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Economy

Crowdfunding for businesses in J&K

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Crowdfunding for businesses in J&K

Altaf Hussain Haji

Crowdfunding for businesses in J&KThe UT of Jammu and Kashmir has unique features and a strategic location that tells a story of various sectors for employment, development and wellbeing. The manufacturing and services sectors of Jammu and Kashmir suffered a lot due to a number of reasons in the last two decades and affected employment, development and wellbeing. As per current reports of Sustainable Development Goals (SDGs) of the government of India, unemployment increased and overall less development happened in Jammu and Kashmir.  At this movement, the government and other institutions need to think of an integrated approach in order to tackle the serious problems of unemployment, derailment from development and little attention towards various indicators of SDGs. The initiatives of the government must be speedy attention for trying to reduce unemployment through sustainable manufacturing and services sectors in Jammu and Kashmir.

The government is trying hard to create a secure environment for improving the manufacturing and services sectors in Jammu and Kashmir.  The current pandemic and instability derailed the institutions of government and non-government sectors and created a lot of problems of unemployment particularly in the service sector in Jammu and Kashmir in the last few years. There are only better hopes of employment in the service sector in Jammu and Kashmir due to the vast avenues of the tourism sector.  Further, a large number of small entrepreneurs and enterprises of manufacturing and services sectors in Jammu and Kashmir did not sustain due to the financing through various sources.

The lack of financing is the only reasons here behind the manufacturing and services sectors for their sustainability establishment in Jammu and Kashmir in the present scenario. It is to state here that state finance should also receive proper attention in order to ensure better fiscal and financial management for such small entrepreneurs and enterprises which played an important role in the business venture or economy of Jammu and Kashmir. A sound policy should be devised to exploit the potential in the sectors of strength. In a nutshell, sound policy and good governance can lead the UT of Jammu and Kashmir to a faster development path.

Also, efforts are needed for the development of infrastructure, generation of employment and alleviation of poverty to bring about the desired socio-economic development of Jammu and Kashmir.  There is also an urgent need to undertake an impact assessment study of the schemes implemented by the government on the socio-economic conditions of the people, particularly those belonging to the economy of various sectors.  On the other side crowdfunding, a new concept developed for new business ventures can be useful at this moment in Jammu and Kashmir

The concept of crowdfunding has become an increasingly popular way for individuals and businesses alike to raise much-needed capital for self-interest and employment generation for others. The financially sound persons may help to promote the business and generate employment for others.

There are different types of crowdfunding such as donation-based, reward-based, equity-based, debt-based and real estate-based crowdfunding. Donation-based crowdfunding is simply asking for a small donation from a large number of people to raise money for personal needs as well as community-based projects like raising money to cover medical expenses or an unexpected financial crisis or raising funds for local projects like a community garden or new park.  Reward-based crowdfunding is another common type of crowdfunding, typically used to raise funds for a new startup or organization. In equity-based crowdfunding, it is the best for small to medium-sized companies that are seeking a large amount of capital to launch or grow their business.

Debt-based crowdfunding is a fast and easy way for both individuals and businesses to raise the money they need. Debt-based crowdfunding works by collecting donations with the promise to pay them back at a later date and real estate crowdfunding is becoming more popular for investors recently who want to put their money in real estate, without the hassle of getting a traditional loan or the obligation of owning all of a single property.  Typically, an individual or a real estate company will collect funds from investors to pay for a large property, like an apartment building.

The financially sound persons of Jammu and Kashmir may help to use the concept of crowdfunding such as reward-based crowdfunding, equity-based crowdfunding, and debt-based crowdfunding for a new or existing business venture, employment generation and development of the economy of the UT.   One of the reasons that manufacturing or others sectors do not grow in Jammu and Kashmir is the lack of awareness of the concept of crowdfunding among business venture culture.

It is true that the rich people of Jammu and Kashmir did not donate to business ventures for self-benefits and help others. The financially sound persons in Jammu and Kashmir mostly keep their wealth held with themselves and do not think of using excess money as crowdfunding to benefit the future generation.  A successful crowdfunding round will give a startup more leverage to come up with better terms and conditions.  As crowdfunding becomes more popular and there is a growth of the number of platforms facilitating transactions, it is extremely important for the right ingredients needed to attract the maximum number of investors.

It is suggested to consider some important facts before crowdfunding for a startup project or new business venture.

Crowdfunding strategies

Strategic Use of Social Media:  It is a good idea to have a wide reach as possible through various modes of publicity including social media. This means picking the right networks to complement marketing and content strategy and ensuring that the right supporters are targeted.

Make and Use Video Clips:  The attractive professional video clips made properly can help potential donors to get a better idea of what is being pitched. A product or service can be seen in action rather than through a series of stills or a wordy brief.

Wait for the Right Time to Ask for Money: With the right enthusiasm and the story of the project presented, people will want to add support naturally. Make sure the backers know what they are supporting and what they can expect in return. Backers should be allowed to invest as little or as much as they want.

Build Interest: Before and during the campaign, it is necessary to generate interest in the business. A pre-existing fan base can help a campaign achieve a strong start. A blog, a documentary, or a social media presence can help generate this interest. The sharing ideas of project/business venture and get feedback and expert guidance on how to improve during crowdfunding.   The number of investors who can track the progress also may help you to promote your brand through their networks and become the most loyal customers through the financing process.

With interaction during conducting annual surveys of industries of National Statistical Office (NSO), Field Operations Division, some entrepreneurs and owners of enterprise of the manufacturing sector in Srinagar, there is a lot of requirements of crowdfunding at this movement in Jammu and Kashmir for the sustainable establishment, economic development and wellbeing of the society. The Good Samaritans of Jammu and Kashmir who are financially sound should come forward for help through crowdfunding particularly reward-based crowdfunding, equity-based crowdfunding and debt-based crowdfunding to save the economy and improve the wellbeing of the people of Jammu and Kashmir.

The new way happens only if the trust will be built among investors and loyal customers during crowdfunding.  Only Trust makes this concept in successes for the development and wellbeing of the people. At last, it is to say that crowdfunding must be appreciated for startups of new initiatives and ideas. The government should also recognize such initiatives and ideas for the betterment of the economy of Jammu and Kashmir.

Altaf Hussain Haji, ISS, is Deputy Director General National Statistical Office, Shimla. He can be contacted at altafhh@rediffmail.com

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Economy

Global eCommerce boom and local traders of Kashmir

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Global eCommerce boom Kashmir

A Structural Shift in the Market Preferences

Dhaar Mehak M
Tabeen J Wali

The global eCommerce market was expected to be worth a total of $5.7 trillion by the end of 2022. That figure is estimated to grow over the next few years; exhibiting the fact that borderless eCommerce is becoming a profitable option for online retailers. It is giving a market space to one and all with a potential or product to sell. Only two years ago, 17.8% of sales globally were made from online purchases. That number is again expected to reach 20.8% by the end of 2023; a 2 percentage point increase in eCommerce market share. This growth is expected to continue, reaching 23% by 2025, translating to an increase of 5.2 percentage points in just five years.

Economic projections and forecasts predict the global retail sales growth to rise even further and take up more retail market share. According to research completed by eMarketer and Statista, online retail sales will reach $6.51 trillion by 2023, with eCommerce websites taking up 22.3% of total retail sales. Although retail has had it tough since 2020, every national market covered by eMarketer saw double-digit eCommerce growth. The trend continues globally: Latin America (including Peru, Brazil, Argentina, Chile, Colombia, and Mexico) saw $104 billion in eCommerce sales in 2022, up 22.4% from $85 billion in 2021. The UK is forecasted to continuously increase by $85.7 billion (+42.88%) within the next years.

China continues to lead the global eCommerce market, accounting for 46.3% of all retail eCommerce sales worldwide, with total online sales just over the $2.8 trillion mark in 2022. It also has the world’s most digital buyers, 842.1 million, representing 39.4% of the global total. The US eCommerce market is forecasted to reach more than $904.9 billion in 2022, a little over a third of China’s. After China and the US, the third-largest eCommerce market is the United Kingdom, taking up 4.8% of the retail eCommerce sales share. The UK is followed by Japan (3%) and South Korea (2.5%). The top five eCommerce markets haven’t changed since 2018. Trends from eMarketer suggest that these markets will stay in the top five until 2025.

While the whole world has been witnessing the structural transformation and shift in terms of market transformations from retailing to online shopping, the Indian economy has been a part of the process. In light of the same, the Jammu and Kashmir economy has had an equal and equally growing participation in the same. The advent of the internet and the arrival of eCommerce technology in the lives of average Kashmiris have changed the shopping preferences and experiences of the locals. People no longer have to battle issues like vehicular traffic on the roads or wait in queues for long hours. Accredited to the growth of eCommerce technology, locals have been empowered to shop anywhere-anytime just at the click of a button.

However, in the recent past, there was no (or very limited) concept of eCommerce in Kashmir. Smartphone availability to the general public was rare. The masses were barely aware about the internet facilities and global communication channels. There was no idea of online shopping, online transactions, etc. With time and the availability of the internet along with the growing mobile phone penetration, eCommerce made its presence felt in the valley. However, due to slower internet connection issues like 2G and lack of awareness, people initially had apprehensions and thus were afraid of buying things online.

Global eCommerce boom Kashmir

Tracing the roots and history of online shopping awareness in J&K, it dates back to the year 2008 when the mobile internet was making its headway into the valley. People were gaining affordable and available access to wireless internet. It was around the same time that after bearing a lot of hardships with sorting out the supply chains Flipkart became operational and function in the region. the initial years were tough and hard but the company stood steadfast. It took some time for Flipkart to cut through lots of hurdles alone and get to success. Being the only player in the online market in the region for quite some time it was a big deal to keep surviving and floating. But the outcomes were a success.

Steadily as people gain access to quality internet services and advanced smartphone technology the word spread. It was observed that doorstep delivery was actually a reality. At the same time, the quality of the delivery matched the promises of the website. The trust factor got built. Witnessing optimism within the J&K market, other companies like Amazon, SnapDeal, and other local online stores, etc., started jumping in to tap into the growing eCommerce market. The consumers got the opportunity of choosing from a wide range of products. Not only that, discounts and sales from time to time offer big benefits to consumers.

All these factors have been contributing towards a structural market shift. People from across J&K have been moving from in-person retail shopping to online shopping. While the consumers in the region have surely benefitted both in terms of utility/satisfaction and profit maximization, the retailers have been losing.

The J&K economy is predominantly characterized as a consumer economy. The characteristics of being a producer and self-sufficient economy have been limited and rather absent for a long time. It is the retailer of J&K, who has been at the losing end on account of the growth of the online markets. Retailing has been one of the most common business ventures of people across the region of J&K. Setting up of the shops and selling various items has been a known venture. People for generations have been relying on this activity. Lately, the structural change is challenging this segment of J&K businessmen and the immediate solution visible is evolution. These businessmen, particularly retailers, need to adjust to the changing market and make themselves competitive enough to compete with global online sellers. The only other option is to let the business supper, deteriorate and shut down.

The authors are affiliated with the Department of Economics, Islamic University of Science and Technology & can be reached at dhaarmehak@gmail.com and tabeen45@gmail.com

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business

Women shaping informal sector in Kashmir

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Women shaping informal sector

Dhaar Mehak M

 The informal sector is defined as the unregistered part of an economy. In a traditional economy, it is assumed that every business entity is formally registered with the government. A proper registration of a business unit is associated with a number of economic, political and social factors. All the registered units to begin with are enumerated in the industrial census. It keeps the government and policy makers informed about the number and nature of the units. The economic and industrial policies are made and shaped in light of these numbers. Social welfare is decided based on the outcomes coming from these registered units. And the long run industrial and economic planning is carried systematically based on information and evidence from the ground.

Quite contrary to this established smooth channel of economic growth and transition, the developing and under-developed parts of the world have been reflecting self-curated unique trends. First of all, the formal sector has not been able to expand as expected. This has led to limited employment opportunities coming from this sector to the ever-increasing populations and youth bulges. As an instinct to survive, people are forced to find some or other kind of employment. This has led to the creation of and the growth of the informal sector across these pockets of the world. The case of India is one of the fundamental ones. The Indian economy is characterized as having one of the most unique and large informal sectors across the world. 80% to 85% Indian population is estimated to be employed directly and indirectly in the informal sector.

Empirics show that Jammu and Kashmir has reflected growth in the informal sector over time. On the eve of the creation of the welfare state in the region headed by Sheikh M Abdullah, a socialistic model of development was brought into practice. It was called, ‘The Naya Kashmir Manifesto’. Among other things, one of the main agendas of the manifesto was to set in place a public sector-led industrialization process in J&K. As such, all the industries established under the Naya Kashmir Manifesto are a-priori classified as the formal sector firms. The political instability and fragility in the region kept on increasing and the focus of the government as predicted by theory and validated by practice shifted to peace restoration activities. This gave a back-lash to the public sector lead industrialization process in the region.

Steadily people began to look for alternative means of livelihood and subsistence. This set in place the informal sector across all the pockets of the region. The instability during the decades of 1990s, followed by various political and natural shocks during the 2000s made people realize that each person must be skilful and must practice the same in order to keep on bringing in sustenance money. The Kashmir division is particularly known to be diversified in various types of craft. From Ari work, through Tilla designing, people have bene utilising their skills to cash in some money. The wood-carving, Pashmina making and many distinct skills indigenous to Kashmir have been practiced in the informal sector by both men and women over time.

Of late there has been an Information Technology boom. The 2000 AD has seen a drastic revolutionising of the world through the spread of the World Wide Web. Mobile phone penetration has made the world an accessible global village. The social media applications of Facebook, Instagram and WhatsApp have empowered people in a number of ways. People started off with sharing their pictures and highlighting their skills online on social media platforms. On receiving appreciation their confidence rose and soon people started to ask if some of their skills could be shared or used.

These platforms have greatly affected the economic well-being of the women located across various regions of Kashmir. Initially, women from different ages and social backgrounds strolled these platforms. Some of them enhanced their existing skills or learnt new ones online. This was followed by trying a hand at the commercialisation of the same, which in many cases has yielded a positive response. There are a number of examples that can be quoted as brief case studies in the present article.

The Instagram page by the handle of @makeupshakeupbynidanazir evolved over time. Nida has always been fond of make-up and lipsticks. As a child she always bought makeup and accessories from her pocket money. Applied the same on her dolls, herself, her cousins and her mother and grandmother occasionally. Over time she mastered the skill. From turning pages of magazines to learning online through YouTube etc. her skills enhanced steadily. It was her friend’s engagement and Nida offered to do her make-up. The outcomes were really appreciable. The friends decided to open up on online platform to display her make-up skills. The bookings soon followed and today Nida is a known name in the local make-up industry.

Saba married a doctor who lived in Saudi Arabia. Soon after her marriage, she moved to KSA with her husband. She always liked chocolates and began exploring the chocolates of KSA. Later in 2016, she shifted back to Kashmir with her kids. The kids and herself started missing the unique chocolates of KSA. One day Saba decided to curate her own. The chocolates turned out to be good. She shared the same with her sister and cousins. She was influenced to upload the same on Instagram. Steadily, the popularity of her chocolates grew and orders started to flow in. Today Saba is an established name in the curated and customized local chocolate industry.

There are innumerable other success stories which will be discussed steadily. But the underlying point of the present article is that the informal sector in Kashmir has been growing ever since the formal industrial set-up took a back-set during 1950s. Initially it was hidden and the returns were menial or limited. However, with the growth of the internet boom the women in the region have been able to harness the benefits and the informal sector has been growing steadily and sustainably. In Kashmir, this sector can be directly related to women’s empowerment and is expected to increase steadily over time.

 

The author teaches at the Department of Economics, Islamic University of Science and Technology, J&K and can be reached at dhaarmehak@gmail.com

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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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