A disaster in the making

Contrary to how progressive economic systems across the world are run, Govt of Jammu and Kashmir seems to stick its own set of priorities. Adopting policies that block the functioning of a fundamental and economically essential entity (Road Connectivity) on which the entire economic structure rests, is not only constitutionally questionable but economically disastrous. There is no doubt that the ongoing and anticipated economic repercussions culminating out of this bizarre decision shall have deep, wide and long lasting impact even after this controversial ban is completely revoked.

The ban has been revised thrice (including the latest revision) since 3rd April 2019, however, the most critical part of the highway i.e. Udhampur to Srinagar continues to bear the brunt every Sunday, acting as an excruciating bottleneck for the entire economy. J&K is largely a consumption driven economy with an annual import size of around Rs. 35,000 crore (Kashmir division alone). We are looking at a situation where trade worth Rs. 35,000 is being pushed under tremendous amount of supply-side stress. Besides reluctance of the transport agencies to ferry goods into the valley, the abrupt cost push in logistics is breaking all the hell loose. Post highway ban, a 20 ton trip from Delhi to Srinagar, which normally costs anywhere between Rs. 75,000 to Rs. 85,000, is now getting billed at around Rs. 1.30 Lakh per trip. This over 60% escalation in logistic costs is acting as a double whammy – shrinking traders’ margins and spiking retail inflation instantly for consumers. Catalyzing the miseries, the trip that used to take 4-5 days is now taking around 15-20 days to complete, thus furthering the working capital cycle and the capital costs thereof.

Udhampur has become a buffer zone where trucks coming from outside the valley are being asked to wait their turn to move. Wasting time in the Udhampur buffer zone and serving a single client in 20 days makes no business sense for the truckers. They rather prefer serving five clients from other states in the same time frame. This time over-run is also creating havoc for perishable items like vegetables, fruits and livestock. The situation for perishables is like a ticking time bomb eroding the traders of their economic value at a ruthless speed.

When it comes to outward movement of goods, Kashmir’s horticulture industry, mainly driven by apple, is another catastrophe in the making. Although, there is still time when this Rs. 8000 crore harvest will hit the markets, but in order to prepare the orchards in a healthy way, farmers need timely supply of pesticides and fungicides, the affordability and accessibility of which is getting negatively impacted due to this ban. Fearing strangled access to markets, the very limited space for cold storages is already being bargained intensely. In harvest season, when the supply will flood the domestic economy, a choked gateway towards plains will create an unaffordable economic mayhem rarely witnessed before. A similar industry, but comparatively small in size, that has been impacted is the cut-flower producers business community. The perishable nature of the produce and high cost sensitivities has thrown the entire cut-flower industry out of gear.

Besides, inflow and outflow of goods, the restriction is also negatively influencing the inflow of tourists into the valley. Tourism, although, has been bleak since 2014 floods, but there is a whole gamut of gig economy associated with the sector. From cab operators to highway restaurants, everything and everyone associated with movement of people on this highway is being mercilessly hit hard by this obnoxious ban. Administrative decisions like these send out strong repulsive signals into the leisure markets as well, furthering the damage to this essential sector of the state economy.

Interestingly, the timing of the ban coincided with the run for the General Elections 2019. Sensing electoral opportunity, all the regional political parties upped their ante against this anti civilian decision. No wonder, with every passing election phase, the political agitation against the ban lost its steam proportionally. Although, some parties are still wrestling it in the judiciary, others preferred shifting their focus on exit poll numbers now. On the other hand, the beneficiaries of misery, the trade bodies, SSI unit holders and other business sections continue to protest through print, electronic and social media, but, like the unmoved autocratic emperors, the Govt’s in Srinagar and New Delhi seem unfazed.

Irrespective of Govt’s indifference, the economic repercussions that are unfolding are intimidating. Supplies continue to dry, household incomes continue to plummet, value of currency continues to dive and socio-economic ambiguity continues to thrive. One can only hope that good sense prevails and Govt revokes the ban soon, or else, we are looking at a perfect recipe for a mammoth economic disaster in the making.