A Year Later, Kashmir’s Economy Faces Disaster

India’s takeover, complicated by Covid lockdown, has “broken the spine of the economy”

By: Majid Maqbool

On the anniversary of the August 5 takeover of the Kashmir region by India, the economy is on a ventilator. In February, weeks before the government enforced another lockdown to contain the spread of the Coronavirus, the business community issued a joint SOS which was published as full-page ads in prominent newspapers in Kashmir.  

“The ill-fated trade, tourism, horticulture, agriculture, handicrafts, commerce and industrial community of Kashmiris is in the middle of the sea of debt and destruction,” the message read, painting a dismal picture.

The distress message took a dig at the ruling Bharatiya Janata government in New Delhi for selling “false dreams” of development at a time when local businesses, entrepreneurs and traders suffered heavy losses following the unilateral abrogation of constitutional autonomous status to the Jammu and Kashmir region – and the subsequent months-long lockdown and communications shutdown.

Addressed to 1.3 billion people in India, the SOS ads emphasized that approximately 1000 days of standstill since 2008 until this day “due to unrest and turmoil made our survival vulnerable. We have been forced to suffer losses, liabilities, and destruction.” 

In a joint statement, the trade bodies of Kashmir revealed that in over two decades Kashmir has witnessed more than 3000 days of lockdown. The report listed industry after industry after industry that faced disaster, with the loss of billions of rupees in tourism and scores of other industries.

Following the revocation of the region’s special status, the new government tried to attract global corporate leaders and investors from mainland India to invest in the former state even despite the refusal to fully lift restrictions, building failure into the project. High-speed internet has continued to be banned, completing a year of restriction. Although the ruling government in New Delhi allocated millions of rupees to host the first-ever “Global Investors Summit,” scheduled in both capital cities of Jammu and Kashmir, it is unlikely, given the pandemic, that the summit will go ahead anytime soon.

The government also identified more than 20,000 canals (10,117,140 square meters) of land, opening the manufacturing, tourism and hospitality, agriculture, real estate, and other sectors, as high priority sectors for investment by outside investors despite concerns by local industry bodies and the business community that it is they who are in financial distress while the government is rolling out a red carpet for outside investors and companies.

The local business bodies say that the government first needed to provide stimulus to the local economy which was already suffering due to the clampdown from last year.

“Attempts to bring outside industrialists were made in the past as well by the successive governments but in the end, they failed to invest in Kashmir,” said Ovees Qadir Jamie, a Kashmir based industrialist and executive council member of industry body Federation Chamber of Industries Kashmir (FCIK).  “And as of now due to the prolonged Covid lockdown, when the investors and companies are themselves struggling to survive in India, how can they invest in a conflict zone like Kashmir?”

In the end, he added, political stability is an essential prerequisite for any economic growth in Kashmir.

 Sheikh Ashiq, the president of KCCI, which comprises more than 1,500 Kashmir based businesses, traders, and exporters said the Covid lockdown has been devastating.

"All businesses, traders, and the entire tourism industry have been shut again this year since March which has badly hit the already dying economy in Kashmir. The ban on air travel has also meant all domestic and international tourists’ bookings have been canceled for the main summer tourist season. The export of goods from Kashmir is also halted as all international and domestic flights remain grounded," said Ashiq.

"It's an alarming situation as the losses suffered are huge," the KCCI president said. "I don't see any business community in any part of the world showing such resilience as the business community in Kashmir has shown especially in the past year."

The industrialist estimated that Kashmir’s economy is suffering vast losses in different sectors since the lockdown began due to Covid-19. 

Entrepreneurs, startups suffer

Dr. Fayaz Ganaie returned to Kashmir in 2015 after nearly a decade of working outside the region. With a background in the veterinary pharmaceutical sector, Fayaz wanted to start his own venture at home. He went on found a small biopharmaceutical startup in Kashmir which focused on the development, production, and marketing of novel alternatives to antibiotics.

Fayaz had invested his own savings in the venture. After somehow surviving months of shutdown and curfews during the 2016 summer uprising triggered by the killing of popular militant commander Burhan Wani, he was hoping for some uninterrupted years of business consolidation.

However, last year’s lockdown following the sudden revocation of the special status of the region came as a deathblow for his venture.

“Suddenly caged in our homes without any access to any Internet and even mobile network, our communications with the outside world virtually collapsed,” he said.

Since 90 percent of his customers were based in other countries, the continued communications and internet shutdown meant that there was no or delayed communication with their local and global business partners and clients. Internet is like an umbilical cord for such business ventures as most of the critical business operations for such startups are driven by the internet.

The continued internet blockade last year disrupted the key business operations of Fayaz’s venture. During the seven-month lockdown and internet shutdown, their business almost vanished from the online world.

“All aspects of our business took a hit due to months-long internet shutdown and social media ban. Web-based ERP systems (digital platforms which act as operating systems for modern businesses) also remained inaccessible, disrupting most of the operations like finance, manufacturing, and supply chains,” he said with disappointment.

The ongoing lockdown due to Covid19 and the complete shutdown of businesses at the start of this year is further annihilating the already fragile business ecosystem.  

“We are supposed to work from our homes but even in the midst of the pandemic we are deprived of high-speed mobile internet which remains restricted here since August last year,” he said.

The penetration of wired and wireless broadband internet is very limited (less than 3 percent) in Kashmir as most of the people rely on mobile 4G service for internet access.

“With no high-speed internet service, it is virtually impossible and frustrating to arrange online meetings, share large document files and carry on other routine online work on slow speed 2G internet,” said Fayaz. 

As factories remain closed, supply chains are disrupted and with no workforce available, the prolonged lockdown might spell doom for Kashmir’s businesses, especially for startups and small enterprises like his.

Lockdown after lockdown

According to Prof Khursheed Ahmad Butt, who teaches financial management and entrepreneurship development at the Department of Commerce in the University of Kashmir, the effect of the August 2019 lockdown can only be ameliorated by the much-needed revival package. But before any support materialized, it got another shock from the statewide and national lockdown due to the Covid outbreak, which is again playing havoc with the already strained economy.

“Even once the lockdown is fully or partially removed, the people may still be afraid to visit markets,’ Butt said. “The Kashmir economy has to pass through the most trying phase in its recent history.”

Had Kashmir not been forced to bear the consequences of the post-August 5 lockdown, the professor believes it would have been able to show some resilience to face the losses from the Covid-19 pandemic. “But the post-August 5 lockdown since last year has broken the spine of Kashmir’s economy,” he said. 

The restrictions imposed during last year’s lockdown have in fact not been fully lifted. The ban on full-speed 4G internet continues despite repeated appeals for its restoration by local politicians, students, teachers, business community, and doctors on the frontlines of the fight against Covid since March this year.

“The ruling BJP government in New Delhi is insensitive towards the sufferings of Kashmiris. They have not lifted all the restrictions even during the current lockdown due to the Covid outbreak, which is unprecedented in the history of mankind,” the professor said.

This article is among the stories we choose to make widely available. If you wish to get the full Asia Sentinel experience and access more exclusive content, please do subscribe to us.