By Haroon reshi
Srinagar: The state government’s plan to explore banking system to replace the barter trade along the Line of Control (LoC) has not gone down well with a section of traders in Kashmir. They say the proposed system okayed by the Reserve Bank of India (RBI) would be unacceptable if it impacts the disputed status of Jammu and Kashmir. However, a noted economist welcomed the decision saying the currency exchange module would be discussed at a later state.
“We cannot accept US dollar as a reference point for the cross- LoC trade,” said Yasin Khan, president of Kashmir traders and manufacturers federation (KTMF). He said the exchange of Indian and Pakistani currency would be acceptable to the traders, involved in the cross-LoC trade between the divided parts of Jammu and Kashmir. The trading activity began in October 2008 as a confidence building measure between the two countries.
The state cabinet on Wednesday in Jammu endorsed the proposed institutional mechanism to provide banking facilities to traders for conducting their business across the LoC. “The banking mechanism will help the trade to grow much faster and enable import and export of listed commodities at a larger scale and faster pace. It will address the regulatory aspects related to the trade between India and Pakistan,” an official statement said after the cabinet meeting chaired by Chief Minister Mehbooba Mufti.
The Reserve Bank of India has already given its nod to provide a proper banking system to the traders from both sides of the LoC.
“The cross-LoC trade is not a business between two countries but it is a trade between the divided parts of the state. This is actually an intra-Kashmir trade. We cannot compromise on the disputed status of the state just for the trade benefits,” Khan said.
“We appreciate the state government’s decision to establish banking facilities across the LoC to boost the trade but the system should be established by keeping the disputed status of the state under consideration,” Hilal Ahmad Turki, president of the LoC traders association told Kashmir Reader “ We cannot have cross LoC trade on the basis of international trade relations ,” he added.
The traders say that dual currency is a viable option to boost the trade and make it hassle free.
“We have repeatedly asked the government that traders from both sides of the state should be allowed to make the local currencies as reference point to the trade. The government should come with the details about how they want to establish a banking mechanism,” Sheikh Ashiq Ahmad, former President of Kashmir Chamber of Commerce and Industry (KCC&I) said.
Khan said that the Indian home ministry officials in meeting with the LoC traders two years ago had agreed a banking system for LoC trade on dual currency basis.
“I was part of the high level delegation which met the home ministry officials in New Delhi to discuss the acceptable methods for establishing a banking system across the LoC. At that time the home ministry officials had aged to our proposal of considering the both the Indian and Pakistani currencies as a reference point for the LoC trade,” Ashiq said.
Asked if Pakistan does not raise any objection to introduction of dollar as reference point Khan said that it would not be acceptable to traders from Kashmir. “We will strongly oppose this. We are neither the agents of India nor Pakistan. We cannot compromise on the disputed nature of the state just for our trade interests.”
Noted economist Prof. Nisar Ali said the state government’s endorsement to provide banking facilities for cross-LoC trade should be taken as a good thing. “Let the banks be established in both parts of the state to facilitate the trade first. The transaction module can be decided later.” Prof Nisar told Kashmir Reader.