Saeed Owais

Micro Economic dynamics of Conflict in Kashmir: an Impact Assessment at the Household Level



Recent research in economics has established that violent conflict is a development issue. It most often than not, erupts from aspiration to develop. However at the same time it reverses development. A dedicated research agenda under the banner of “Greed v/s Grievances” has underscored the dynamics involved in genesis, evolution and development of economics literature dealing with conflict and conflict situation. Whatever the reasons for its emergence and onset, there is no denying with respect to negative externalities of armed conflicts. There is a vast literature available today which documents consequences of violence on productive structure of an economy. Impact of armed conflict on GDP growth, Capital formation, employment, natural resources and their appropriation is a case in point. It adversely affects GDP growth, destroys infrastructure, causes capital flight and affects institutions and governance. Moreover, it diverts resources from productive activities to violence induced activities. The dynamic variables of an economy get stagnated and may even move in a reverse direction. However, scant attention has been paid to the exploration of micro level impacts of armed conflicts. Effects of conflict on individual level, at the household and community level, especially in the Indian context are almost unexplored. Violent conflict as a continuum of war and peace like situation, occasions a mechanism by which people at household level get trapped into a continuous cycle of fear, economic deprivation broadly stemming from lack of bleak opportunities of employment and human capital formation. Conflict alters human behavior. Accordingly the rational human being, hypothesized by economic theory tends to respond back with observable deviations from the prescribed rules laid down by the theory of economic rationality. Armed conflict kills humans, destroys assets, damages homes and livelihoods, bleaks opportunities and restricts market access, thereby, forcing people into extreme forms of poverty which becomes persistent if a household is unable to replace labor.

Barring few exceptions one does not find any research effort carried out to understand macro as well as the micro level dynamics and economic causes and consequences involved in perpetual armed conflicts in India. This is so, notwithstanding the fact that there are multiple instances of fragilities, political as well as socioeconomic within its geographical extent. This for sure impacts its growth trajectory. Be it the North East, the mainland, the South or the extreme north, some sort of politically motivated and social engineered conflicts have been a historical legacy. One of the most outlived conflict situations prevailing within the Indian mainland that has attracted appreciable international attention and at the same time has affected growth prospects of a resourceful region is the Kashmir conflict.

The Jammu and Kashmir state has lived a violent armed conflict since 1990s. This conflict has killed tens and thousands of people, destroyed infrastructure worth billions, and made environment fragile for any sort of investment. Volume after volume has emerged on the political dimension of this issue. Research and reliable literature on its economic dimension in general and microeconomic dimension in particular has not at all been forthcoming. It is in this backdrop that the present study attempts to explore the growth dynamics of household in conflict situations. This study will, thus, deliberate on how conflict in Kashmir has interacted with household welfare variables. An attempt will be made to investigate the exposure of employment, investment, savings, assets creation and earning capacity at the individual level to fragility in case of the twenty nine years of low intensity armed conflict in Kashmir. The proposed study will be based on first hand field study and relevant secondary data to empirically analyze impact of micro level economic impact of armed conflict at the household level. This study although based in Kashmir is expected to be of huge relevance to development perspectives elsewhere in the Indian context.