Ziraat Times Team Report
Srinagar: The much-awaited business revival package for the turmoil and Covid pandemic-affected businesses in Jammu & Kashmir was announced by the Lt Governor Manoj Sinha on Saturday in Srinagar.
The Rs 1350 crore worth measures announced mainly related to financial support, administrative policies, banking interventions, infrastructure bottlenecks, GST and Central Government interventions.
So what is the Rs 1350 crore ‘package’ all about? Does it address the expectations of the business communities in Jammu and Kashmir regions? Would it help stimulate the economy – mainly contain job losses, business closures, bankruptcies and help job creation, overall demand for goods and services and promote investment? Here is a preliminary Ziraat Times team analysis.
What were the nature of demands by businesses communities of Kashmir and Jammu regions?
Several businesses communities of Kashmir and Jammu had submitted formal memoranda to the administration about what they expect the state to do to address the business losses in the post 5 August 2019 and post-Covid pandemic period. The communities include KCCI, Jammu Chamber of Commerce and Industry, FCIK, Jammu Federation of Industries, PHDCCCI Jammu and Kashmir chapters, CII J&K chapter and others.
The Government Committee
In response to the demands, on 17 August 2019, the Lt Governor announced a Committee headed by Advisor to the Lt Governor, Kewal Kumar Sharma, consisting of Financial Commissioner, Finance Department; Commissioner Secretary, Industries and Commerce Department; Secretary, Tourism and Chairman, J&K Bank to work out modalities for the economic revival and propose measures for extending support to the business community; and submit a report by 1st of September, 2020.
The committee met and heard around 35 business associations in J&K and noted 199 demands, out of which 49 demands related to financial support and banking interventions, 69 demands pertained to Administrative decisions, 26 demands pertain GST and other Taxes and 55 demands pertained to policy decisions.
Demands by industry : What has been agreed to and what has been not
The overall demands of the business communities related to: financial support, administrative policies, banking interventions, infrastructure bottlenecks, GST and Central Government interventions.
According to the government, “137 demands have been accepted in accordance with the principles of financial prudence, business sustainability, mutual partnership between Government and business community and legal & regulatory framework.”
There were 49 demands related to financial support and banking
intervention out of which 31 demands have been duly considered, the government said today.
Out of 69 demands involving administrative decisions, measures
have been suggested in respect of 66 demands, which include establishment of online registration and renewal systems, time bound clearances, rationalizing of covid-19 restrictions and various platforms for stakeholder consultations on a regular basis.
Out of 26 demands pertaining to issues related to GST and other taxes,
12 pertained to GST council, 7 demands stand addressed and 7 demands
are not covered under the principle of financial prudence, the government said in its package briefing.
There are 22 demands pertaining to the policy issues which have not been addressed because of what the administration says “inconsistency with the regulatory and legal framework.”
What is the financial package for businesses and borrowers?
The committee has recommended interest subvention of 5% for six months amounting to Rs 1089.24 crore, partial waiver of fixed electricity charges for one year amounting to Rs 80 crore, waiver of water charges for six months costing Rs 25 crore, time bound One Time Settlements (OTS), capital infusion in accordance with the Atma Nirbhar Bharat Abhiyan, replacement of old vehicles and insurance support costing Rs 50 crore to the transporters, support to artists and others costing Rs 108.75 crore as given below:
What the Bank and Finance Support announced is all about?
There is not much in terms of bank and finance support in the ‘package’. The administration has said that “banks will enhance powers to sanction loan by branch heads as per laid down procedures.”
Moreover, Finance Department will write to all banks to cover loans for
agriculture and allied non-farm activities under MUDRA loans e.g.
pisci-culture, bee keeping, poultry, dairy, live stock-rearing, grading,
sorting, aggregation agro industries, fishery, agri-clinics and agribusiness centers, food & agro processing etc.
The date of filing of GST reimbursement claims up to the period 31.12.2019 shall be extended to 31st December, 2020 provided that the units have filed up to date returns.
What is there for the Tourism Sector?
The ‘package’ talks about “Customised Help Tourism” scheme by J&K Bank for financial assistance to persons associated with the Tourism Sector with attractive pricing and repayment features. It does not mention any interest subvention, waiver or relief for the sector. For working capital loan there will be 2 guarantors instead of 3.
All renewals of Registration of Hotels, Restaurants and the like shall
be done in a time bound manner. The time specification has not been mentioned in the package.
Measures announced for the Industries Sector
The administration would organise buyer-seller meets at both the provinces, especially export oriented handicrafts, round the year. It also talks about creation of land bank exclusively for the establishment of food
park clusters. It is not clear whether this measure is different from the already ones in the pipeline.
Moreover, a single window portal will be setup and online clearances will be introduced.
Industry-related measures announced
Land shall be provided in the industrial estates for the
establishment of the warehouses. I&C shall conduct a comprehensive diagnostic study for solving industry-related problems and furnish a report within 3 months.
Moreover, a committee headed by Administrative Secretary I&C Department with representative of Finance Department will propose issuance of a simplified negative list for industrial incentives within 3 months.
Handicrafts sector-related measures
I&C Department shall provide online facility, display and promotion space for carpet organizations and others to promote their products.
The administration also announced that Export Promotion Board will be set up in consultation with the stakeholders within 3 months. Loan slab under Credit Card Scheme for handlooms and handicrafts will be enhanced from Rs 1 lakh to Rs 2 Lakhs with interest subvention of 7%.
Moreover, Handicraft Cluster centres will be set up in specified zones. Handloom parks will be created in J&K and possibilities for development
of handloom parks outside J&K will be explored. Registration of Instruments will be done by Revenue Department on daily basis, and not more than 7 days.
Agriculture/Horticulture and allied sectors
Framer Producer Organisations will be increased with market linkages, the administration said. It is not clear whether this announcement relates to new crop marketing policy decisions announced earlier this year.
Housing and Urban Development:
STPs of Srinagar will be completed in time bound manner providing
relief to Hotels. Building permissions will be given in a time bound manner within 3 months.
Youth and women entrepreneurs
Special desk shall be created to address youth and women entrepreneurs in the J&K Bank. The facility shall be put in place by the J&K Bank by 1st of October, 2020.
Exclusive market space will be created for women entrepreneurs.
CBSE Registration of Schools
Renewal of registration of Schools will be done in a time bound
manner and affiliation process with the CBSE board shall be eased
out to have more CBSE school registrations.
Other committees formed
➢ Committee to be constituted for settlement of Bank, Finance and
Industry issues with association representatives as members to be
chaired by Finance Department.
➢ Constitution of committees in each Province/District involving
members of the business associations to address their issues which
shall meet every month at district level and every two months at
provincial level to settle issues of business community. The
committees shall have representatives from I&C/Finance/Banks as
its members.
Government of India plan to do next
➢ Notification of the new Industrial Policy for J&K in the coming days.
➢ GST Issues- reduction in tax rates from 12% to 5% in case of all
handicraft items.
➢ Allowing local filters for procurement through MSME on GEM for a
period of 2 years in J&K in view of difficulties due to the abolition of the
toll tax. Request has been made to CEO GEM who has taken up matter
with Department of Expenditure, Ministry of Finance. Alternatively,
procurement from MSME may be allowed in J&K through e-tendering
for 2 years in relaxation of GFR.
On Srinagar-Jammu Highway
The administration has talked about “stabilization of National Highway between Srinagar and Jammu to avoid frequent disruptions.”
Whether that would include special administrative measures for training of Traffic Department or special measures in containing land slides or improving movement-worthiness of the road remains unclear.