For an economy that already has been bashedby recurring cycles of conflict, harsh weather, and single national highwaywith shabby road connectivity survival is an inherent challenge. Talking aboutthe Kashmir economy it is a known fact that majority of the people by dint ofthe circumstances have shown a preference for government jobs. The privatesector is almost inexistent. Primary sector doesn’t yield much in terms ofreturns. Services sector has tried to maintain a tardy growth over the years.The only sector that can save the economy from entering a complete low-levelequilibrium trap is the secondary sector, specifically the manufacturing one.
The state of affairs is such that thegovernment has always been taking on itself the process of industrialization inthe region of Jammu and Kashmir. Being the sole job provider for most part ofthe democratic history, the job pressure on the government has been immense.Since, the demand for jobs has grown much beyond the capacity of the governmentto provide the same, alternatives are to be sought. It has been in thisbackdrop that the dual motive policy of industrialization was put in place. Thecreation of jobs with the boost to economy stands to be the two most importantcontributions of this sector of the economy.
To create the common pool of resources andsplit the benefits of these club goods provided by the public authorities, thegovernment viz. its various bodies has come up with the industrial estates,dotted across the region of Jammu and Kashmir. Empirical study of theindustrial estates located across the Jammu region show a completely differentgrowth pattern than those located within the valley of Kashmir. While theformer thrive in business, the latter suffer every kind of difficulties andsetbacks. From being geographically remote to being conflict ridden, the unitslocated in the Kashmir region battle for mere survival.
The past cycles of business loss have beenrecurrent and instantaneous. After the flood of 2014, the 2016 crisis was a bigbacklash for the production units of the Kashmir region; this was followedimmediately by the August 2019 crisis. The winter following it was a very harshone and as soon the firms decided to bounce back almost the last time, thealmost last nail in the coffin has been hit by the COVID-19 crisis.
Most of the production units need a bigamount to start the process of production. Generally the entrepreneurs takeloans from the banks and invest in the fixed assets and other pre-requisites tostart the production process. The cost-benefit chart of these units isextremely tight and pre-defined. The monthly instalments need to be paid due ontime in order to avoid turning them into the Non-Performing Assets. During thecrisis of 2016, banks and other financial institutes granted an 18 months longMoratorium to these units. The crisis kept on rolling and rolling doing nothingbut only increasing the liabilities of the firms and eating up their workingcapital. Neither big push nor any effective security net came as such from thegovernment to cushion these units from the crisis.
Surpassing all the previous misfortunes,the unit holders across the industrial estates of Jammu and Kashmir have beenlooking up to the year 2020 to find some relief from their persistent problems.In the time where we stand today, the government has granted permission for thenecessity units to run back the business with the required precautions andsafety measures. The persistent problem faced by the unit holders (among otherbig problems) is the electricity crisis. The Industrial Growth Centre atLassipora that holds a number of units under one head counts amongst the worstsufferers.
While as a dedicated power line is apre-requisite for any production activity, the estate has the misfortune ofsharing the grid with the villages in the close radius. There is a regularpower-cut between 6pm and 10pm every day. Meanwhile the same electricity istransferred to the villages and a trade-off stuck. However the main problem isthat this is not the only spell of no electricity. During the twenty-four hoursthere are ‘n’ number of random power-cuts. A random power cut however is agrave problem for a(ny) production unit.
There are about seventeen cold storageunits in the IGC Lassipora. It is perceptive that these units need a 24*7 powersupply. Any scheduled/unscheduled cut in the electricity increases the costs ofthese units manifold. They have to switch to generators and use diesel to keepthe storages running and to avoid huge losses of the items stored. At the sametime, most of these units again are financed by credit and a huge amount is tobe paid by them each month to the banks/financing agencies. With so manytroubles and the unnecessary higher costs of power for such units always keepsthem in distress of getting converted into NPAs.
All the units need a constant anduninterrupted supply of electricity. The PVC units need to heat their machinesfor a long time before they begin the process. At the same time, there issensitivity associated with the heat provided and quality of output produced.Any power-cut interrupting the process makes a mess of the whole. All the rawmaterial put to this use gets completely wasted and again the cost ofproduction raised much more for the units.
A recent survey conducted by me for thepurpose of my research revealed that 100% entrepreneurs from the Kashmir regionare in stress with relation to their business. 87.5% of them feel that theirbusiness units have a complete disadvantage by location and circumstances. Theyare marred by geography, conflict and utter chaos by dint of the perpetuallyunresolved problems. 56.3% of them believe that having a government job in suchfragile situations is much better than running one’s own business.
For the already losing and crumblingbusiness sector in J&K in general and Kashmir region in specific theimmediate need of the hour is a strong government intervention. From clearingthe channels of production to giving the relevant wavers to the unit holders’big intervention is needed to prevent the production businesses in Kashmir fromshutting down. In the absence of the basic requirement of dedicated electricitynothing can be set back on the track. At the same time letting the industrialsector collapse in the 21st century that too in a third world nation’s conflictzone is the expensive most affair for a nation as big as this one.
(Dr. Javaid is a senior Assistant Professor in the Department of Economics, University of Kashmir. He specializes in Labour and Conflict Economics and has recently published a book,” Muslims in Indian Labour Market; Access and Opportunitues” with Sage. Dhaar Mehak is a Senior Research Fellow affiliated to the same department and working on Impact of Armed Conflict on Firm Performance.)