch IAS officer whose raunchy photographs with two, or three as is being stated, have taken the virtual world by storm. Deputy Commissioner Udhampur Anil Kumar is seen enjoying with two young females, somewhere in a hotel. A resident of Katiyar in Bihar, Kumar is termed a competent man with a Himalayan weakness for women. While an investigation, if at all it is being ordered, will offer details about the case, the state government should have placed his services under suspension till he explained his escapades. But the central administrative network seemingly is keen to help the bachelor.

This is not for the first time that a babu is apparently being shielded. Last time, when two officers, apparently in a relationship, fell apart, it created a serious issue as one of them took the knife and cut her nerves. The issue was raised in the state assembly by various lawmakers. The embarrassing situation led the government to shift out one of them and avoided punishing the two for taking short cuts to pleasure, apparently at the cost of the governance.

The government must take care of its staff, especially at the top level, because the embarrassing conduct of the officials does have a bearing on governance and the reputation.

Deliver Justice

Last week reports about the soldiers, convicted for killing civilians in Machil fake encounter, being released by the military court triggered a lot of debate in the civil society. The Machil encounter was the main trigger that led to the massive destruction and more than 100 killings in the 2010 summer. After the police registered a case and made certain arrests, the army took the case to the Court Martial and decided it. This made the armed forces the only member of J&K’s huge counter-insurgency and security grid that professionally responded to the 2010 unrest. This is often being mentioned that while the state police avoided any investigation in the unrest, even after Justice Koul Commission submitting its report, the army kept its head clear in the entire chain of events.

With the sentence of the convicted soldiers having been suspended – the reported reason was that slain civilians were wearing Khan dress, it started questions being asked about the fairness of the already established institutions of justice. It is being seen as a reversal of the justice process and the subversion of the institution of justice.

With this decision, the entire security grid is on the same page. The state police have avoided taking action against its members responsible for various killings and the army has reversed an action that had made it distinct in this particular case. This contributes in the ground situation negatively and the policy makers must take it very seriously for a stable Kashmir.


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