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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

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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Economy

Editorial | Ambitious Budget

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Ambitious Budget

Ambitious Budget | This week Union Finance Minister Nirmala Sitharaman presented the third consecutive annual budget of J&K in the Lok Sabha. The J&K Budget is required to be passed in the Indian Parliament as the newly formed Union Territory continues to be under the President’s rule and due to the absence of the Legislative Assembly in Jammu and Kashmir.

The finance minister presented an outlay of about Rs 1.13 lakh crore for the J&K Budget 2022-23. The budget has seen an increase of about Rs 4500 crore from the budget estimate of the financial year 2021-22. However, the revised estimate for 2021-22 shows an increase of Rs 10,000 crore.

As per the revised estimates for 2021-22, there has been a huge shortfall of estimated tax collection and other resource generation, which has proven a big handicap for the J&K Government in fulfilling its development targets.

In this year’s budget presentation, like the previous one, the focus has been put on the capital expenditure – the portion of the estimate spent on asset creation and infrastructure building, which is a positive development. However, the biggest challenge, as witnessed in the previous years, is that despite allocating funds in the budget for various sectors and projects for development works, there is either lack of resources or the inability of different departments to spend the allocations.

Take the example of Jal Shakti or the Public Health Engineering Department. In the budget of 2021-22 highest capital expenditure of Rs 6346 crore was allocated to Jal Shakti, which was more than a 400% increase. But the revised estimate presented by the Union FM shows that only Rs 2107 crore were spent, which indicates either lack of resources or an inability of the department to undertake the development works. However, a deeper analysis of the budget documents and other publicly available information suggests that both the unavailability of funds and the incapability of the administration to spend are the reasons behind it. The same is the case with many other government departments.

The revenue receipts were short of almost Rs 13,000 crore as per the budget estimate of 2021-22. Similarly, the fiscal deficit during the same period rose to Rs 16,456 against the target of Rs 10,647. The debt to GDP ratio has increased to 53% as compared to 46% in the financial year 2020-21.

As per the revised estimates for 2021-22, there has been a huge shortfall of estimated tax collection and other resource generation, which has proven a big handicap for the J&K Government in fulfilling its development targets. The revenue receipts were short of almost Rs 13,000 crore as per the budget estimate of 2021-22. Similarly, the fiscal deficit during the same period rose to Rs 16,456 against the target of Rs 10,647. The debt to GDP ratio has increased to 53% as compared to 46% in the financial year 2020-21.

The J&K Budget 2022-23 has set an ambitious target of asset creation and infrastructure development in the UT. If there are no unspent budget allocations and all these targets are completed, J&K will witness remarkable changes in the development front.

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