Never-ending struggle of J&K’s young entrepreneurs

Sarwar Malik

For over a decade, J&K witnessed a sharp rise in entrepreneurship. A good number of youngsters chose to leave their well-paying jobs to become entrepreneurs and job creators. Youngsters, who were settled outside, came back to invest in Kashmir and contribute their bit towards its development.

While dealing with conflicting social attitudes and other youth-related issues, these youngsters too have to face all those pressures faced by any other businessperson. Entrepreneurship is seen as a channel for the talents of many highly educated young people to explore their potential and cash their business acumen. Lack of jobs and the rise in unemployment is also seen as the main reason for growing entrepreneurship here.

At 16.2%, Jammu and Kashmir has the second-worst unemployment rate among states/union territories in the country as educated youth struggle with neglect and lack of job-creation policy. Evidence shows that the unemployed are unhappier, more likely to experience a range of health issues, for young people the effects of unemployment may be particularly scarring, evidence suggests that a spell of youth unemployment increases the likelihood of poorer wages and unemployment in later life. As per the Economic Survey Report of 2016, the employment rate in Jammu and Kashmir is higher than the average national employment rate. Nearly a quarter of its population in the age group of 18 to 29 years is unemployed, which is far more than the national rate of 13.2%.

Adding to it, the financial crisis post-2014 Floods and turmoil in 2016, youngsters find themselves hanging in between the continued geopolitical issues. However, the government came up with certain startup policies through JKEDI, PMEGP, PMMY, JKREGP, Standup India which somehow came like a hope for those who wanted to start their own enterprise. But this was not the end of their struggle, because most of the times the amount sanctioned through these schemes required to have either mortgage or guarantors by the financial institutions. It has also been witnessed that most of the projects sanctioned are either under-financed or poorly financed. Even maximum of the times banks don’t appreciate credit guarantee CGTMSE cover where govt promise up to Rs 2 crore without any guarantee or mortgage.

It’s also required to have your own place of work either owned or leased, which also becomes a reason for aspirants to give up because it’s not easy for everyone to have their own business place and at the same time it’s not easy to acquire leased place and above all, there is no land available in any industrial area throughout J&K. While discussing the latest J&K industrial land allotment policy 2021-30, there is no special quota for youngsters especially women entrepreneurs and there is no relaxation of land premium as well, which means that anyone be it a well-established businessman or aspiring entrepreneur or any new startup, the procedure of land allotment remains same, and that is the reason we see most of the industrial estates are dominated by either businessmen or second-generation entrepreneurs.

While going through our industrial policy and the latest Central Industrial Development Scheme of Rs 28,400 crore announced by the Lt Governor, it’s again a ray of hope for youngsters but how is this possible when there is lack of ease of doing business or poor management in any implementing department.  In 2020 the union territory has obtained 21st rank in ease of doing business which may be better than 29th rank in 2018 but on a broader perspective, J&K doesn’t even contribute 1% to the average national income.

Promoting youth entrepreneurship will not only help in reducing unemployment but more importantly showing young people that they have alternatives to create their own destiny by starting their own companies and just not waiting to find a job. A lot of constraints and perceived barriers to youth entrepreneurship have been identified as lack of capital, poor infrastructure, strict and cumbersome Government regulations, lack of guidance and awareness etc. J&K is facing slow growth of entrepreneurship due to least developed infrastructural facilities like communication, transport, power, and economic information etc.

Entrepreneurs create jobs, increase innovation, raise competition and are responsive to changing economic opportunities and trends. Entrepreneurship offers other positive externalities. A young person setting up a new business may provide ‘demonstration’ or learning externalities in that they may act as a role model for other young people. This may be particularly advantageous in deprived communities because setting up a new business especially if it goes on to be successful may signal that entrepreneurship is a mechanism for helping disadvantaged people break out of social exclusion. Indeed, one of the reasons why youth entrepreneurship is so attractive is that it offers an indigenous solution to economic disadvantage.

In spite of the increasing recognition of entrepreneurship as a source of job creation, regional development, and economic dynamism in a rapidly globalising world, there has been no systematic attempt to look at it from a youth angle. Youth entrepreneurship is picking up fast not only in developed states but also in developing states/UTs like J&K. Yet the overall poor rate of entrepreneurship may be attributed to several different factors like lack of venture capital, lack of infrastructure and political instability. While the state government has provided a host of incentives for industrial development, the rate of youth entrepreneurship remains low. Educated, skilled and unskilled youth need to consider entrepreneurship.

Post lockdown August 5, 2019, in continuation with the emergency lockdown of Covid19, came like a dent to already struggling economy. Entrepreneurs were still paying the losses of the turmoil of 2016 through the bank restructuring scheme which was supposed to end in December 2019. This instability caused huge sufferings to young entrepreneurs and ultimately lost all their savings and working capitals. As per the study held by the Youth Co:Lab (Asia Pacific) 86% of young entrepreneurs reported that coronavirus has negatively impacted their business. Among these, 1 in 3 report a major slowdown, and 1 in 4 have stopped entirely. Of the young entrepreneurs who report that coronavirus has negatively impacted their business, 88% have experienced reduced customer demand, 34% have experienced supply chain disruptions, 26% cannot progress government business, and 25% have experienced distribution disruption.

The special economic package which was announced by the Finance Minister, Smt. Nirmala Sitharaman on 13 May 2020. The name of the Scheme is ‘Distressed Assets Fund – Subordinate Debt for Stressed MSMEs but it came in the form of another loan and ultimately increased the liabilities of struggling entrepreneurs. As per another survey held by local body CYIK only 9.5% of young entrepreneurs reported that their business has received a tax break, loan, grant, subsidy, or another form of support.

Despite these negative impacts, the youth-led enterprises across J&K are innovating to support their communities to combat coronavirus and build back better. Youth-led enterprises are fighting misinformation, mobilising community action to protect the vulnerable, and developing innovative new products and services.

The author is CEO of Huckleberry Industries and MD at Proactive Premium Water and also general secretary at Consortium Of Young Industrialists representing young industrialists at various economic platforms