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Economy

Govt announces Rs 1350 Cr financial package for J&K’s economic revival

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5% interest subvention, 50% waiver on  fixed charges of electricity, water tariff

BK News

Srinagar, Sept 19: Meeting his earlier commitment made with the business community, Lieutenant Governor, Manoj Kumar Sinha today announced a mega relief and revival package of Rs 1350 crore to help the J&K business sector to tide over their problems.

In a press conference at Srinagar, the Lt Governor announced a package of measures, both financial and non-financial, aimed at helping business and entrepreneurs.

Addressing the press conference, Lt Governor also stated that the first part of overall economic package came from Government of India in terms of Atma Nirbhar Bharat Abhiyan. He said that so far Rs 1400 crore has already been provided through JK Bank and other banks under this Abhiyan. He added that it has many components which seek to help business entities in multiple ways such as provision of liquidity and other financial supports. He said that many welfare measures such as free rations and support to the most needy were also being provided.

The Lt Governor said that the main component of today’s package is 5 % interest subvention to all borrowers irrespective of their sizes, which would cost about Rs 950 crore. The interest subvention will be available for six months in the current financial year and it will be a huge relief in the current scenario.

Lt Governor went on to say that government has also decided to provide 50 % waiver of fixed charges for one year with respect to electricity and water which would cost Rs 105 crore. He said that they have also decided to assist bus drivers/conductors, auto/taxi drivers etc who may have lost their livelihood by providing for an appropriate mechanism.

Further 50% or Rs 5.00 lakh subsidy whichever is lower shall provide to the transporters for replacement of old buses and the insurance premium shall be borne by the Government subject to a maximum of Rs 5000 per vehicle for Buses/Mini Buses, Rs 3000 for taxes/sumos and Rs 2000 for three-wheelers.

For Tourism Sector, subsidy for installation of Bio-digesters in the houseboats has been announced. Assistance shall also be extended out of ‘JK Relief Fund’ to some 19914 Shikara/House Boat owners/Tourist Guides/Pithuwalas/Dandiwalas/Sledge Walas/Pony/Camel Riders and cash assistance of Rs 1000 to all of them given from last 3 months shall be extended for further 06 months ending 31st December, 2020.

There are more than 3100 artists who have lost their livelihood during the pandemic. The artists accociated with the cultural academy shall be paid Rs 1000 per month out of ‘JK Relief Fund’ for a period of 09 months w.e.f 1st April, 2020.

The comprehensive ‘Business Revival Package’ also includes newly rolled out special Covid schemes like Guaranteed Emergency Credit Loan (GECL), Working Capital Demand Loan (WCDL) facility for Private Educational Institutions. J&K Business Support Loan Scheme for hotels and guest houses shall be rolled out on similar lines. Considering the loss suffered by the business community, there shall be extension of additional funding to all eligible borrowers for revival of their stalled business under Guaranteed emergency credit loan.

For agriculture sector, district level bankers committee shall be constituted to ensure loan coverage for agriculture and allied non-farm activities under Mudra loans. Meetings will be organised every month to overcome difficulties faced by the borrowers.

Moreover J&K Bank shall frame the customised “Help Tourism” scheme for financial assistance to persons associated with the Tourism Sector with attractive pricing and repayment features. All stakeholders shall be taken on board for any modifications.

As far as tax concessions are concerned, the filing of the GST reimbursement claims has also been extended till 31st December, 2020. Handholding to remove difficulties in filing returns and mechanism to avoid delays in reimbursement claims shall be instituted. The accumulated interest shall be converted into funded interest term loan.

A number of administrative measures for different economic sectors are part of this mega package to improve business environment. These are:

  1. Tourism
  2. Online renewal and registration system for transporters/hoteliers shall be put in place.
  3. Banks will extend every possible support to houseboat owners, tour & travel operators and shikarawalas and frame a customized scheme for their working capital requirements in consultation with the concerned associations.
  4. All renewals of Registration of Hotels, Restaurants and the like shall be done in a time-bound manner.
  5. Housing and Urban Development
  6. STPs of Srinagar will be completed in time bound manner providing relief to Hotels.
  7. Building permissions will be given in a time-bound manner within 3 months.
  8. Agriculture/Horticulture and allied sectors
  9. Farmer Producer Organisations will be increased with market linkages.
  10. Transport
  11. Suitable space for passenger taxi and auto stands will be provided to avoid traffic congestion.
  12. Handloom and Handicraft:
  13. Handicraft Cluster centres will be set up in specified zones.
  14. Handloom parks will be created in J&K and possibilities for the development of handloom parks outside J&K will be explored.
  15. Registration of Instruments will be done by the Revenue Department on daily basis, and not more than 07 days.
  16. Focus Groups
  17. Special desk shall be created to address youth and women entrepreneurs in the J&K Bank. The facility shall be put in place by the J&K Bank by 1st of October, 2020.
  18. Exclusive market space will be created for women entrepreneurs.
  19. Creation of Portal for unemployed Youth- A one-stop solution with a tie-up with employment portals and employers on the same platform will be done.
  20. Renewal of registration of Schools will be done in a time-bound manner and affiliation process with the CBSE board shall be eased out to have more CBSE school registrations.
  21. Frequent national and international events shall be organised by the Youth Service and Sports Department to have wider participation. High-end events will encourage tourism sector and improve the economy of the UT.

In addition to financial package and administration measures, the government has also constituted few committees to look deep into the issues of traders’ community and resolve them as per the current needs and their demands. These include:

  1. A committee headed by Administrative Secretary I&C Department with a representative of the Finance Department will propose the issuance of a simplified negative list for industrial incentives within 03 months.
  2. A Committee shall be constituted for settlement of Bank, Finance and Industry issues with association representatives as members to be chaired by Finance Department.
  3. Constitution of committees in each Province/District involving members of the business associations to address their issues which shall meet every month at the district level and every two months at the provincial level to settle issues of the business community. The committees shall have representatives from I&C/Finance/Banks as its members.

Advisor to Lt Governor, KK Sharma; Chief Secretary, BVR Subrahmanyam; Financial Commissioner, Arun Kumar Mehta; Principal Secretary PDD & Information, Rohit Kansal; Principal Secretary to Lt Governor, Nitishwar Kumar; Principal Secretary, Industries & Commerce, MK Dwivedi and Director Information & Public Relations, Dr Syed Sehrish Asgar were also present at the press conference.

Economy

Rural mart inaugurated under NABARD scheme

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Rural mart inaugurated under NABARD

BK NEWS

Shopian, Sept 20: National Bank for Agriculture & Rural Development (NABARD) has collaborated with National Rural Livelihood Mission (NRLM) for extending the grant support to SHGs promoted by NRLM for setting up rural marts. These marts aim to promote and provide a platform for women’s self-help groups to market their handmade products.

The rural mart was inaugurated on 20 Sept 2022, at Shopian

Dr AK Sood, CGM NABARD J&K, SSP Shopian Tanushree, NRLM Reyaz Ahmad, and ADDC Shopian, Manzoor Hussain were present for the inauguration ceremony.

The mart will give numerous SHGs an opportunity to sell their homemade goods, including apparel, handloom and handicraft products, homemade food items, dry fruits, and more.
For a period of three years, NABARD has agreed to commit Rs 4.79 lakh as financial support for each rural market. NABARD will pay for the components, such as shop rent, salesman salaries, marketing costs, and other miscellaneous expenses.

Dr Sood, CGM NABARD, urged the female SHG members to use the mart as an opportunity for economic growth and to guarantee the continuity, quality, and quantity of local goods for both locals and tourists.
Additional Mission Director NRLM commended SHGs for taking such a unique initiative in the district.

“Rural mart to be run by female SHGs is the first step towards women empowerment in the district,” said Tanushree, SSP Shopian

Members of various SHGs from the district attended the event. Deputy General Manager NABARD Surinder Singh, District Development Manager NABARD Rouf Zargar, DPMs NRLM Uzma Mehraj and Irfan were also present on the occasion.

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Economy

Wood shortage, high prices due to Russia-Ukraine war affect timber business in Kashmir

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Wood Shortage high prices

Malik Nisar

Srinagar: Every summer Altaf Ahmad 35, a small timber trader from north Kashmir Baramulla district used to be busy with his timber business, but this year instead of attending to customers at his unit, Altaf spends his day playing cricket in his village outskirts. The war in far-off lands has affected his business badly.

The prices of KD Wood mostly imported from Russia and Ukraine have soared many times, while the supply had dwindled.

“The Russia-Ukraine war has badly hit our timber business in Kashmir. This is the construction season here, we were expecting our business will double as there was lockdown from the past two seasons because of Covid19, but due to the war we are on the verge of complete breakdown this season too,” said Altaf Ahmad.

Altaf believes that their business is at a halt not only because of less supply of timber but also due to the less demand due to price rises as customers are reluctant to purchase at higher rates.

“There is the increase of 20% to 50% in the rates that has abruptly brought down the demand because customers are unable to purchase on such higher rates. We used to earn a good profit, but are presently on destruction mode where survival seems very much difficult,” said Altaf

Russia is one of the highest timber suppliers in the world and ranks as the seventh biggest exporter of forest products worldwide, which accounts for 22% of the global trade. And it clearly shows that the global market will continuously impact as long the Russia-Ukraine war continues. A country like China, which is in support of Russia in the conflict, has also been affected by limited trade sanctions as it depends on the import of timber, logs, and wood chips even for their domestic use.

Halted construction work

For Sajad, who was planning to complete the pending works of his newly built house and get married next year, the Russia- Ukraine conflict has brought a tsunami of hopelessness because the sudden surge in the timber rates has halted his plans of construction work and marriage back home, he feels it is unbearable to bear all the expenses in such a tough situation where other commodities all already in the surge.

Wood Shortage high prices

“The sudden increase in timber rates halted all my construction works because, I was expected to purchase timber say for example for Rs 1 lakh, now it will cost me Rs 1.5 lakhs an increase of fifty thousand. Now, I am too confused about whether to do it or not,” said Sajad Ahmad from the Bemina area of Srinagar.

 Showkat Ahmad another timber trader from North Kashmir says Ukraine timber was mostly used in Kashmir for the past couple of years as compared to Russian and German timber because Ukraine timber was available at cheaper rates. With a war going on in Ukraine the demand for German and Russia will arise, but it’s going very much costlier for customers.

“People prefer Ukraine timber because it’s easily affordable for them in contrast with German and Russian timber due to its low cost. The war in Ukraine has put everyone both (buyer and seller) in a catch22 situation because one doesn’t know what’s going to happen next,” says Showkat Ahmad who deals with the timber business for the past decade.

Business Kashmir visited various units in central and north Kashmir among them was Changa Timber Gallery, Sopore.

“I am into this business for the last one year but, I think this kind of situation will only benefit those dealers who have piles of stock available in the stores because they can increase rates on that stock which they have purchased at low rates earlier and a trader like me will go more into loss due to these unprecedented rates who’s new into this business and has very much less stock available at times,” says Aijaz Ahmad Changa, a 30-year-old BCom graduate.

Kashmiri Timber Traders mostly purchase timber from Gujarat and in Gujarat, they directly import the timber from Russia, Ukraine, and Germany. Business Kashmir contacted Singla Timbers Private Limited one of the oldest timber factories in Mithirhar, Gandhidham Gujarat who are in this business since 1946.

“The whole world is witnessing inflation it will remain for some time maybe for another year and there is also less supply of timber from the last few months because of that we are witnessing an increase in the rates of timber,” says Pulkit Singla director Singla Timbers.

“Kashmiri traders prefer Ukraine timber because of low price, but at the same time Ukraine timber also differs in quality in comparison to others.”

He says the lack of local wood production forces people to buy imported wood.

“India only imports 2% of the world produced timber. The local timber in India is not of that quality and one has gone through a long process before getting its access. The forests are like agricultural fields for countries like Russia and Ukraine, they cut the trees and do the plantation of it again and again but, in India, that thing is lacking. It’s also because of the weather,” he said.

Altaf and other timber traders in Kashmir are now waiting and praying for the end of the war in Ukraine so that their business will see that charm again.

“I only want the war in Ukraine to end, so that our miseries will also end,” concluded Altaf.

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Economy

Omicron, economy and budget deficits

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Omicron economy budget deficits

Dr BinishQadri

The World Health Organization on November 26, 2021, labelled variant B.1.1.529 a variant of great alarm, named Omicron, on the advice of WHO’s Technical Advisory on Virus Evolution (TAG-VE). Extensive evidence was presented to this advisory that Omicron has several mutations affecting its behaviour.

Research is coming up at different levels to get hold of different aspects of Omicron in a better way.  There is much ambiguity about whether there is more transmission in Omicron as compared to other variants, including the Delta variant. South Africa has seen the number of people testing positive increasing as a result of this variant. Many epidemiologic studies are in progress that aims at knowing if the positive cases are rising because of Omicron or some other factors.

One of the biggest aims of economies is resource allocation involving a balance between our priorities and competing needs so as to get the most suitable economic action. Any fiscal policy demands a judicious attitude in pursuing the goal of resource allocation and distribution. Fiscal discipline should reduce fluctuations in income, output, and employment.

Whether it is omicron or anything else the fact is that all facets of the current pandemic have in one way or the other way affected economies of the world in general and underdeveloped in particular. It is very important to correct all economic and social odds.

Fiscal indiscipline is an important characteristic related to all shocks of all times and COVID19 is no exception. Fiscal indiscipline implies that our governments are not maintaining good fiscal positions that coincide with macroeconomic stability and economic growth that is all-inclusive and sustained. Borrowing in large numbers and amassing debt like anything are enemies of every economy. The dual actions are responsible for the creation of fiscal crunches. To achieve the target of Fiscal discipline it is necessary for governments to maintain fiscal positions that are consistent with macroeconomic stability and economic growth that is sustained by letter and spirit. In order to create and maintain fiscal etiquette, there should be an avoidance of debt accumulation and excessive borrowing.

One of the biggest aims of economies is resource allocation involving a balance between our priorities and competing needs so as to get the most suitable economic action. Any fiscal policy demands a judicious attitude in pursuing the goal of resource allocation and distribution. Fiscal discipline should reduce fluctuations in income, output, and employment. COVID19 and all its variants no doubt have generated fiscal indiscipline which is why all governments should be prudent to create ‘‘budgetary beanbags’’ to combat all shocks and disturbances and to deal with anticipated economic and fiscal burdens.

Economists surveyed by Reuters argue that economies should emphasize fiscal judiciousness as there is a declining trend in the Indian economy. Lead Economist at Emkay Global Financial Services, Madhavi Arora argues that Omicron and the allied bad repercussions have a short end and is in no way a long-lasting wave.

A fiscal deficit connotes a gap in a government’s income compared with its spending thereby meaning that there is a fiscal dearth in the government spending beyond its means. There is a dip in the fiscal deficit from 135.1% in the April-November period of the previous financial year to 46.2% in the current financial year. There is a need for fiscal consolidation and all the fiscal policies carried out by the government at all levels must aim at reducing their deficits and debt stock build-up.

In order to understand Omicron and its impact on the Indian economy and other emerging markets, planners need to Google and start thinking about consolidating their budget deficits post COVID19 years. They need to include a series of fiscal responsibility laws, fiscal guidelines, and fiscal assistance (dynamic organizations in particular).

The strategy and implementation policy, alongside economic (fiscal) and political commitment are necessary and sufficient conditions for the effective strengthening of fiscal discipline during shocks.

Dr Binish Qadri is an assistant professor at the Department of Economics, University of Kashmir. You can reach her at [email protected]

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