Economic distress shadows Eid celebrations in Kashmir

Srinagar, Mar 28: As the Eid festival draws near, a pervasive atmosphere of economic uncertainty engulfs Kashmir, with businessmen and traders voicing profound concerns about the region’s financial landscape.

The approaching festival, traditionally a period of jubilation and commerce, is instead marked by a palpable sense of apprehension and economic strain.

The current economic scenario is characterised by a complex web of financial challenges that are suffocating local businesses and community livelihoods. Faiz Ahmad Bakshi, Secretary General of the Kashmir Chamber of Commerce and Industry, articulated the depth of the crisis, highlighting a significant liquidity crunch that has dramatically impacted market dynamics.

“Business sentiment is low, markets are recording less sales mainly due to liquidity crunch,” Bakshi explained, emphasising the multifaceted nature of the economic downturn.

“Post Covid we have seen only tourism doing good, however, this sector had suffered huge setbacks in the past and whatever earning hoteliers made, most of that has gone into liquidity previous debts,” Bakshi stated, painting a stark picture of the region’s economic fragility. “The problem is compounded by pending contractor bills amounting to several thousand crores of rupees and delayed salary and pension payments for over 400,000 government employees and pensioners.”

The financial distress extends beyond immediate business concerns. Muhammad Yaseen Khan, President of Kashmir Traders and Manufacturers Federation, described a “silent crisis” unfolding across the region. Individuals from various sectors—farmers, small entrepreneurs, and even those financing personal needs like weddings—find themselves trapped in a challenging debt landscape.

“Local newspapers are now predominantly filled with auction notices, a stark testament to the financial hardships facing businesses. These notices primarily reflect businesses defaulting on loan payments, resulting in the auctioning of properties by banks, a development that underscores the severity of the economic challenges.”

The region’s economic vulnerability is highlighted by a staggering debt burden of 1.25 lakh crore rupees, coupled with non-performing assets reaching 4.8%. The economic model appears precariously balanced, with sectors like tourism and agriculture bearing significant risks.

The post-2019 period, which initially promised stability and growth, now presents a paradoxical economic scenario. While lending and tourism saw initial spurts, the underlying economic fundamentals remain fragile. Horticulture farmers, small businesses, and youth continue to navigate an uncertain economic terrain, with inflation constantly eroding their financial resilience.

Experts suggest that without strategic interventions focusing on job creation, industrial growth, and sustainable development models, the region risks sliding into a more profound economic crisis. The current situation demands comprehensive reforms that address not just immediate financial needs but also long-term structural economic challenges.

As Eid approaches, the festive spirit is tempered by these economic realities. Businesses are hoping for government interventions, particularly the release of pending bills and salaries before the financial year concludes on March 31, which could provide some much-needed financial breathing room.