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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.

 

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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Economy

UAE delegation announces establishment of Kashmir Business Centre in Dubai: KCCI

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Kashmir Business Centre in Dubai

Malik Nisar

Srinagar: To facilitate J&K-based startups and entrepreneurs in Gulf countries for opening their operations, the UAE-based visiting business delegation has announced to open Kashmir Business Centre in Dubai, Kashmir Chamber of Commerce and Industries (KCCI) said in a press conference on Tuesday.

A 30-member UAE business delegation is on a four-day official visit to Jammu and Kashmir to explore the investment opportunities in the region.
President, KCCI, Sheikh Ashiq said during an interaction meeting with the local business community, the UAE-based delegation announced that a Kashmir Business Centre will be set up in Dubai for providing support to J&K-based entrepreneurs and connecting them to the relevant people there.
Ashiq said, KCCI not only welcomes the announcement but with the consent of the government will try its best that it materialises. He said the centre will also prove fruitful for a large number of youth, who go there in search of jobs.
Secretary General of KCCI, Farooq Amin, added that the business centre will provide an opportunity to young entrepreneurs who want to explore their new ideas but do not find them viable here. He said these new entrepreneurs will get the chance to explore their innovative ideas in the global market. The business centre will be more kind of an incubation facility, he added.
Amin said some of these youngsters have already presented their business ideas in the meeting and received applause from the UAE delegation. They will now directly contact these young entrepreneurs and will invest in their business.
Sheikh Ashiq said they are also mulling to send a J&K business delegation comprising of all the sectors to UAE for exploring the market for various kinds of produce and handicrafts there.
While welcoming the delegation for their investment proposals in J&K, KCCI hoped that local businessmen will be also included in their plans.
Ashiq said the delegation will also prove beneficial for the tourism promotion of the region as they will spread the word about the beauty and culture of Kashmir.
“We also told them that we need more international connectivity and we want global market should open for our people. Through these initiatives the unemployment rate can be brought down,” Ashiq said.

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