As the India’s gross domestic product (GDP) fell by 23.9% in the April-June quarter, UT administration believes that there won’t be much impact on J&K’s GDP given its primary dependence on government expenditure and horticulture and agriculture sectors.
“There won’t be as drastic a reduction in J&K’s GDP as has been seen at the national level because our economy is government driven,” said a senior finance department official who wished not to be named.
The official said that most of “J&K’s income comes from the government and its horticulture, agriculture and handicraft sectors, which are unlikely to contract.”
The pandemic which hit businesses and livelihoods across the country has caused the steepest decline in India’s post-independence economic history. The GDP data of India shows a
complete collapse of investment and a drastic drop in consumption caused by loss of income.
Total investment in the country’s economy has dropped by 50 per cent, while consumption has declined 25 per cent even though government’s consumption has increased.
On whether centre’s refusal to pay GST compensation to states will hit J&K the official said: “GST compensation will come directly, indirectly from borrowings, we are having discussion on the issue, but there won’t be any crisis like situation in J&K because of this decision.”
According to the government, the tourism trade in J&K has been worst hit since August 2019. “Hotels are empty, apart from some rooms occupied by the government, there is nobody in hotels.”
“Other segments of economy have fared well and there is no distress like situation in J&K which is being witnessed in other parts of the country. The main reason for it is that the government of J&K was the first to initiate relief measures,” the official said.
On whether there will be any impact of the current crisis on the budget, a senior official said: “There won’t be an impact on upcoming budget. Currently wherever work is being done we are clearing the bills. We have no liability for the period of 2019-20, 2020-21.”
It is pertinent to mention here that Kashmir Chamber of Commerce and Industries has estimated Rs 40,000 crore loss to Kashmir’s businesses by the lockdown and uncertainty post August 5 when Jammu and Kashmir’s special provision was read down and subsequent covid19 situation.