‘Tourism only 6% of Jammu and Kashmir’s GDP’: Prof. Nisar Ali

With consecutive lockdowns since 5 August 2019, the economy of Jammu and Kashmir has faced major losses amounting to more than 40,000 crore rupees. A noted economist Professor Nisar Ali in an interview with The Kashmir Walla’s Pirzada Shakir explains the losses incurred, possibilities of revival and reforms.

Below are the edited excerpts of the interview:

How have three consecutive lockdowns impacted the economy of Jammu and Kashmir?

 The Jammu and Kashmir economy is facing lockdown for almost three decades as prolonged unrest/hartals in these decades have adversely affected the state’s economy. If we check the official data of state Gross Domestic Product (GDP) or state’s economy the growth was at a snail’s pace at 5.7 percent in contrast with the national growth that was between 8.5 to 9 percent.

The situation was getting better. In the 2018 fiscal year, the growth was getting higher in the months of June and July. The surprise lockdown announced by the government on 5 August 2019 was followed by two lockdowns of the COVID-19 pandemic that impacted the economy adversely as there was no growth in the economy. The economic growth dropped to around 3.4 percent as the trade and service sector was hit, which is one of the main contributors having 54 percent share, to the economy of Jammu and Kashmir.

What measures should the government have taken to deal with the situation concerning the economy?

Neither the government of India nor Jammu and Kashmir government had knowledge of how to deal with the pandemic and imposition of lockdown amid COVID19. International medical experts say that the virus is an evolving medical science and have no exact and sustainable knowledge of dealing with it. But in Wuhan city of China, they managed it. We should find a sustainable method of imposing lockdown as we should identify the sectors where lockdown is needed as we cannot use the same yardstick to deal with the situation in all service areas. As there are certain sectors where there is no possibility of large gatherings should be set open and there are certain vulnerable sectors where gatherings are necessary should not be allowed to open. The procedure will help the economy to keep running.

What do you think the government should do to bring the economy back on track?

India, as well as the world economy, has been facing recession due to imposed recession. In the 1930s (depression of thirties) John Maynard Keyne’s economics was developed and was first implemented by the United States of America followed by western Europe as it advocated a bail-out package. The state has a role to provide a bailout package to business establishments. In America, both Donald Trump and Joe Biden both provided bail-out packages to the business establishments. In the Indian economy announcements in this regard were made but they were mainly credit-related. The details of offtake are yet to be made public but I do not think that would be sufficient except for some decisions that include a moratorium on loans. The government has to intervene by providing rebates on taxes including direct and indirect taxes but nothing such has been done to date that has reduced the growth rate of GDP of the country. In absence of bailout packages and rebates, the unemployment generation per month falls between 12 to 16 percent. The economy of Jammu and Kashmir received a major hit in the last few years as Tourism related activities were put at a halt. By this allied sectors of tourism could not generate revenue. The rate of occupancy of hotels dropped to almost zero except some occupancy was recorded in Gulmarg during last winter.

Is tourism the mainstay of the economy 0f Jammu and Kashmir?

As per data, its contribution towards Jammu and Kashmir’s GDP is not more than six percent. Around Dal Lake, only six thousand people are connected with the sector that include houseboat owners, shikara riders, etc. Its contribution towards GDP would be some eight percent if we include restaurants etc in the sector. It is given hype out of context. Yes, If you want to boost Jammu and Kashmir’s economy you need to focus on the industrial sector (small and environment-friendly industries) and focus on the newly identified tourist destinations.

It should be made to run round the year on Maldives pattern. A big package of ten to fifteen thousand crore needs to be invested. It will have a spillover effect. We should also convince big corporations to establish their franchise in Jammu and Kashmir. All this will help in employment and revenue generation. Laws for the establishment of franchises were always favourable as they could have taken land on lease even earlier. But neither the government of India nor big corporations showed interest in industrial investment in Jammu and Kashmir.

What are the other sectors the government should focus on to generate revenue?

Agriculture, our main crop sector, as per the official data, production has remained stagnant for many years as food imports have greatly increased from four lac ton to twelve lac tons. This will go on as our agricultural land has reduced. Horticulture has a contribution towards the economy of the region. Eighteen lac metric tons of fresh fruits and more than 2 lac tons of dry fruits are produced each year. Due to climatic changes nearly thirty percent of fruits get damaged that can be used to make juices, jams and jelly. If small processing units are established, I believe these items will become our export commodities. However, there are nearly two such processing units as of now but that is not enough.

Land used for saffron cultivation has declined and has adversely affected its production. We have not made efforts to extend its cultivation but have restricted it to certain places.

How do you see India’s economic growth in the last five years?

As per the latest data shared by the International Monetary Fund (IMF), a claim has been made that India’s economy has shrunk by seven percent.

By this, we understand that there may not be any remarkable growth in the GDP of India as predicted and planned. It is because our manufacturing sector is picking up at a slow pace and the tourism sector is facing a shutdown due to the pandemic. Till the pandemic is not over we do not foresee any remarkable growth in the economy of India.

How do you foresee India’s economic growth in the coming five years?

For stability, India needs at least two years after the pandemic is over. These two years will be needed to make the environment suitable for investors. Optimist psychology has to emerge for the business and investors as no investor would like to put his/her investment at risk. It will take around two years to see the fiscal year 2007-08 again when the economic growth rate was nearly eight to nine percent.

Government has the main role, once we come out of the stability phase, the government should go for massive reforms. There are many important bills pending for approval among them twelve to thirteen bills that pertain to the social sector are pending for approval. It is because of a lack of reforms that there is low Foreign Direct Investment (FDI) in India.


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