December 2016 News

Demonetisation Effect: Kashmir Valley Deals Coolly With Cash Crunch

9 December 2016
The Economic Times
Hakeem Irfan

Srinagar: Kashmir Valley has dealt coolly with the cash crunch that has rest of India agitated. They have become accustomed to hardships amid near-shutdown in the Valley since July and the age-old practice of stocking up on essentials before the onset of winter. The ongoing protests in the Valley, triggered by the killing of Hizb-ul-Mujahideen commander Burhan Wani in July, had already halted the cash flow and daily-wage operations in the state. Intermittent restrictions on use of the Internet as a means to curb separatist activities meant that people were used to their credit and debit cards being rendered useless every time the clampdown happened, thus diluting any immediate adverse consequence of the now month-old demonetisation drive on businesses and service sectors in the state. While there were hiccups, after the Centre said on November 8 that it would no longer recognise old Rs 500 and Rs 1,000 notes, processes largely fell in line after the first week. Showkat Anwar, a teacher of economics at Central University, Kashmir, said the valley has a culture of stocking essentials-earlier due to the weather and now due to the conflict situation in the state. 'However, trust and credit still play a vital role in our business and daily transactions,' he said. Others attributed the absence of chaos to the government's financial inclusion drive and a strong network of bank branches in the state. 'We have a huge network of banks and bank accounts. People with their innate scepticism due to circumstances are financially more literate and thus less perturbed,' Abdul Rahim Rather, former finance minister of J&K and senior National Conference leader, told ET. As per the latest government data, the state has a network of 1,936 branches of scheduled commercial banks, co-operative banks and state financial corporations operating across the state. On an average, one bank branch is available for 6,500 people compared with the national average of one branch for 10,000 persons. For a population of about 12.5 million, there are more than 15 million bank accounts in the state, most of these in the J&K Bank. 'Essentially, J&K is an average middle class society. We are not poor, but we don't have huge incomes as well. Also we don't hold cash at home and deal mostly in cheques,' Anwar said. Experts and some business owners said the 'over cautious attitude' of Kashmiris has worked well for them once again. 'Like mostly unused multi-storied houses rescued us during the 2014 floods, the bank accounts saved us this time. All of us either keep the money in the bank or invest in real estate or bullion,' said Manzoor Ahmad, a wholesale trader in essential commodities who operates in Srinagar.