Two months on, India’s lockdown threatens to capsize Kashmir’s economy

Two months on, India's lockdown threatens to capsize Kashmir's economy

Wooden tourist boats, known as shikaras, are moored on Kashmir’s Dal Lake. The Indian government’s revocation of Kashmir’s autonomy in August has had a devastating impact on the local economy, particularly for the tourist industry.


Abdur Rashid Dar steps forward to greet passersby on the road that passes the famous Dal Lake in Srinagar, the largest city and summer capital of the Indian state of Jammu and Kashmir. The owner of a shikarah (a wooden, gondola-like boat), he tells potential customers: “I will charge you just 200 rupees (approximately US$2.80) for a one-hour ride”. Normally, the going rate is Rs600 (approximately US$8.45).

Nestled in the Himalayas, Srinagar is a popular destination for Indian and foreign tourists between April and October, when ‘India’s Alps’ are at their most beautiful. But not this year. “There are no tourists in Kashmir Valley,” says Dar. Around 600 shikarahs have been moored while over 900 houseboats lie silent and empty on the other side of the lake. “We haven’t earned anything for the past two months. There is no hope for the future”.

Tourists fled Kashmir on 3 August, two days before the New Delhi government unilaterally revoked Article 370 which granted Kashmir autonomy within the Indian Union, plunging the disputed region into complete turmoil. For the first time since conflict broke out between India and Pakistan over Kashmir in 1947 (Jammu, the Hindu majority part of the state, has been largely unaffected), more than 340,000 tourists (including an estimated 200,000 Hindus on the annual Amarnath Yatra pilgrimage) were ordered by the government to leave India’s only Muslim-majority state within 24 hours due to concerns over “terror threats”.

Within two days, Kashmir was empty of all outsiders, including thousands of the estimated 400,000 migrant workers living and working in the state from other parts of India.

Although migrant workers were not asked to leave, the economic impact of the abrogation has seen work dry up for many workers, while others are worried about the possible escalation of violence – especially as at least 38,000 Indian troops have been sent in to join the existing 500,000 Indian soldiers and police officers already installed to ‘keep the peace’.

The BBC reports that the lock-down has cost Kashmir’s economy more than US$1.4 billion, with tens of thousands of jobs having been lost. But the tourism industry, which forms 6.8 per cent of Kashmir’s GDP and employs an estimated two million people in the region, has been dealt a crippling blow in the middle of peak season. Every other sector is also sustaining heavy losses, says Sheikh Ashiq Ahmad, president of Kashmir Chamber of Commerce and Industries (KCCI): “We don’t see any hope in the near to medium term”.

Althougha limited number of mobile phone services were restored last week, there has been a communications blackout since 5 August, with telephone networks and the internet cut off. The government said this was done to stop false rumours from circulating, although Kashmiris say it is an attempt to prevent any organised mobilisation from taking place. Public gatherings have been banned, and hundreds of political and civil society leaders have been detained. In South Kashmir villages, there have been reports of torture and arbitrary arrests by Indian security personnel.

A new phase in seven decades of conflict

A presidential decree issued on 5 August 2019 by the government of Prime Minister Narendra Modi of the Hindu nationalist party BJP revoked Article 370 of India’s constitution, which had guaranteed Kashmir’s autonomy and right to its own constitution. The state was also bifurcated into two union territories (Jammu & Kashmir and Ladakh) which are now under direct rule from New Delhi.

Divesting Jammu & Kashmir of its autonomy was part of the long-standing ideological agenda of the far-right BJP which believes in “one constitution, one flag and one prime minister”. But Kashmiris cherished Article 370 as it allowed them a degree of self-rule (the Delhi government only controlled its defence, foreign relations and communications) and also helped safeguard the state’s unique culture and demographic character (68.3 per cent Muslim).

This is why New Delhi’s move has deeply alienated the people of Kashmir. It has also antagonised Pakistan, which controls one-third of Kashmir and disputes India’s control of the remaining two-thirds of the territory. The two nations have fought three wars in a bid to gain control of the entire state. For the past three decades, Kashmir has been the site of an armed separatist struggle resulting in the deaths of 70,000 people, most of whom were civilians. There are fears that India’s abrogation could lead to a fourth conflict between the two nuclear states.

Pakistan is now confronted with a stark choice: it can either acquiesce to India’s control of the state or resist it. A similar choice faces the people of Kashmir who fear its absorption will pave the way for a major and engineered demographic change within the state.

With the removal of Kashmir’s special status, people from the rest of India will now be able to purchase land in Kashmir. Kashmiris suspect that the real intent behind the federal government’s scrapping of Article 370 is to dilute Jammu & Kashmir’s Muslim majority, which the BJP sees as the reason for the long-running separatist struggle.

With the possibility of conflict blowing in the wind, the people of Kashmir are struggling to carry on as normal. Every sector – from public transport to handicrafts to agriculture to IT – has been adversely affected. In Srinagar’s industrial enclave in Rangreth, located at the southern edge of the city, around 12 IT companies, many of them Business Process Outsourcing centres serving clients around the world, have stopped working entirely. Between them, the 12 companies employ around 1500 people, all of whom are facing an uncertain future if the government doesn’t soon restore the internet.

“We provide software services to companies based in United States, Europe and Dubai, but we are as good as dead now,” says the owner of a company who didn’t want to identify himself for fear of running afoul of the government. His company hires around 150 people, but his employees no longer come to work as there is nothing for them to do. Like many workers in Kashmir, they are not being paid.

Withering orchards and new labour laws

Kashmir is the largest producer of apples in India but today there are trees full of unpicked fruit in its orchards. It is the middle of the harvest season but there is nothing that Basharat Rasool, a farm owner in northern Kashmir, can do. Like fruit growers throughout the state, he faces formidable challenges in picking, packing and transporting his produce to markets both inside and outside of Kashmir. “We can’t contact the fruit traders in New Delhi and the other parts of the country to negotiate prices,” says Rasool, adding that he recently he had to travel 400 kilometres to Jammu just to text a trader his bank account number.

Horticulture, which is spread across 75,000 hectares of land and employs more than three million people in Kashmir, earns about Rs 65 billion (approximately US$913 million) for the state. “If nothing is done to salvage this harvest, thousands of families will suffer,” says Mohammad Yusuf Dar, president of the Kashmir Apple Growers and Dealers Association. “We urge the government to restore the communications as that will enable farmers to independently take care of their produce.”

Dar expressed his dissatisfaction with the recently announced Government Market Intervention Scheme whereby a state-run cooperative, the National Agriculture Cooperative Marketing Federation of India (NAFED), pledged to buy all of Kashmir’s apples at competitive prices. “But this isn’t working out,” says Dar.

“The cooperative is not paying competitive prices at all.” For example, Dar says that NAFED officials frequently rank A grade quality apples as B grade: “Instead of Rs 52 (approximately US$0.58) a kg, they only pay farmers Rs 33 (US$0.33). The government also said that NAFED will make payments within three days, but we still haven’t received payment after 20 days.”

Meanwhile, New Delhi is set to roll-out far-reaching constitutional and legal changes following the abrogation of Article 370, to bring Jammu & Kashmir in line with the rest of the union. Of particular concern for India’s national trade union centres are the government’s plans to merge 44 existing labour laws into four, concerning wages, industrial relations, social security and occupational health and safety. Trade unions say that the new bill will only cover 10 per cent of Indian workers and will further subjugate workers’ rights in the interests of business.

And with winter due to set in next month, a significant amount of commercial activity will disappear. The prevailing despair has been heightened by the receding hope of an improvement in the situation in near future. One major reason for this is the absence of leadership with the ongoing protests. Scores of separatist and establishment leaders, including some Kashmiri business leaders, have been arrested, amongst them Shakeel Qalander (the former president of KCCI), Mubeen Shah (the former president of the Federation Chamber of Industries) and Yasin Khan (president of Kashmir Economic Alliance). In their absence, there is no one to steer the public resistance against the repeal of Article 370, which looks set to take a huge toll on workers and industry for the foreseeable future.