On Tuesday, while Lok Sabha debated the Modi government’s move to scrap the special status of Jammu and Kashmir, Bharat Parmar, a small stock trader on Dalal Street in downtown Mumbai, grappled with a dilemma.
“The government has made an excellent decision with respect to Kashmir, I admit that,” he said, “but it just does not understand economy.”
The government’s move to hollow out Article 370 of the Constitution, ending the relative autonomy of Jammu and Kashmir and splitting the state into two Union Territories, has come in the midst of a national economic slowdown that has been intensifying for several months.
Since the start of the new financial year, there has been a slump in the sales of fast-moving consumer goods and a negative growth in several core industrial sectors, such as the automobile industry, domestic aviation and other consumer durables. The Centre’s claim of crossing more than 7% growth this fiscal year has come under question. Even entrepreneurs and investors who have ardently supported the Bharatiya Janata Party-led government in the past had started to speak out against its failure to check the slowdown and boost the economy.
But on Monday, many of these concerns seemed to have been swept aside by the news about Jammu and Kashmir. Even as Kashmiri voices were muzzled by a near-total blockade of mobile, internet and landline connectivity in the state, most citizens of mainland India were in a jubilant mood on social media and on the streets, celebrating Prime Minister Narendra Modi and Home Minister Amit Shah’s “political masterstroke” to make Kashmir a complete part of India.
The news about Kashmir also eclipsed bleak news about India’s stock markets, which fell sharply on Monday after a record fall of the Chinese yuan, triggered by the United States’ trade war with China.
Among those directly impacted by the slump in the stock market and the economy are traders and investors on Dalal Street, home to the Bombay Stock Exchange. Did the Kashmir news boost their confidence in the BJP government and serve as a distraction from their concerns about the economy?
Not for Parmar. He cited the criminalisation of triple talaq, the launch of the Chandrayaan mission, the air force strikes in Balakot and the Swachh Bharat scheme as some of many positive initiatives of the Modi government on the “samajshastra” or sociological front. On the “arthashastra” or economic front, however, Parmar is visibly angry with the government.
“Businessmen have no confidence to invest or grow right now. The government keeps putting agencies like the CBI [Central Bureau of Investigation] and the ED [enforcement directorate] behind them, making them feel like criminals,” said Parmar. He cited the example of Jet Airways, which stopped its daily flight operations in April after it ran out of money, and is now being investigated for alleged irregularities in its accounts.
“I give this government 100 on 100 in samajshastra, but zero on 100 in arthashastra,” he said. “While voting, people prioritise social issues, but when their pockets are empty, they will realise.”
A Dalal Street stock broker, who did not wish to be named, was more explicit in his criticism of the central government. “The BJP is communal and it is anti-business,” the broker said. After a pause, he added that he was referring to small businesses. “Last year they introduced the long-term capital gain tax. Now they have introduced the surcharge on FPIs [foreign portfolio investors]. All of this affects the stock market and businesses,” he said.
Like Parmar, the stock broker believes the government’s step towards revoking Article 370 has been a powerful and positive decision. “But why should we care what they have done in Kashmir? How does it affect us? What matters is that we are facing a recession, and that this government is trying to kill the middle-class.”
‘Bold government’
Not all investors and traders, however, share these views.
Nikhil Shetty, a research analyst at a stock broking firm near Dalal Street, believes the Modi government has been bold and unafraid to take risks on all fronts, and its decision with respect to Jammu and Kashmir is just the latest example of this. “It will take a few years for things to normalise locally in Kashmir, but because of this decision, there will now be more development in Kashmir, companies will be able to go there and grow, and people will be able to buy land there,” said Shetty.
On the economic front, Shetty believes the government took a strong decision by asking banks to treat bad loans as non-performing assets in April. “The previous [Congress-led] government would try to stabilise the market by supporting and bailing out companies doing badly, but this government does not want to do that, which is better in the long-run,” said Shetty.
With the Goods and Services Tax, too, Shetty believes the Modi government took the risk of inviting the anger of various industries by forcing them to move away from their old systems of operating through “kachcha bills”. “Modi has taken tough steps to move us towards a formal economy, and people who understand this will appreciate the government,” he said.
Mutual funds investor Roopa Venkatkrishnan also commends the government for strong policies such as the introduction of GST and the bankruptcy law of 2016. The Kashmir decision, she said, has also been a strong one, since it will mean bringing development, growth and opportunity to the state.
Unlike other investors and traders Scroll.in spoke to, however, Venkatkrishnan is not worried about the health of the economy. “The economy always goes through cycles and everything is temporary – only growth is permanent,” she said. “Today, people tend to focus only on the bad, but in the long-run, I personally feel our country will do very well.”