The Valley business community has again pointed to a grim economic situation prevailing in Kashmir. In its meeting with a Parliamentary panel currently in the town, the Kashmir Chamber of Commerce and Industry expressed fears about an economic disaster looming over Kashmir. Post-floods, the economic activities in the state, particularly in Kashmir, have come under severe stress.
The general trade depression and the slump in tourism have badly impacted our service sector. Although the Chief Minister, who also heads the tourism ministry in the state, had sought to promote the hospitality sector by taking certain publicity initiatives, which could have restored a semblance of recovery to this sector, such initiatives, however, seem to have proved largely ineffective. With no private investments coming forth, we cannot expect a significant number of jobs to be created in near future. This all points to a vicious economic cycle being aggravated by the downturn in general trade and the distress in tourism sector. Amid this situation, the recovery largely depends on the public sector spending. The conservative fiscal policy obviously could not be a response to this situation.
The state rather would have to perform its role as the largest spender. Secondly, at a time when the state is facing nastiest economic downturn, it makes no sense to seek to rely on internal resource mobilization. Almost all the sectors of our economy have been ravaged by the floods. There is hardly any hope of any bumper harvest in agriculture or horticulture this year, something that is going to add to the inflation in the state. In this backdrop, seeking to rely on internal resource mobilization is bad economics.
A bailout by the central government seems only way to help this economy come out of the strain. Unless the central government pumps money into the system, no recovery can be expected. It is unfortunate that so far the central and the state governments have not been able to provide for adequate relief and rehabilitation of the flood affected. As a matter of fact, this has been acknowledged by the Parliamentary Standing Committee on Science and Technology, Environment and Forests. The PSC acknowledged that the existing norms of relief and rehabilitation are insufficient.