Contrary to how progressive economic systems across theworld are run, Govt of Jammu and Kashmir seems to stick its own set ofpriorities. Adopting policies that block the functioning of a fundamental andeconomically essential entity (Road Connectivity) on which the entire economicstructure rests, is not only constitutionally questionable but economicallydisastrous. There is no doubt that the ongoing and anticipated economicrepercussions culminating out of this bizarre decision shall have deep, wideand long lasting impact even after this controversial ban is completelyrevoked.
The ban has been revised thrice (including the latestrevision) since 3rd April 2019, however, the most critical part of the highwayi.e. Udhampur to Srinagar continues to bear the brunt every Sunday, acting asan excruciating bottleneck for the entire economy. J&K is largely aconsumption driven economy with an annual import size of around Rs. 35,000crore (Kashmir division alone). We are looking at a situation where trade worthRs. 35,000 is being pushed under tremendous amount of supply-side stress.Besides reluctance of the transport agencies to ferry goods into the valley,the abrupt cost push in logistics is breaking all the hell loose. Post highwayban, a 20 ton trip from Delhi to Srinagar, which normally costs anywherebetween Rs. 75,000 to Rs. 85,000, is now getting billed at around Rs. 1.30 Lakhper trip. This over 60% escalation in logistic costs is acting as a doublewhammy – shrinking traders’ margins and spiking retail inflation instantly forconsumers. Catalyzing the miseries, the trip that used to take 4-5 days is nowtaking around 15-20 days to complete, thus furthering the working capital cycleand the capital costs thereof.
Udhampur has become a buffer zone where trucks coming fromoutside the valley are being asked to wait their turn to move. Wasting time inthe Udhampur buffer zone and serving a single client in 20 days makes nobusiness sense for the truckers. They rather prefer serving five clients fromother states in the same time frame. This time over-run is also creating havocfor perishable items like vegetables, fruits and livestock. The situation forperishables is like a ticking time bomb eroding the traders of their economicvalue at a ruthless speed.
When it comes to outward movement of goods, Kashmir’shorticulture industry, mainly driven by apple, is another catastrophe in themaking. Although, there is still time when this Rs. 8000 crore harvest will hitthe markets, but in order to prepare the orchards in a healthy way, farmersneed timely supply of pesticides and fungicides, the affordability andaccessibility of which is getting negatively impacted due to this ban. Fearingstrangled access to markets, the very limited space for cold storages isalready being bargained intensely. In harvest season, when the supply willflood the domestic economy, a choked gateway towards plains will create anunaffordable economic mayhem rarely witnessed before. A similar industry, butcomparatively small in size, that has been impacted is the cut-flower producersbusiness community. The perishable nature of the produce and high costsensitivities has thrown the entire cut-flower industry out of gear.
Besides, inflow and outflow of goods, the restriction isalso negatively influencing the inflow of tourists into the valley. Tourism,although, has been bleak since 2014 floods, but there is a whole gamut of gigeconomy associated with the sector. From cab operators to highway restaurants,everything and everyone associated with movement of people on this highway isbeing mercilessly hit hard by this obnoxious ban. Administrative decisions likethese send out strong repulsive signals into the leisure markets as well,furthering the damage to this essential sector of the state economy.
Interestingly, the timing of the ban coincided with the runfor the General Elections 2019. Sensing electoral opportunity, all the regionalpolitical parties upped their ante against this anti civilian decision. Nowonder, with every passing election phase, the political agitation against theban lost its steam proportionally. Although, some parties are still wrestlingit in the judiciary, others preferred shifting their focus on exit poll numbersnow. On the other hand, the beneficiaries of misery, the trade bodies, SSI unitholders and other business sections continue to protest through print,electronic and social media, but, like the unmoved autocratic emperors, theGovt’s in Srinagar and New Delhi seem unfazed.
Irrespective of Govt’s indifference, the economicrepercussions that are unfolding are intimidating. Supplies continue to dry,household incomes continue to plummet, value of currency continues to dive andsocio-economic ambiguity continues to thrive. One can only hope that good senseprevails and Govt revokes the ban soon, or else, we are looking at a perfectrecipe for a mammoth economic disaster in the making.