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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 [email protected]

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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