Sajjad surveys the impact of global recession on Kashmir’s economy
(Mr. Sajjad Bazaz, 45, was born in Srinagar. He attended the Khalsa high school and the Sri Pratap College in Srinagar. He received his bachelor’s degree in Media and his master’s degree in Mass Communication and Journalism from the University of Kashmir. Mr. Bazaz has over two decades of experience in journalism (both print & electronic), and he is author of the book “Bankwatch” which is about a financial scenario with particular reference to the J&K state. He is currently incharge of corporate communications department in a leaduing financial instution in J&K. Mr. Bazaz likes to spend leisure time watching movies and enjoying company of his friends.)
Flirting with recession
Nowadays global financial crisis has become a universal topic for all. Everybody is relating everything to this meltdown. In fact, it is the ‘recession’, which has become a buzzword. But what actually is the impact of this economic recession on our economy or on our day to day life needs a serious thought.
Before going into the realities of recession, I am reminded of a young city boy, who didn’t hesitate to carve out his living in difficult time by selling slippers. Actually, working in a private business establishment, the frequent hartals during the Amarnath land row left him penniless. On the day when Eidgah chalo was organized during the land crisis, I heard someone loudly inviting people to buy something in the wee hours. It was not fully audible what the guy was selling. His pitch of the voice was indicating that he was coming closer to my home. I ventured out of my home to see if he was selling vegetables or some other eatables. I spotted this young boy dressed properly in jeans and T-shirt carrying a gunny bag. On inquiring, I came to know that he was not selling eatables or vegetables, but slippers. He was insisting me to buy one and at the same time asked for a cup of tea as he told me that he had left his home in wee hours just to earn something for next two to three days.
Basically, he was apprehensive about the situation and he had nothing in hand to feed his family who were dependent on him. In his own way he carved out the way to beat the impact of hartals. The point here is that the people of this land know how to earn when there are extreme conditions. Actually, the last two decades have trained a common man here how to survive in a situation when economic activities come to a grinding halt.
Coming back to recession aspect, recent statistics are showing that small and entrepreneurial businesses are suffering badly due to the global recession. Regardless of the increased struggle, many entrepreneurs still prefer working on their own and for themselves. Reports suggest that approximately 70% of small business start-ups survive the first two years and fewer than half survive the first four. But this is not the case here, as the current recession doesn’t have impact on the local economy, as is projected with carpet industry discussed as a case in point.
Take the case of our cottage industry. For the last two decades, it is under severe threat as the welfare of our weavers, artisans and small entrepreneurs has always been at stake. But today this gloom on our thousands of artisans is attributed to the global economic meltdown that has already imperiled major global economies. The situation was pointed out when a sharp decline in export of the Valley’s exquisite handicrafts was reported in the past few months, with carpet industry worst hit. The sale of carpets has dropped considerably and as per reports, it is estimated that over 1.50 lac artisans and weavers would be out of job within next few months.
It is not for the first time that carpet industry is reported to be dying a slow death. The artisans whose families have been engaged in the making carpets for generations have slowly been turning to other professions much before the advent of global financial crisis. Basically it has been on account of the low profitability involved in carpet making which has forced the artisans to carve out their living from other vocations. Almost 90% of the demand for carpets in the country is met by the carpet-producing units in Amritsar, Rajasthan, Agra, Uttar Pradesh and Andhra Pradesh. Export of Kashmiri garments has always been on decline. The state government has a precedence to act as a silent spectator to this situation and starts reacting when the situation worsens.
Meanwhile, if we go by definition of recession, in simpler times, it is an extended decline in general business activity. And this has been a general feature of the Kashmir’s economic scenario, at least during the past two decades, which witnessed bloody turmoil.
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, our economy is conflict ridden, 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. During the past two decades, Kashmir has witnessed tremendous flow of money form unidentified sources both within and outside India. Estimates suggest that between Rs 1,500 crore and Rs 2,000 crore is the size of the parallel economy. This includes money flowing in from foreign countries, funds the Indian security forces get and also the unaccounted for money that some influential possess.
To sum it up, whatever negative things appear on our economic scene cannot be attributed to the global financial meltdown. Recession may be a buzzword for global economies today, but here it is depression, which has enveloped our economy since 1990. Because we have been living with recession for decades now. Once a recession lasts longer and has a larger decline in business activity, it turns into depression.