For an economy that has already collapsed after security and communication clampdown last year in the wake of Article 370, the ongoing lockdown ended hopes of an economic resurrection
With the onset of Covid 19, Kashmir economy is suffering from low industrial output; high import-export ratio; large scale unemployment; low capital productivity, high fiscal imbalance with excessive reliance on the Indian union. All these are symbolic of underdevelopment of the state’s economy. This is being mainly attributed to the small and shrinking production base in different sectors of the economy. Kashmir economy was fortunate enough to have many sunrise sectors like, tourism, handicraft, sports good industry, cement industry, food processing industry, silk industry, wood based industry, leather tannery & allied industry. The state is also endowed with huge potential in hydropower generation. if exploited fully it could have become major contributor to the state economy. All these potential sectors were capable of making the state one of the most prosperous states in the country. Initially the state could not make much head way in the economic progress due to policy paralysis which is reflected in infrastructural, entrepreneurial, and promotional bottlenecks. Political uncertainty with which the state is suffering right from the beginning has been the underlying cause for many of these and other bottlenecks.
As per the Economic Survey 2019-20, Services is the major sector of the Kashmir economy, contributing 58 per cent to the states GDP. Industrial and agricultural sector accounts for 27 per cent and 15 per cent respectively of the state’s economic output. Services sector in the union territory mainly consist of tourism and related activities. Agricultural sectors will get impacted by the COVID-19 but not to the extent to which other sectors will witness downward spiral. The hardest hit sectors will be tourism, hospitality, aviation and entertainment. Besides, there will be sufficient decline in consumer spending particularly from the middle and lower income groups owing to falling incomes. Therefore, Kashmir economy is going to be hit the most as tourism being the most important sector which unfortunately was not yet out of woods after crippling impact of the post abrogation of Article 370 restrictions. Kashmir handicrafts an important activity for the livelihood of large number of people in the union territory will be equally hit by economic meltdown caused by the COVID-19 due less footfall of tourists in the country and the valley. The restrictions imposed to control pandemic will at least continue for another 6 to 9 months for tourism, hospitality, aviation and entertainment which means that there will be complete loss of this year’s tourist season thereby resulting into revenue losses of thousands of crores and job losses to around 2 lakh people.
In view of the crippling impact of the lockdown imposed post abrogation Article 370 on the Kashmir economy and greater vulnerability of its key sectors to the cascading impact of COVID-19, there is an earnest need for the Indian union to come-up with Kashmir specific and targeted revival package. It is also a fact that the fiscal and monetary packages announced at the national level benefit very least to the people in Kashmir for certain obvious reasons. Industrialists, hoteliers, tour operators, transporters, traders and others were made to bear huge losses by the government by imposing lockdown for months together after the abrogation of Article 370 and 35A in the state particularly Kashmir valley, therefore, it is morally incumbent on the government to compensate for such huge losses
Key for the success of any package will surely lie in its planning and implementation. Generally, in our country even the best schemes/ programmes fail to achieve their stated goals due to favouritism, nepotism and corruption. Institutions whether, political, social, cultural, economic provide direction for development in all spheres of life. When these institutions fail to deliver, aberrations are bound to take place. Unfortunately, almost all the institutions in the country have degenerated into monumental incompetence and malpractices. As Gita Mehta in her book “Snakes and Ladders” argues passionately that there was “lightness in India’s leaders, fighting for independence was a game for them but a very pure game. Now we are clawing our way back 70 years of institutionalized corruption.” Political system which has evolved over a period of time is root cause for many ills in the country which unfortunately thrives given the kind of democracy has evolved in the country which unfortunately suffers from serious fault lines.
