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Second wave of COVID19: Kashmir businesses feel the heat

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SYED JESARAT

Srinagar, May 27: While the COVID19 pandemic created havoc across the world, affecting the economy and businesses throughout the globe, India – one of the worst-hit countries by the coronavirus – has to face an economic recession after decades as the GDP for 2020-21 is expected to contract by more than 7 percent. However, the businesses in Jammu and Kashmir have to face a double whammy. First, it was the August 5, 2019 clampdown and internet ban, and as people here were struggling to come out of its impact, a countrywide lockdown was announced to curb the deadly virus. This year also as the second wave of COVID19, which proved worse than the first one, hit the country, restrictions were again put in place for the movement of people as well as the opening of markets, educational institutions and public places hitting hard the already beleaguered business. To know the impact of these back to back lockdowns on the Kashmir economy, Business Kashmir spoke to some businessmen and industrialists about their assessment of the situation.

Kaisar Ahmad Khan

Al-Furqaan Enterprises

Trade & Distribution sector

My company is going through a financial crunch. We provide stock to our retailers but most of the payments remain withheld. We have about 10 employees working with us, who are dependent on the firm. We have to pay salaries to our employees as well as rent of godowns, which makes it even more difficult to cope with the loss.

The trade sector is hugely impacted by the COVID19 pandemic and prior lockdowns as well. Due to prolonged lockdowns, consumer buying power has gone down. Even those people who have money are only buying essentials and deferring bigger purchasing decisions as the situation is unpredictable.

The government needs to take some concrete steps to facilitate the business sector. Refinancing of loans and interest subvention is of no help to businesses like ours. The situation is like that we have to start it all from scratch now because Kashmir has witnessed three lockdowns consecutively. Government should come up with a good package that will deal with business as well as present the COVID19 situation simultaneously.

Dawar Mir

MA Mir and Co.

Govt Contractor

COVID19 pandemic has resulted in halting major construction activities. While the construction material prices have shot up by more than 35%. Be it gravel, sand, cement or steel, all items are now costlier as compared to the rates before August 5, 2019. But the government rates are locked until the completion of a project and as the work gets delayed due to lockdowns, it takes away the profitability.

I believe, the industrial sector is witnessing a 90% loss, since the business is not going well we still have to pay the workers which drain the capital. Though during the present phase of lockdown, passes have been allotted to the industry people. But these passes are not many times entertained by the lockdown enforcing people on the ground.

Though the government has a lot of policies on paper regarding industry and business, all they need to do is implement those policies, which is not happening. Development funds are delayed, and payments are pending for the last 3 years. If the government implements the policies there might be some respite from the misery of losses.

Ibrahim Beigh

5G Mobile Services

Cell Phone sale& Service 

COVID19 pandemic has affected the daily work of our firm badly. Mine is a product-based as well as a service-based business. Due to COVID curfew and lockdown, the official store at Khanyar is closed. The business is run through online mode now and delivered to customers through logistics service providers which have impacted the sales as the footfall has reduced to a significant amount in our retail store. The online platforms cannot compensate for that. Economic scenario has deprived to a large extent and spending power of people is very low compared to what it is in normal conditions.

There is no display of mercantile in the retail store, owing to present circumstances, all sales are generated online right now. We are offering free delivery within adjoining areas and paid delivery in farther areas.

The business is witnessing a 50-60% dip in sales on average because of the current lockdown.  The store has 5-6 employees, all working on a commission basis presently, no salary structure is being applied for now.

Kashmir’s economy has been disturbed since 2014 itself, due to natural as well as political conditions, keeping in view all these factors and knowing this is the third consecutive lockdown, the administration should strike a balance between pandemic as well as business and ease restrictions for businesspeople to some extent.

Certain leniency should be provided to businesses, as holistic lockdown will halt the economy completely. The opening of markets should happen in a phased manner under a particular controlled mechanism.  Society has hand-to-mouth segments of people as well who are solely dependent upon the small businesses they own, keeping that in view the stringent standards of lockdown should ease to some extent.  Also, the administration needs to facilitate the smooth movement of delivery persons, as it’s not easy for them to move freely during such stringent lockdown.

Sheikh Samiullah

FastBeetle

Logistics & Courier Services

FastBeetle has witnessed good growth during the ongoing lockdown. People want all the essential to get delivered to them at their doorsteps, which boosted the logistics business. This sector of business has seen a significant amount of profit.

The mobile application makes it very easy for people to place an order. The company has employed 35 people till now and is doing very well.

Kashmir has witnessed several lockdowns which have resulted in less economic growth. There are other sectors of business that have got severely affected due to the lockdown. Government officials should come up with some relief packages for business sectors so that the ongoing losses can be compensated.

The movement of delivery persons during the COVID curfew is a matter of concern. Their movement is usually restricted, and they are even beaten most sometimes, but somehow they manage to deliver the orders by following Covid- SOPs.’

Kashmir businesses feel the heat

Daniyal Qureshi

Greenway Enterprise

Packaging Industry

The current lockdown has resulted in a decline in production at our factory.

Initially, the movement was not allowed from home to factories, then the administration ordered movement passes to people in estates but on grounds, the situation was quite opposite. Since the markets were closed, the buyers were not ready to accept the products which affected the product generation. Even though the factory was closed, the payment to labourers and utilities needs to be paid. The production made is zero but banks are continuously charging the interests from the firms.

Since there is no sale, we are not able to generate any money, what will we pay to a bank? Because of this, our EMIs are continuously piling up.

Currently, Greenway Enterprise has seen a 30% dip in production generation. The national lockdown has resulted in an escalation in prices of raw materials as well. Presently, losses are being assessed, and it can be said that the current state of Kashmir’s economy is not viable.

Government should come up with effective policies to compensate for the losses.

With proper implementation of COVID19 SOPs, markets should be at least opened alternatively.

Government should consider a proper plan of 5 years for rehabilitation, revival and restructuring of the business sector. The economy is under crunch and 40% – 50%  capital infusion will not help in reviving the market.

Asif Hussain

Fair Fax Holidays

Tour & Travel

Tourism sector is one of the worst-hit sectors in Kashmir. Except for a brief period of 2-3 months, tourism activities have remained suspended in Kashmir since August 2019.

The employees working with us are very badly impacted. To sustain we provide them with a salary but at the same time, everyone wants to see growth in their job, which unfortunately can’t be achieved in Kashmir.

The tourism sector saw a boom for the winter month for a while, at a winter sports event in Gulmarg and in April, at tulip festival opening. So, keeping that in view many investments were made beforehand but due to the sudden rise in Covid cases and imposing of lockdown, all the investments are in a loss. The graph of tourism has seen improvement only for two times since three consecutive lockdowns it’s in decline mode.

Forget about gaining, even to sustain markets are not open.

Hotels, restaurants are all shut since lockdown and the earning is zero in the tourism sector.

The expectations of the tourism sector now lie with the Amarnath Yatra, which is supposed to get functional in July.

The objectivity is lacking in Kashmir’s trade and commerce sector. The state has no backup plan, even after witnessing many unstable conditions. The government is not taking any solid steps to help the people who went through huge losses.

The administration should frame policies that can be implemented on grounds keeping in view the Covid-19 SOPs.  It seems that we have to live with COVID, for now, so the strategies to sustain the economy should be made very effectively. Government should start home-based projects for youth who are unemployed and can’t find work due to the pandemic.

Firdaus Bhat

Manchester Education Consultancy Services

Service Sector

COVID19 has badly impacted us, as almost every country is dealing with it right now. Travel and movement in many parts of the world are either banned or restricted. Earlier, it would be lockdown in Kashmir and students would like to go outside for the studies but this time situation is the same everywhere. So the kind of service we provide, overseas education, is completely down and my venture is running in losses. I have to pay the salary to my employees regularly.

Not only the educational consultancies but overall the education sector is in losses. But despite that, I’ll argue that lockdown should continue until it is required to rein in this deadly virus. Health should be a priority for everyone.

 

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Economy

Major industrial activities in J&K – II

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J&K's major industrial activities

Dhaar Mehak M

Major industrial activities in J&KThe informal sector is the part of an economy that is not registered with the relevant government authorities. The birth and growth of this sector is non-linear and follows no set pattern or the existing theoretical prediction. The empirical investigation following the developmental paths and trajectories of various developed and developing nations shows that birth, growth, decline and death hasn’t been the same. While the experiences of developed nations validate the eventual decline and end of the informal sector, the experiences of developing nations put the informal sector in an important position to usher in the process of industrial development.

In the developmental context of India, the informal sector has been an important source of providing sustenance to families, generating employment and meeting the local demand. Given the limited availability and access to public resources at the national level, the government policy and public sector have not been able to cater to the needs and demands of the people. As a coping strategy and a way out, people have found their ways towards the informal sector engagements. Over time the sector has rather shown an overall growth across the nation as against the prediction of the theories visualizing an end of this sector as one of the pre-requisites of development.

Agriculture for years has been a dominant economic activity in the region however mountain agriculture is not able to come out of subsistence to commercialization. As a result the returns from this sector have been low, pushing people out from it. Tourism has been another comparative advantageous economic venture in the region. Fragility and political instability has kept this sector from flourishing. As a result, people in J&K have steadily been pushed into the informal sector.

In Jammu and Kashmir, the trend corresponds to the national level evidence. The informal sector in the region has also registered growth over time as is validated by various national level data-sets including the NSSO and PLFS. Agriculture for years has been a dominant economic activity in the region however mountain agriculture is not able to come out of subsistence to commercialization. As a result, the returns from this sector have been low, pushing people out from it. Tourism has been another comparative advantageous economic venture in the region. Fragility and political instability have kept this sector from flourishing. As a result, people in J&K have steadily been pushed into the informal sector.

The Table ranks the dominant activities in the informal sector in Jammu and Kashmir as per the latest data availability. The ascendancy of these units points to their viability as low risk and viable profit ventures. Like the formal sector, the informal sector too mainly consists of need-based units. Most of the units deal in the retail sale of household perishable goods. These units which are in the form of shop establishments are found in all the localities of the region across rural and urban belts.

There is always business viability associated with these types of ventures. People from the households prefer to buy groceries from the nearest possible retailer and thus the normal profit is the least and assured return promised by these types of businesses. Tailoring activities rank just next. Given the changing seasons in Jammu and Kashmir and the distinct clothing style of both men and women, they prefer to stitch their clothes than buying ready-made and at the same time need different fabrics across the seasons. The investment in these ventures is small and can be household-based too. At the same time, this sector has the potential to empower women through household-based flexible employment.

J&K's major industrial activities

Being a consumer economy, the demand for all types of goods is very high in the region across the year, opening scope for the transportation industry. Over time there has been the development of the trend among the locals to invest in the freight transportation sector at the individual level. Though very popular among the lower-middle-class sector it has come to witness some decline in recent times due to a number of natural disasters and political fragility shocks. The current viability to invest in the sector is not too high however a huge number of existing informal sector participants is involved in this business activity.

Another related sector ranks just next. Despite the loss faced by the tourism sector the demand for Jammu and Kashmir tourism still exists in the country and across the globe. As a result, the taxi service in the region has been yet another promising venture in the informal sector. The use of taxi services has been rather limited among the people and startups like Kehwa and Jugmu cabs for the general public have just begun.

To begin with, the current major potential lies in the necessity-based industrial ventures. Based on the level of investment in hand both formal and informal sector are equally viable. If given proper consideration based on entrepreneurial instincts and government support, the businesses mentioned in formal and informal sector are low risk ventures.

The development of the beauty industry in the region appeared late but grew quick. Women especially have been involved in this sector. Opening and growth of the beauty parlours and salons can be seen spanning across the lengths and breadths of the region. This sector has especially shown growth in the region. Many women have opened these ventures inside their household premises making their operation flexible and demand localized. The local embroidery styles including hand Tilla and Aari are very famous across the globe. Families have been involved in these skill laden trades and have been passing on the same.

Both the demand and supply are high and being skill-based this sector always promises returns to the participants. The beginning of restaurant and café culture is equally novel in the region, the growth equally rapid! This sector has lately been growing and receiving an immense response, especially from the youth population. The startups in this industry have been doing well and the potential still exists for further diversification.

The construction and allied industry in Jammu and Kashmir, especially the Kashmir region has always had high-end potential given the local demand. As a result, the informal sector has shown some considerable growth in the manufacturing, production and sale of items corresponding to this sector. From the wood-based requirements to furniture and flooring and beyond the potential of this sector is yet to be explored completely. Given the innovations, people at the micro and household level can get involved in the customization of these items and expect a genuine profit and growth of the business over time.

From the analysis of both the formal and informal sectors in Jammu and Kashmir, it can be seen that the scope and potential of industrialization in the region is very high but specific. To begin with, the current major potential lies in the necessity-based industrial ventures. Based on the level of investment in hand both formal and informal sectors are equally viable. If given proper consideration based on entrepreneurial instincts and government support, the businesses mentioned in the formal and informal sectors are low-risk ventures. The future policymaking should be informed about the specific business potential in the region and the industrial policy push can be given based on these considerations.

Specialising in the industrial process of J&K, the author is a Senior Research Fellow in the University of Kashmir’s Economics Department. She can be reached at [email protected]

 

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Economy

Major industrial activities in J&K – I

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Major industrial activities in J&K

Dhaar Mehak M

Major industrial activities in J&K The economy of Jammu and Kashmir is known for its ironic characteristics. Being a mountainous region the agricultural potential does not go beyond subsistence. Climatic extremities with geographic remoteness limit the viability of the industrial sector. The services sector like the rest of the nation has been pacing up. The contrary facts include a low incidence of poverty in the region as compared to the rest of India. Low levels of inequality and possession of some or other assets by every household. All this comes in the business environment of fragility characterised by conflict. The major business shocks in the previous decade can be broadly summed up as (i) the 2010 agitation resulting in mass lockdown, (ii) 2014 flood, (iii) 2016 agitation, (iv) blanket curfew of 2019, and (v) ongoing sprouts of pandemic lockdowns since 2020.

All these features can be visualized through two lenses. The first and obvious one that of loss of economic opportunities. The second one not so obvious is the resilience that has developed among the people over time. Given the fragility in the region that has lasted for decades on a stretch, the businesses having the least shock resistance have ceased to exist and the businesses having the resistance to face the jolts and challenges have continued to exist.

The business viability in Jammu and Kashmir is focused on necessity-based goods over any other type be it non-necessity items or luxuries. Jammu and Kashmir continues to be a hotspot consumer economy feeding on the output from the industrialization process concurrent with the rest of the county. This increases the leakages from the local economy, boosting the rest of the nation. As a result, the overall growth in general and industrial growth, in particular, in a crippled form currently.

Every economy consists of the formal and informal sectors. On the same lines, the economy of Jammu and Kashmir can be bifurcated into the formal and informal parts when it comes to major economic activities excluding agriculture. Broadly the formal sector can be defined as the firms that are registered with the relevant government authorities and have fixed working hours and wages. This part of the economy is stark visible and open to scrutiny all the time. On the contrary, the informal sector is hard to locate and lacks features like formal registration, fixed wages and working hours, labour unions and formal channels of business.

State-level secondary data shows that the major economic activity that has continued over time in the formal sector is the manufacturing of insecticides, rodenticides, fungicides, and herbicides etc. The reason for the persistent survival of these units is the inelastic demand for their output. Jammu and Kashmir economy is predominantly an agrarian economy and lately has been turning into a horticulture economy. Given its association with the land, it is unmoved by factors like conflict and pandemics. Thus, the viability of this business in the region is the greatest with a fair possibility of supernormal profits given the excess of demand for the output as compared to the existing level of supply in the region.

This is followed by the flour mills. The demand for flour in the region is high as people habitually as a matter of culture consume approximately three teas a day. The tea in the region unlike the rest of the country is taken with either homemade or ‘Kandur’ made roti. This factor keeps the demand for flour inelastic in the region and the business turns out to be shock resistant. In the region, several households prefer to go directly to the mill and buy fresh flour than to buy the packed versions from the store. This business, though small in scale has sustainable potential in the region.

The manufacturing of allopathic medicines and allied goods is also a viable and sustainable business here. Given the necessity-based demand for the goods produced by these firms, no kind of shock impacts the demand for the medicines. In light of the harsh winter, a high-intensity conflict in the past and the current pandemic people in Jammu and Kashmir tend to hoard and stock medicines that last for more than a month. At the same time, the frequent change in weather throughout the year makes people more vulnerable to seasonal illnesses like flu and the common cold. This factor has always kept the demand for regular medicines high. The Kashmir region especially has a culture of having high-fat foods, dairy products, spicy and sweet foods all leading to diabetics and high blood pressure. These factors additionally contribute to the high demand for pharmaceuticals in the region.

Major industrial activities in J&K

The mountainous geography coupled with harsh climatic conditions increase the wear and tear cost of the transport goods. As a result, people have to take extra care of their vehicles. This increases the potential of the businesses to sustain that deal with the maintenance and repair of motor vehicles. One of the basic characteristic features of the local population, predominantly in the Kashmir region is owning at least one motorized vehicle per household. Given the experience of the locals with uncertainty and the frequent shutting down of the public transport because of the same has made the motorized vehicle a basic necessity in the region. The existence of more vehicles in a region points out the high demand for maintenance for the same thus the viability of the business in the region. Another business sector closely associated with the geographic, climatic and conflict-related conditions is the need and necessity of the Kashmiri households to have a permanent, pucca and owned roof over their head. This has spiked the demand for all the raw materials used in the construction of the house. Now that the construction process has modernized the demand for cement is higher than ever-increasing the viability of this type of business activity in the region.

Demand for power generators is high in the region because of the lack of regular electricity. Though Jammu and Kashmir has a very high potential for hydro-power, a number of technical and political factors have kept it from the Pareto-improvement. As a result, the region has been facing a severe shortage of electricity, especially in the winters. To keep the houses and offices lit and warm the demand for alternate sources has always been high. As a result, the viability of the firms manufacturing and assembling power generators is high in the region.

For the local youth seeking entrepreneurial ventures, the good news stand hidden as a blessing in disguise. The necessity goods industry has a huge scope of potential with the least risk of failure. The indigenous formal industrialization process in Jammu and Kashmir can begin with the startups producing the inelastic necessity goods.

While having more and different types of clothes is a luxury for people across most parts of the country, it is a necessity in this part. The frequent change in climate and four strongly different and influential seasons demand different types of clothes. Extreme weather in January declines to minus 10 degrees sometimes while summer goes beyond 30 degrees. The poorest of the poor need accommodating clothes. At the same time by tastes, an average Kashmiri is highly considerate about what (s)he wears. These factors have always sustained the viability of the clothing industry in the region. The demand is very high while the supply is extremely short. The clothes market of Kashmir has been the hotspot of producers across the country. Consequently, the importance and viability of this particular type of business can’t be ruled out from the high viability rating.

There are a limited number of places where the Willow tree grows. As a matter of comparative advantage, Kashmir is one such region. The highest demand for Willow wood comes from the cricket bat industry. However, the lack of relevant policy intervention from the government and a lack of market boost have crippled the sports goods industry in the region for a long time continuing to date. In light of the same, one of the prime business segments in the region is the sports goods industry. In the current state of affairs, the potential is very high but the current situation is way below efficiency. A relevant policy intervention can change the whole potential of this business and increase the overall viability of sports goods production in the region.

It can be concluded that the business viability in the region of Jammu and Kashmir is focused on necessity-based goods over any other type of good be it non-necessity items or luxuries. Jammu and Kashmir continues to be a hotspot consumer economy feeding on the output from the industrialization process concurrent with the rest of the county. This increases the leakages from the local economy, boosting the rest of the nation. As a result, the overall growth in general and industrial growth, in particular, is in a crippled form currently. However, for the local youth seeking entrepreneurial ventures, the good news stands hidden as a blessing in disguise. The necessity goods industry has a huge scope of potential with the least risk of failure. The indigenous formal industrialization process in Jammu and Kashmir can begin with the startups producing the inelastic necessity goods. … to be continued …

Specialising in the industrial process of J&K, the author is a Senior Research Fellow in the University of Kashmir’s Economics Department. She can be reached at [email protected]

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KU’S Economics Deptt lauds Tanveer for securing second rank in IES  

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Economics Deptt lauds Tanveer

Srinagar,  Aug 1:  Kashmir University’s Department of Economics congratulated it’s alumni Tanveer Ahmad Khan for securing All India Rank-2 in the prestigious Indian Economic Services (IES) 2020.

Tanveer a student of batch 2016 -17 is the first candidate to qualify All India Economic Services Exam, which is an extremely professional service engaging with economic administration and development policy implementation.

Department of Economics is one of the oldest economics departments in North India. “It has a tradition of training extremely talented students and scholars. Remarkably, over the recent past our students have made it to the highest research centres and Universities across India and abroad,” it said in a statement.

“Within J&K our students constitute the majority in Higher Education, Department of Planning as well as in the Subordinate Services.”

In this march towards excellence this rare feat achieved by Khan is going to give a new “big push” to the efforts underway at the department to scale new heights in shaping the future of extremely talented youth, said HOD Economics Department Prof Imtiyaz Ul Haq.

The entire faculty, supporting staff, students and alumni of the department congratulate Tanveer Ahmad Khan and wish him all the best for his future.

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