In Kashmir it is not recession, but depression
Incredible! But true. In the ongoing turmoil when every business activity has come to a grinding halt, some groups of youth have carved out an innovative method of earning their livelihood. They keep an eye on petrol pump outlets for any violation of hartal dictate. Even as no vehicle is allowed refueling at these outlets, they purchase few hundred litres of petrol and diesel for themselves. During the shutdown hours they sell the same petrol on roadside against 100 per cent or more profit.
Meanwhile if any petrol fuelling station defies shutdown hours, the very same group stones the outlet and forces their shut down. The groups are bold enough to admit that they resort to these tactics to earn some pennies to feed their families as they stand jobless for over two months now.
Here I am not making any political statement about good or bad aspect of hartal. But it’s painful to see people especially daily wagers and those associated with the already weak private sector rendered jobless whenever unrest strikes the valley. And the painful story of economic suppression continues to be scripted since 1990. So crisis on economic front is not new and has continually remained an inevitable part of the political unrest in the state.
There are actually many stories of innovative small business models like these small groups of people selling petrol on roadside. The people here know how to survive in a situation when economic activities remain in recessionary mode.
Here the question arises – Is our economy witnessing recession? If we go by definition of recession, it is an extended decline in general business activity. And this has been a general feature of the Kashmir’s economic scenario since 1990.
Many economists use declines in gross domestic product to define a recession. Broadly defined, a recession is a downturn in a nation’s economic activity. The consequences typically include increased unemployment, decreased consumer and business spending, declining stock prices etc. Others define a recession as the time when business activity has reached its peak and starts to fall until the time when business activity bottoms out. When the business activity starts to rise again it is called an expansionary period. By this definition, the average recession lasts about a year or so.
Speaking in local context, we are having a conflict economy, which manifests itself in two ways. One is the large-scale investment in real estate; the other is lots and lots of small shops that have sprung up in the valley and continue to do so. During the years of conflict, almost every family in Srinagar opened a shop, because nobody wanted to step out. No wonder, then, that the construction sector accounts for more than three-fourth of industrial growth in the state.
Then there is a big factor, which has almost overshadowed real picture of our economy. This is known as parallel economy. Kashmir has witnessed tremendous flow of money from unidentified sources both within and outside India. Some time back estimates suggested that between Rs 1,500 crore and Rs 2,000 crore is the size of the parallel economy in Kashmir.
In conclusion, it’s not recession but depression, which has enveloped our economy during the past 25 years.
The response of the successive governments to this depressing economic scenario has been dismal. The authorities need to revisit various economic schemes and put in place a mechanism where people, especially those with little means like the groups selling petrol on roadside during shutdown hours, don’t lose their livelihood even in extreme conditions. Tackling economic unrest on the parallels of political unrest is inevitable. The job may be tough, but not impossible.
Meanwhile, people too have a responsibility to shoulder. Since they are the prime targets of the economic depression, they need to manage their money efficiently. Saving the right amount in the present times is most crucial. Setting more aside and spending less on the non-essentials is the most crucial base of saving money. They should habituate to live on a budget, avoid expensive habits and force themselves to save.
So just ask yourself. Are you living beyond your means? Are you earning well but still don’t seem to be saving enough?
(The views are of the author & not the institution he works for)