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One year in, Modi’s “new Kashmir” has pauperised its people

REUTERS/Danish Ismail
Fenced out.
Published Last updated This article is more than 2 years old.

Strife, curfews, and economic gloom are not new to Jammu & Kashmir. And yet, the past year has delivered a blow like none other.

On Aug. 5, 2019, India’s central government rendered Articles 370 and 35A of the constitution toothless, effectively revoking the special status that was granted to the restive north Indian state since 1950. The Narendra Modi government also bifurcated the state and demoted it to two union territories of Jammu & Kashmir and Leh.

Without its special status, Jammu & Kashmir no longer had its own constitution and ceased to have autonomy over its own affairs. It could also no longer prevent non-domicile Indians from settling down in the region.

Citing security reasons, the newly formed union territories were put under lockdown in August 2019 by the central government, under heavy military presence, and without any telecommunication or internet services. While life was brought to a grinding halt—schools, colleges, offices, and markets shut for months on end—Kashmir’s already suffering businesses were left with no means of survival.

“If Kashmir’s economy was on the ventilator before, it is now dead,” says Farooq Amin, general secretary of Kashmir Chamber of Commerce & Industry (KCCI). The industry body estimates the Kashmir valley to have lost business worth Rs40,000 crore ($5.32 billion) and around 800,000 jobs during the past year.

Kashmir’s economy is largely made up by horticulture (apples, exotic fruit, dry fruit), saffron, handicraft and handloom items such as shawls and carpets, and tourism. “Across these industries, the impact of the internet shutdown and lockdowns has been massive. Almost 90% of small business loans are likely to become non-performing assets,” Amin says.

Business owners, across Jammu & Kashmir’s political spectrum and religious communities, echo Amin’s sentiment. “On paper, government leaders had promised prosperity for Jammu & Kashmir. But in reality, every single business owner is bleeding money,” says Rakesh Bhat, promoter of e-commerce platform Kashmir One Stop.

At this point, the narrative of economic progress falls flat in the face of the restrictive and heavily militarised zone that Kashmir continues to be. Instead of opening up the valley to industries, the central government’s move made it unliveable even for those rooted in Jammu & Kashmir.

The valley of broken dreams

Mujtaba Rizwi, an arts and culture entrepreneur from Kashmir, says while the economic outlook was rather gloomy for the past three decades, the last five years sped up the decay. “First, after the killing of Burhan Wani in 2016, Kashmiri businesses suffered because of 100 days of lockdown,” he says. “Even so, Kashmiri business activity had picked up a little in 2018-19. But after Aug. 5, everything has collapsed.”

Rizwi used to organise various arts and culture events through his foundation, and through his venture Kashmir Art Quest. He also ran the Goodfellas Cafe, a space for the young to meet and exchange ideas. At the time he was operating his cafe, Rizwi says there was a breed of vibrant, young entrepreneurs who were trying to inject life into the conflict-ridden, splintered valley.

But in the years leading up to the abrogation of Articles 370 and 35A, several of these businesses shut down, including those that made it till Aug. 5, 2019.

Rizwi wrapped up all his ventures and moved out of the valley for a corporate job in Chennai in October last year. “My parents, too, pushed me to migrate though I left half-heartedly. I was leaving behind my place of work, life, and identity,” Rizwi says. His emotional and psychological exhaustion, he adds, is not an anomaly. Everyone he speaks to back home echoes this sentiment.

“People across the world in the finest of economies are suffering because of Covid-19. Now imagine Kashmir, already disadvantaged by weather, terrain, and over six months of lockdown before the pandemic hit,” observes Shehla Rashid, activist and member of the Jammu & Kashmir People’s Movement (JKPM) party. “In Jammu & Kashmir, people and businesses were already in financial distress; they didn’t have huge cash reserves to fall back on. The economic collapse is a no-brainer when you add a year-long lockdown to this,” she says.

And a lockdown without the internet has been particularly devastating.

The valley of broken internet

Since 2012, the Jammu & Kashmir region has witnessed 226 instances of internet shutdowns, which is a large part of the reason why India has the most number of internet shutdowns in the world. Of these, over 100 were in the past year alone. Over the past year, the region did not have internet access for nearly six months. This was a complete blockade that was ordered by the central government and challenged in the supreme court by Kashmir-based journalist Anuradha Bhasin.

“Neither India nor the world had ever seen such an extensive blockade extending for so many days,” says Mishi Choudhary, a technology lawyer with practices in New York and Delhi, and legal director of Software Freedom Law Center, a legal services organisation. “It’s a  government order, so even if there was a technological tool to circumvent it, it would be illegal to use it.” That essentially ruled out virtual private networks, too.

While 2G services were resumed in parts of the region in January, only specific whitelisted websites were allowed to function. Broadband services were restored in March, and residents were finally allowed to access social media.

But this has, in no way, meant a smoother ride for local businesses. Poor internet has led several to lose customers, who give up halfway when payments don’t go through. For the small tech startups in the region, this has meant zero business. While security restrictions were most stringent in the Kashmir valley, service-oriented companies in Jammu experienced strong ripple effects.

A local tech company in Jammu, for instance, lost all of its Kashmiri tour operator clients during this one year. “We used to work on retainership to provide website services to tour operators and small hotels in Kashmir. Since Aug. 5, 2019, because these companies saw no business activity, they didn’t even want to renew domain names for their websites,” says Rahul Pandit, owner of the Jammu-based IT firm.

Bhat of Kashmir One Stop, a website that sells Kashmiri specialities like spices, handloom, and dry fruit, had to find workarounds to ensure his supply chain against the unpredictability of lockdowns and curfews. For starters, he sold a part of his company’s stake to an entrepreneur who already had a successful courier service business. “Larger logistics companies don’t always work out in Kashmir because of the restrictions. We were able to fulfil orders because of this partnership,” says Bhat.

But even so, Bhat realised that he would need a back-up plan. Like several small e-commerce businesses, he set up secondary operations in Delhi, maintaining a stock of fast-moving and non-perishable items at the warehouse there. Kashmir One Stop also integrated within its website the capability of breaking down orders between Jammu and Delhi. “Despite all this, our business was immensely slow. We may be working out of Jammu, but we are dependant on the Kashmir valley for sourcing products,” he explains.

Pandit, the IT business owner, is now exploring avenues in the education sector, particularly as classes go online during the pandemic, he says, but until full internet services are restored, none of these efforts will be fruitful. “People talk about working from home. But how do we do that? Of our 10-12 employees, only three have high-speed broadband services at home. We can’t even download a simple file on the 2G network,” Pandit rues.

The internet blockade, among other things, has completely overturned any promise of prosperity that the abrogation of Articles 370 and 35A was purported to fulfil.

The valley of broken promises

On Aug. 12, 2019, a week after the abrogation was announced, prime minister Modi declared during a national address that he was confident of building a “naya Kashmir” (new Kashmir). “Leading entrepreneurs have already expressed their interest in investing in Jammu & Kashmir. In today’s world, economic growth cannot happen in a closed environment,” he had said, alluding to the fact that Kashmir’s special status was often perceived as a roadblock to free markets. “Open minds and open markets will ensure that the youth of the region will put it on the path of greater progress. Integration gives a boost to investment, innovation and incomes,” he said.

Among the biggest attraction for supporters of the abrogation was the fact that Indians without a domicile status in Jammu & Kashmir and Leh could now buy land, set up industries, and take a “backward” region into the era of prosperity.

In fact, Indian industries body Confederation of Indian Industries, headed by banker Uday Kotak, promised on Aug. 6, 2019, to organise an investor summit in the region. To date, that summit has not taken place.

According to a business analyst from the region, there has been no new business activity in Jammu & Kashmir. “It has been regressive, to say the least,” says the analyst who requested anonymity.

“When the abrogation was announced, the general discourse was that Kashmir would follow a Gurugram story, and land revenue would increase. The corporate class would come and settle here, and locals would become multi-millionaires overnight like landowners in Gurugram did,” says Rashid of JKPM. “What has instead played out is an economic destruction that has pauperised people and pushed them against the wall.”

A common fear among businesses is now their inability to repay loans. This would, Rashid and the business analyst fear, make businessmen lose collaterals such as their land and other assets if they default. The legal provisions that allow for banks to seize property—Securitisation and Reconstruction of Financial Assets and Enforcement of Securities Interest Act (Sarfaesi Act), 2002—was not implementable in the erstwhile state of Jammu & Kashmir. But once the state’s bank, J&K Bank, was restructured and brought under the central government, it allowed the bank to bypass these limitations in Jammu & Kashmir.

These fears are not unfounded. Stressed assets in the newly formed union territory nearly doubled in September 2019, according to Kashmir Life, a weekly magazine from the valley.

“What is worrying is that most of the first-generation entrepreneurs in Kashmir are indebted to the J&K Bank. Their land and homes are at risk of being taken over,” Rashid says. The changes in Articles 370 and 35A, which allow non-residents to own land in the valley, stand to benefit from this. “I see this not as an accidental by-product, but a deliberate consequence of the Article 370 move,” says Rashid.

Experts say peace in the valley is the obvious solution to these woes, but one that cannot be brokered by force and by taking away the people’s autonomy. “It’s a very tired situation in Kashmir. People are tied up with so many issues, so many people don’t have access to food or water,” says Rizwi from Chennai.

Drenched in financial despair, the highway to hope has crumbled in Jammu & Kashmir.

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