From Loans to Losses: Kashmir’s entrepreneurial dream ending in debt traps
Srinagar, Aug 2: When Javid Ahmad (name changed) set up a Plaster of Paris (PoP) manufacturing unit in south Kashmir in 2015, he believed he was building a future for himself and for others.
With a government-backed loan of over Rs 80 lakh, he installed production lines, hired six workers, and started supplying local shops.
But a decade later, his factory is defunct, its machines rusting in silence.
He owes more than what the factory is worth.
The electricity was cut off long ago.
The bank has marked his account as a Non-Performing Asset (NPA), and his CIBIL score is ruined.
His dream, once celebrated as part of Kashmir’s new self-employment movement, has ended in silence – shuttered units, default notices, and deep financial stress.
“I haven’t earned a rupee from this business since 2020,” Javid says, standing outside the locked gate of his unit. “Even if I sell the factory, I’ll still owe lakhs of rupees. The bank won’t recover its money, and I won’t recover my life.”
His story is not unique.
A growing number of first-generation entrepreneurs in Kashmir, many of them educated, skilled, and full of intent, are being pushed into default and debt.
Their ventures are failing not because of a lack of effort, but due to policy confusion, financial mismanagement, the absence of support, and an economic environment that remains unpredictable.
Muneeb (name changed), a 29-year-old MBA graduate from London, came back to Kashmir in 2016 to open a modern restaurant in Srinagar’s Lal Chowk.
With a Rs 20 lakh bank loan and personal savings, he launched what he hoped would be a contemporary café-style eatery, creating jobs and a new brand in the local market.
“The restaurant opened, and days after the restaurant's opening, the situation changed in 2016. That one event destroyed everything,” he says.
The unrest that followed meant months of lockdown, curfews, and zero business activity.
“I tried to sustain it for five months, paid salaries from my savings, but eventually had to shut down,” he says.
He lost over Rs 12 lakh in the process.
His account went into default, the loan became unrecoverable, and his finances were shattered.
Today, he works in Dubai.
“I didn’t fail as a businessman. I failed because there’s no business continuity or safety net here,” he says.
Both Javid and Muneeb were part of a wave of youth who embraced the government’s call for self-employment and entrepreneurship.
But now, a growing number of such ventures have failed.
According to banking sources, the volume of NPAs in the small and medium enterprise sector has seen a significant rise over the past four years, particularly among first-time borrowers under government-sponsored entrepreneurship schemes.
Former president of the Federation Chamber of Industries Kashmir (FCIK) and a noted industrialist, Shakeel Qalander, says that what Kashmir needs is not just money or schemes, but an overhaul of the entire enterprise ecosystem.
“We have created a myth that entrepreneurship is the answer to unemployment. But in Kashmir, that myth is collapsing,” he says. “Schemes like Mission Youth or Startup India are launched without coordination or follow-up. Delays in implementation and lack of mentoring destroy the entire concept.”
Qalander says that interest subvention, a critical form of financial relief, often gets delayed, worsening the burden on young entrepreneurs.
“If an entrepreneur thinks they will get interest support for three years, and that support is never disbursed, it becomes a trap. Their loan repayment plans collapse,” he says.
There’s also growing concern about the quality of business advice given to first-time entrepreneurs.
“Most youth are pushed into routine ventures like fast food, boutiques, or poultry, without proper demand analysis,” Qalander says. “If your product quality is weak or your price isn’t competitive, it won’t sell, not even in Kashmir.”
While entrepreneurs call for structural reforms, banks are highlighting another concern – misuse of loan money.
A senior official at a nationalised bank in Srinagar, who has dealt with dozens of SME loans, says many new entrepreneurs start their journey with the right paperwork but the wrong priorities.
“Many times, the moment the loan is disbursed, they upgrade their lifestyle, buy a new car, plan a wedding, or move into a new home. The money meant for working capital goes elsewhere. Within a few months, the business is in trouble,” the official says. “What starts as a business loan turns into personal spending. Then the EMIs stop, and the same people blame the system.”
“Without policy reforms and stronger handholding, we are setting young people up for failure,” Qalander warns.
Experts at the Entrepreneurship Development Institute (EDI) agree that while system delays and instability are major hurdles, there is also a clear need for financial discipline and post-loan mentoring.
“We can’t expect every 23-year-old to understand capital rotation or risk management,” says a senior EDI official. “That’s why mentoring and monitoring must be built into every loan, especially for first-generation business owners.”
Recommendations from stakeholders now include the creation of dedicated advisory cells in every district, time-bound disbursal of subsidies, financial literacy training as part of the loan process, and protection mechanisms for units affected by curfews or conflict.
Back in Dubai, Muneeb says he still dreams of returning one day, not just to live, but to build again.
But he’s also clear that this will not happen unless the ground situation changes.
“Entrepreneurship in Kashmir broke me. I survived, but many won’t,” he says.
Meanwhile, Javid stares at the silent machines in his abandoned factory.
“Everyone said I was doing the right thing - starting a business and creating jobs. Now, all I have is debt. No one came to help. Not even once,” he says.
Their stories reflect a larger truth: without protection, planning, and a supportive ecosystem, entrepreneurship in Kashmir risks becoming not a solution, but a silent crisis.
