After successive lockdowns, first on account of the August 5 decisions and other forced by covid-19 pandemic, the economic activity had plummeted in Jammu and Kashmir. However, there is some improvement in economic indicators over the past two months or so which suggests that the process of normalisation of economic activities is underway even as it remains far away from being ideal.
One of the indicators, at least for the government, is that the GST collections are showing a positive trend as the total SGST collections stood at Rs. 359.84 cr, and Rs.435.39 cr for the month of August and September respectively.
The government underlined that the continuous increase in GST collections is “clearly indicating a growth in the business activities and the taxable transactions.”
Similarly, the government says that the revenue collections under MST stands at Rs.141.00 cr for the month of October and it is expected to grow at Rs.150cr for the month of November.
However, one must be cautious while interpreting these numbers. For instance, large parts of the high-contact services sector such as airlines, hospitality and tourism continue to lag the industrial sector, and their revival in part depends on the success in containing the covid-19. Talking about tourism, the covid-19 remains a dampener. Tourism contributes about 7% of the GDP of J&K and before it could have shown any revival post 5 August 2019 decisions amid uncertain security environment, covid-19 announced its arrival. Government has a great role and cannot rest on its hands. This is the time when efforts should be made to revive the industry by making it affordable for the sightseers to visit. Lieutenant governor’s recent statement regarding the revival of tourism sector being government’s is topmost priority is welcome and new policies talked about should really help in value creation and profitability for the local businesses.
As far as other sectors, it is good to keep the optimism but it needs to be tempered. For one, part of the recovery in economic activities can be traced to certain factors which are itself dithering. Whether this momentum sustains or the extent beyond the months of harsh winter remains to be seen. Then, there is the possibility of a surge in COVID-19 infections during the season which could heighten risk aversion. This along with continuing income uncertainty could unfavorably impact the growth trajectory going forward and thus caution must be maintained.