The Pulse | Economy | South Asia

Perpetual Silence: Kashmir’s Economy Slumps Under Lockdown

“Our lockdown began way before the world was forced into isolation.”

By Niha Dagia for
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Perpetual Silence: Kashmir’s Economy Slumps Under Lockdown
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After six years of running a laundry service in London, Nasir Ahmad decided it was time to go home. In the autumn of 2018, Ahmad returned home to the picturesque but highly militarized town of Lolab near the Line of Control in the Kupwara district of the Indian-administered Kashmir Valley, aspiring to enter the dairy farming business.

With savings and a government-secured loan in hand, the 37-year-old was all set to begin building his dairy and poultry farm. 

This was a time when Jammu and Kashmir was one of the better performing states in India, with a booming economy that ranked second highest on non-tax revenue and third highest on the tax revenue lists. It was among the top three special category states for low fiscal deficit and top 10 for its low poverty rate of 10.35 percent against the national average of 21.92 percent. The state’s per capita gross state domestic product had risen to 100,000 Indian rupees (INR) in 2016-17 while its net state domestic product was over INR 780 billion. 

By the summer of 2019, things were shaping up well for Ahmad. The construction work on his farm was completed and he was all set to acquire livestock. Then came August, when his world came crashing down.

On August 5, 2019, the Narendra Modi-led government revoked Article 370 of the Indian Constitution, which granted Jammu and Kashmir special autonomy, and split the state into two federally controlled union territories. The move was accompanied by thousands of Indian troops flooding the Muslim-majority valley, detaining thousands while imposing a complete lockdown on movement and forcing a communication blackout.

“Everything was ruined,” mourned Ahmad.

A Year in Isolation: Ensuing Losses 

By December, Jammu and Kashmir’s economy slumped. According to the Kashmir Chamber of Commerce and Industry (KCCI), the state suffered a loss of roughly $2.4 billion in the first four months of the lockdown while the estimated industry losses for January 2020 to June 2020 amount to around $2.9 billion. 

“[The] economy is in a complete mess,” KCCI president Sheikh Ashiq told The Diplomat. “We have estimated a loss of $5.3 billion in the 10 months of lockdown.”

From agriculture to horticulture, construction and real estate to handicrafts and manufacturing, transport to tourism, and IT to startups, every business saw at least a 50 percent drop in earnings, said a report on the impact of lockdowns in the disputed territory by The Forum of Human Rights in Jammu and Kashmir

Over 20 percent of Jammu and Kashmir’s population remained unemployed through August-September 2019 and January-February 2020. In July 2020, the state’s average unemployment rate at 17.9 percent was twice that of the national average at 9.5 percent. The situation is expected to worsen with the Indian government granting domicile certificates to immigrants, thus allowing them to be eligible for government jobs and owning land. 

A prime reason impeding economic activity is believed to be the internet shutdown between August 4, 2019, to March 4, 2020 – the longest ever in a democracy. Internet-based businesses were forced to close, leaving the local workforce unemployed. The forum’s noted that 20,000 weavers employed by units making silk carpets were left stranded when importers looked elsewhere due to the communication blackout. “My sister’s homemade cake business runs on Facebook and Instagram. With the internet blocked, she doesn’t get any orders,” the report quoted another Kashmir resident as saying. 

With curfews and communication blackout in place, the tourism sector also took a hit. A government document revealed that a 71 percent average decline in revenue from the tourism sector in August 2019 to October 2019. Government data showed that the number of tourists flocking to the Himalayan region from August to December fell from 316,424 in 2018 to 43,059 in 2019 – a sharp 86 percent decline.

“A travel destination, Gulmarag, was packed tourists until August 2, 2019. The tourist town was left deserted within hours of the Indian government directing non-Kashmiri citizens to make a hasty retreat ahead of the August 5 decision,” said Manzoor Reshi, a horseman residing in the nearby village of Treran. “I have lost over $26,000 due to the lockdown.”

Closure of public transport since August 2019 added to the woes of the daily wage workers who struggle to find avenues to earn. A unionist quoted in the Forum’s report said thousands associated with the transport business were in distress. “Most transporters are struggling to repay loans,” added a teacher from Jammu.

Reishi, who had a monthly income of $200, too has struggled to make the ends meet. With no tourists heading to the Himalayan region, he now moonlights as an agriculture or construction worker. “I have no idea when tourism will resume. Let’s see what Allah has planned for us.” 

Short-lived Relief

Many of the initial measures were subsequently eased. But the relief was short-lived as the region faced another lockdown due to the COVID-19 pandemic – forcing millions of Kashmiris to stay in their homes for what became a total of 12 months. 

India’s tally of over 2.46 million COVID-19 cases is the third highest in the world – out of which over 26,900 infections are in Jammu and Kashmir. 

With the virus looming over their heads, locals have shied away from venturing out and abandoned construction work, further jeopardizing local livelihoods. “We were hoping to revive the economy under the partially eased lockdown in the summer season. But we faced another lockdown,” lamented Ashiq, the KCCI chief. 

In spring, Ahmad was at the edge of finalizing a deal to buy livestock when the coronavirus lockdown was announced. “All my hopes were dashed. I have lost nearly half a million in profit in the last year,” said Ahmad, who used his savings to repay the government-issued loan. “The thought of closing down has crossed my mind many times, but it would devastate my family.” 

Perpetual Silence

To help the Indian economy recover from the three-month COVID-19 lockdown, Modi announced a $265 billion stimulus package in May. Jammu and Kashmir has received no assistance for the economic loss it suffered under its earlier 10-month long lockdown.

“With half a million people unemployed, our concerns were growing,” said Ashiq. “We discussed measures to revive the economy with the Indian government.”

The KCCI president urged the Indian government to announce a bailout package as soon as possible. “A lot of the businesses were forced to shut down. We need a push to revive the economy,” he said, pointing out that government across the globe had announced stimulus packages to support their economies post-COVID lockdowns. 

“Our lockdown began before the world was forced into to isolation. Time and again, we have faced crisis due to curfews. We have now lost the financial capacity to deal with the losses. It’s high time the government intervenes. Jammu and Kashmir’s economy needs a push,” he concluded.

Niha Dagia is a Pakistan-based journalist specializing in social issues and politics. Follow her on Twitter: @nhd00

With additional input from Zafar Aafaq in Kupwara, Kashmir.