Srinagar, Feb 1: As Finance Minister Nirmala Sitharaman is set to unveil the Union Budget 2022 today, Jammu & Kashmir’s business community is keenly looking forward to interventions that could give them a reprieve from their ballooning debts and shrinking business and bottomlines.
While there are widespread anticipations that this budget is likely to be a populist one considering the the upcoming elections, there is also a sentiment that the rising fiscal deficit does not provide Nirmala Sitharaman with a good elbow room.
Officials at the Finance Ministry and economic advisers of major political parties whom Ziraat Times engaged with mince no words that the union government cannot ignore the situation of the pandemic-hit businesses that have accumulated huge debts and are unable to repay due to shrinking demand.
There is a general consensus that the business relief measures announced in 2021 by the Union government, which have largely focused on providing much-needed capital to struggling businesses on softer conditions and interest rates, have not necessarily helped the demand side and the bottomlines.
In this background, what is it that needs to be done for helping Jammu & Kashmir’s industrial and business communities to revive businesses, save jobs and maintain the growth momentum in the government’s tax revenues?
Ziraat Times surveyed key sectors of J&K’s economy, and spoke to prominent business leaders about their expectations from the 2022 budgets and also their views about the Special One Time Settlement Scheme announced by the J&K Bank for defaulting businesses recently.
There is a general agreement that the long pandemic-related lockdowns, changes in the GST, toll tax and procurement policies of J&K government after August 5, 2019, have made a sizeable proportion of J&K’s businesses in industrial and tourism sectors unviable.
That situation, businesses maintain, has ballooned their bank liabilities, risking insolvency and job losses at a large scale.
According to the President of the Jammu Chamber of Commerce and Industries, Arun Gupta, the announcement of special OTS by the J&K Bank was good and timely, however, its scope will have to be widened for enabling it to make a positive impact.
“The OTS scheme is a welcome move, but, at the same time, it should not be confined by time and slab limits. It should be for all the businessmen of J&K who want to repay their loans, but, due to the situation, have incurred huge losses. Besides, there should be an extension in time limit for the scheme to be availed by the business community, as during COVID there is a slump in the market and people are not earning enough to clear their outstanding liabilities.”
Several key tourism industry players, on the other hand, sound more sanguine.
Mushtaq Ahmad Chaya, Chairman of Jammu and Kashmir Hoteliers Club, a crucial body of the hospitality sector, contributing a major chunk to J&K’s GSDP, believes that the scheme is good for the business community of J&K. While expressing his gratitude to the new leadership of the J&K Bank, Mr Chaya believes that the scheme can be helpful to the distressed business community in J&K.
“We urge the bank authorities not to make the Special Scheme time-bound and extend the re-payment time of six months as the Covid restrictions started all over India, that affects the business community directly”, he added.
The industrial sector, on the other hand, perceived to be hit harder by the new laws, views the situation somewhat through a different prism.
Shahid Kamili, President, Federation Chamber of Industries Kashmir (FCIK) is of the opinion that a special OTS scheme would serve its purpose only when there is no limit for distressed account holders to avail of this scheme.
“The scheme caters to loans ranging from Rs 15 lakhs to Rs 5 crore, but what about those businesses that don’t come under this scheme as per the bank’s guidelines?”, he asks.
“How is a small shopkeeper, who has credit exposure of just Rs 5 lakh, and has incurred losses due to the situation here, or somebody who has credit exposure of hundreds of crores, supposed to deal with his accumulated debts? Also, the scheme is for D3 account holders, but what about those who are on verge of becoming NPAs and they want to repay loans under this scheme? Therefore, our stand is clear that this scheme is good but it needs modifications to cater to all the distressed businessmen.”
J&K’s busienss community has expectations that the union government is cognisant of the ramifications of job losses and dip in government’s tax revenues if the banks are not supported through special fiscal measures to provide interest relief to J&K’s businesses.
President, Kashmir Chamber of Commerce and Industries (KCCI), Sheikh Ashiq, while maintaining that the chamber has welcomed the one time settlement scheme for struggling businesses, it want modifications in the scheme.
“It should be for all the businessmen who are under financial distress due to the prevailing situation in Kashmir. There should not be any limit like the scheme has envisaged which is likely to restrict its impact. Besides that, the time limit for repayment is brief. Even if a businessman, whose account has turned NPA, wants to sell his property to clear his loan, he won’t be able to do so in this short period, and to add to it, the pandemic situation has derailed economic activities.”
“30-day scheme validity is too less a time for repayment, for which the sanction or otherwise will be conveyed within seven working days of the receipt of application with a maximum repayment period of six months, is a very tricky one”, he told Ziraat Times.
Chairman, PHDCCI Kashmir Chapter, Baldev Singh Raina, who runs businesses with sizeable jobs and financial turnovers, told Ziraat Times that the struggling business community in J&K needs succor as it has suffered huge losses and they have, time and again, showed their commitment to repay loans.
“J&K has the lowest NPA rate across India, it shows our honesty. The recently announced NPA scheme is good for the business community but it doesn’t cover big businesses or even small businesses who have less credit exposure but have been badly hit by the COVID and other situations in Kashmir and now want to clear their loans”, Mr Baldev said.
“We urge the government to consider this and the J&K Bank to extend this scheme for all. It would bring cash back to the bank and also help distressed businessmen”, he added.
The private education sector in J&K, with significant credit exposure, despite the closure of schools for more than two years now, sees the situation manageable.
“I don’t think the one time settlement scheme of banks will have any impact on private schools as usually banks deduct their EMIs from fee collected from students, which is deposited in banks. We usually borrow money for buying school buses, which remain mortgaged till the amount is repaid”, Chairman, J&K Private Schools Association, G. N. Var said
Businesses with lower range credit exposure in J&K are of the view that the Budget 2022 has to have a provision for providing them interest relief.
President, of Srinagar city’s Shahr-e-Kashmir Traders and Manufacturers Committee, Bashir Ahmad Kenu has already made an appeal to the finance minister. He tells Ziraat Times that they want a financial package from the government because they are incurring losses due to government-imposed lockdowns for which they need to be provided some kind of interest relief compensation.
“I believe that once a business opts for OTS scheme, they declare themselves to be NPAs and their business automatically gets red tagged, which is not good for their future business. We want J&K Bank to waive off interest and the government to come up with a comprehensive financial package for the business community”, he added.
President, Kashmir Business Council, Altaf Dar feels positive about any scheme providing an opportunity to businesses to repay their debts with interest relief.
“I don’t want to go into the question who will get benefit from this one time settlement scheme. Whosoever gets it is good because they are from our business fraternity. Regarding the issue of bringing small businesses into this ambit, we have already taken up the issue with the bank management and are hopeful that they would consider it.”
