Covid-19 has endangered human lives as well as national economies. The entire world has been put under a great lockdown which will have multifaceted impact on people the world over. Covid-19 has forced us to redefine and rethink our priorities both at individual and community level. To be more specific, this pandemic will change our outlook towards the way we live, the way we interact and assemble and even the way we earn our livelihood. Even though we are in the middle of a crisis, we still need to be proactive at all levels, be it administrative, policy making or public service to understand opportunities, consequences, and possible remedies in the post Covid-19 times. The purpose of this essay is to draw attention to the likely economic impact on Jammu and Kashmir’s economy and possible remedies.
To effectively plan for the post Covid-19 situation, we have to be prepared for the worst. It is too early to assess the economic impact but signs are loud and clear that the global economy will be hit very badly. Officials of the IMF have already declared that we are in for the worst recession since the great depression of 1928 and far worse than the global financial crisis of 2008. Considering what the economy of Jammu and Kashmir will look like when we emerge from this lockdown, following are the likely scenarios:
1. Reduction in savings: Actually we are in the ninth month of lockdown since abrogation of Article 370 on August 5, 2019. The collapse of all economic activities and expenses to sustain life have resulted in the decline of savings and a consequent decrease in purchasing power of people.
2. Growth in unemployment: The people who are employed outside Jammu and Kashmir used to send their earnings back but this time due to the global lockdown there is every possibility that there will be tremendous job losses and the money that used to come back to the J&K economy through remittances from abroad will be much less. Job losses of highly educated youth will only compound the problems. This all further escalate problems associated with unemployment, be it mental stress, rise in crime, drug addiction, etc.
3. Closure of business units: Due to frequent lockdowns in the past and now the current one, a large number of business establishments and MSME units in J&K are already suffering on many fronts and some are on the verge of closure as liquidity and solvency problems have overwhelmed them.
5. Disruption in supply chain: Since ours is a consumer economy and to meet its daily requirements we largely depend on imports from other parts of the country, which results in drainage of economic resources instead of creating any internal growth in the J&K economy, there will be definite impact on the supply chain. Moreover, the closure of the national highway due to weather conditions and landslides is going to add more misery on this front.
6. Decrease in exports: Export of horticulture and handicraft products provides a good source of revenue for Jammu and Kashmir economy but due to lockdown and expected decrease in purchasing power, the demand for such products will decrease and, consequently, will lead to decline in revenue from exports.
7. Tourism: Tourism has been the worst hit globally and it is believed that this sector will not come back on rails till a vaccine is not made available for this infection. Tourism and the people associated with its allied sectors, like transport, hoteliers, restaurants, house boat owners, shikara-walas, etc, in Jammu and Kashmir are going to feel the heat in post-corona times. There are meagre chances of revival of tourism in the near future.
In light of the above, we need to be proactive in finding remedies and measures to be adopted once this pandemic is over. The possible remedies can be:
1. Cut down on spending: In our society the majority of us are habitual of spending lavishly on marriage ceremonies and other functions. We need to stop this unproductive expenditure and we need to focus on making judicious use of available limited financial and non-financial resources. I suggest that we avoid what is called in Kashmiri as “Wartav”. Instead of a token of love, it has taken the shape and form of usury, which is prohibited in Islam.
2. Self-sufficiency in food: We must set our priority as self-sufficiency, at least in food crops. For this we need to policies that focus on cultivation of food crops instead of commercial crops.
3. Local human resource: We as a community need to encourage the use of available local human resource/ labour force instead of depending on labourers and professionals from outside.
4. Entrepreneurship: Covid-19 on one hand has put forth many challenges but it has also offered certain business opportunities, like in health care, IT sector, etc. Entrepreneurs can convert these opportunities into profitable ventures. The business community must invest in industry and enterprises that can cater to the local demand.
5. Stop being a consumer economy: The time has now come to transform our consumer economy into a producer economy. We need to do rational “Gaps analysis” and “Needs analysis”. Local manufacturing has to step up, supported and encouraged by the government.
6. Social welfare schemes: Due to job losses, the rate of unemployment will increase, which needs to be addressed by introducing some social welfare schemes or monthly stipend for unemployed educated youth in Jammu and Kashmir.
8. Economic package: A special economic package is needed for business units that are suffering on many fronts.
9. More funds for healthcare: The Budget of the Ministry of Finance for the financial year 2020-21 needs to be revised to make more allocations for healthcare so as to be better prepared for dealing with similar situations in the future.
Lastly, lockdown is not a new phenomenon for the people of Kashmir as they have seen countless such lockdowns in the past 30 years. I personally believe that the Baitul-Mal model is best suited in these situations and as a community we must make these financial institutions of Islam stronger. They are established during Ramzan month and we should use the opportunity to have as many Baitul-Mals this Ramzan. By the grace and mercy of Almighty Allah, the courage and the experience we have gained from past lockdowns will serve us well in coming out of this pandemic not weakened but strengthened.