Article: Despite investments, why has unemployment soared in Jammu and Kashmir?

Safwat Zargar

Hassan has forgotten how many jobs he has applied for in the last four years. He completed a masters in computer applications in 2018 but has been unable to find a well-paying job in Kashmir.

“I have applied for so many government vacancies that I have lost count,” said 28-year-old Hassan, who lives in central Kashmir’s Ganderbal district.

Since the private sector is almost negligible in Kashmir, the government is the main source of jobs in the organised sector.

Still, Hassan tried his luck at a few private software companies in the Valley. That hit a dead end in August 2019, when Jammu and Kashmir was stripped of statehood as well as autonomy and split into two Union Territories. An internet shutdown that lasted months was imposed on the Valley, bringing all businesses that depended on connectivity to a halt.

When the shutdown was lifted, there were other challenges. The August 2019 legislations had dissolved protections under Article 35A, which reserved government jobs for long-time residents of Jammu and Kashmir, among other things.

“I am hopeless,” said Hassan. “Now, since outsiders are eligible for jobs here, the prospects have dwindled further.”

The unending job search has taken a toll on his mental health. After four years, he is now considering the prospect of moving out of Jammu and Kashmir to look for employment. Both Hassan and his family are uneasy with the idea. “What other options do I have?” he asked.

The Centre justified the August 2019 measures saying they would bring greater prosperity and economic development to the region. In his first public meeting in Jammu on April 24, Prime Minister Narendra Modi claimed investment in the private sector, which had stagnated earlier, was now reaching Rs 38,000 crore. Things were looking up for the youth in Jammu and Kashmir, he promised.

Unemployment figures tell a different story.

Surge in unemployment

Hassan is among Jammu and Kashmir’s surging unemployed workforce. Monthly data published by the thinktank, the Centre for Monitoring Indian Economy, showed that in March, unemployment in Jammu and Kashmir had touched 25%

This was the second highest in the country – Haryana led with 26.7% – and well above the national average of 7.6%.

And this is not accounting for the fact that many may have dropped out of the workforce so are not counted in the unemployment data – which means absolute numbers may be higher. “The issue with these surveys is that they count only those people who are actively seeking jobs,” explained researcher Eijaz Ayoub. “They don’t count people who have become hopeless and stopped looking for jobs altogether.”

According to another survey, published by the ministry of statistics and information in March, unemployment among the 15-29 age group in Jammu and Kashmir in April-June 2021 was 46.3%, up from 44.1% the previous quarter.

The sample size was small – just 1390 households – and the survey was conducted during the height of the second wave of the Covid-19 pandemic in India. But unemployment figures have remained persistently high in Jammu and Kashmir since 2016, when months of protests and strikes as well as internet shutdowns took a toll on the economy.

Matters did not improve after August 2019. The new administration announced a slew of measures to draw investments to Jammu and Kashmir. In March, the Jammu and Kashmir government said it expected investment worth Rs 70,000 crore within six months. Last year, the central government announced an industrial investment package worth Rs 28,400 crores for Jammu and Kashmir. It would create 4.5 lakh jobs, Jammu and Kashmir Lieutenant Governor Manoj Sinha promised

Why has unemployment in Jammu and Kashmir remained high despite these measures?

Three lockdowns

Many point to the three consecutive lockdowns in Jammu and Kashmir. As sweeping legislative changes were introduced in August 2019, the region was placed under lockdown and a communications blackout. In the Kashmir Valley, there was almost a complete internet shutdown for months.

In January 2020, the Kashmir Chamber of Commerce and Industries calculated that the August 2019 lockdown had cost the Valley’s economy about Rs 18,000 crore. According to its findings, the highest job losses were in the trading sector, where about 1.2 lakh people lost their jobs in four months – tourism and handicrafts were particularly affected.

About 70,000 jobs were lost in the industrial sector and 60,000 in transport, the report said. Ayoub estimates the impact on the transport sector, which employs about three lakh people, was even worse. As lockdowns continued, many private bus owners sold parts of their vehicles as scrap in order to survive.

In March 2020, the Valley was just emerging from the August 2019 lockdown when the central government imposed a nationwide lockdown to combat the spread of the coronavirus. By the end of the first year of the pandemic, losses to the Kashmiri economy between August 2019 and December 2020 were worth Rs 50,000 crore.

Once again, just as businesses were opening up, India went into lockdown as the second wave of the pandemic hit in early 2021.

According to Ayoub, going by the monthly data put out by the Centre for Monitoring Indian Economy, the average monthly unemployment rate in Jammu and Kashmir from August 2019 to March 2022, is 16.37 per cent. “If we take the same period of 32 months preceding August 2019, the average amounts to only 13.15 per cent,” he said.

Things are not improving, either – in the first three months of this year, the average unemployment rate was 17.73%.

Traders lose out

The trading sector in Kashmir has been the worst in three years, according to Ayoub. After agriculture, this was the biggest employer. It includes retail, tourism, hospitality and other services.

“Around 10 lakh people are associated with this sector and when businesses were closed down due to three consecutive lockdowns, it led to a fall in earnings, which led to massive layoffs in the sector,” he explained. “Once those laid off people found themselves without jobs, their incomes dwindled too as a result of which people simply were unable to spend money.”

Take Basharat Khawjawal, who sells readymade garments at Lal Chowk, Srinagar’s city centre. This year was the first time since 2019 that he invested in buying substantial stocks – but it may not pay. “The response is abysmal,” he rued. “Customers are not turning up. All the money I invested in is now stuck.”

During the pandemic, Khawjawal said, he took some online orders but his business was still badly battered. “I used to employ five salesmen,” he said. “Now, I have only two. I am simply not making enough to hire so many people.”

Liyakat Ahmad, who owns two shops selling children’s garments in Srinagar’s affluent Gogji Bagh market, has barely managed to stay afloat. He said he was lucky he owned the shop premises, or else he would not have been able to pay rent for them through the successive lockdowns. Business had been hit hard.

“People are buying only essentials,” he said. “They don’t have the purchasing strength to buy luxuries like clothes, gadgets and other consumer items.”

Jammu and Kashmir’s three-lakh strong handicrafts sector was also hit severely as exports fell during the pandemic, Ayoub explained. In June 2020, the Kashmir Chamber of Commerce and Industry sought urgent intervention of the government to purchase handicraft stocks worth Rs 500 crore lying unsold. By 2021, the worth of unsold goods had shot up to Rs 600 crore.

Banks dealing with bleeding balance sheets have not come to the rescue of businesses either. “In Jammu and Kashmir, banks are reluctant to lend credit and are more focused on recovering their loans,” said Ayoub.

In September 2021, the union territory administration in September 2021 announced an economic package of Rs 1,350-crore to revive the struggling economy. But that has not helped many businessmen in Kashmir – trade leaders point out many promises in the package were not implemented in time.

Ignoring the local

Indeed, business leaders as well as economists feel much of the crisis has been caused by mismanagement by the government.

After August 2019, outside investment was touted as a roadmap to prosperity. Most schemes and policies have been tailored to draw such investment.

A senior business leader in Kashmir, who spoke to Scroll.in on the condition of anonymity, pointed out the flaw in these plans. “The government wants to expand the economy,” he said. “Fair enough. But it is deemed good in the eyes of economists to consolidate before you expand. The economy is in a shambles and business units are on the verge of closing down. They should be the government’s priority because they don’t need much push – they are already part of the economy.”

Resentments that the government favoured outside businesses at the cost of local units have brewed in Jammu as well. For instance, in September last year, Jammu Chamber of Commerce and Industry called for a day-long shutdown to protest against the Centre’s move to open 100 Reliance-owned retail stores in Jammu. Earlier, wine traders in Jammu had been up in arms against the government’s decision to hold e-auctions for liquor shops as they feared it would drive out local businesses.

Both Jammu and Kashmir divisions protested against the abolition of toll tax in December 2019. It meant traders from the Indian mainland entering the Union Territory through the Jammu-Pathankot highway would no longer have to pay toll. This would make outside goods cheaper and give them a competitive edge over local goods, Ayoub explained.

The other problem, the business leader from Kashmir pointed out, was that the investment proposals floated by the government were long-term projects. They did not promise immediate employment. “Given the conditions in Kashmir – political and climatic – we know that an average two-year project takes five or six years to complete. Until then, what are our youth supposed to do?” he asked.

The solution, he felt, lay in dedicating a chunk of the new investment packages to the six lakh business enterprises that already exist in Jammu and Kashmir. If the money was given with the condition that each unit would employ at least one or two people, that would go a long way in addressing unemployment.

A political problem

The problem may be political as well as economic. Since Jammu and Kashmir became a Union Territory, it has had no elected government and is run by a bureaucratic administration. Business leaders in both Jammu and Kashmir complain of a disconnect between the government and stakeholders, which has led to flawed policy-making.

According to Ayoub, economic stability and private investment that could generate jobs depended on political stability. “There’s a lot of hopelessness in the future,” he said. “People don’t see a stable future in Kashmir as long as there is no local government.”