Status and Performance of Handicraft Sector in J&K Economy: A case Study of Kashmir Valley

Shazia Hamid and Dr. Imtiyaz-ul-Haq

Research Scholar, Department of Economics, University of Kashmir, Srinagar-J&K India

Senior Assistant Professor, Department of Economics, Department of Economics, University of Kashmir, Srinagar-J&K India

ABSTRACT:

Owing to a rich craft tradition, the Handicrafts sector continues to occupy a distinct and unique place in the economy of Jammu and Kashmir State. The handicrafts made by artisans of J&K state are acclaimed globally irrespective of the growing competition. In the absence of large scale industries in the state, handicraft sector has remained a key economic activity in the state of Jammu and Kashmir. Handicraft sector is one of the main revenue earning sectors of the State in terms of people employed, production and export earnings, etc., and thus plays a vital role in overall economic development of the state. In this context the government of the State stresses the role of cottage and Small-scale industries in the development of the State economy. Also, this sector has been successful in creating direct and indirect employment to a large number of people across the state. Through the present study an attempt has been made to analyze the performance and importance of Handicraft sector in the State economy by examining the changes in various variables like production, employment and exports.

HANDICRAFT SECTOR- AN OVERVIEW

Jammu and Kashmir is viewed as a state confronted with problems of isolation, inaccessible areas and lack of industrial infrastructure. However the state is rich in mineral resources, water resources, tourism, Horticulture and Handicraft industry. Because of the absence of large scale industries in the state, Handicrafts has remained a key economic activity in the state of Jammu and Kashmir. In this context the government of the State stresses the role of cottage and Small-scale industries in the development of the State economy. The handicraft sector is basically a home-based or cottage industry which has a direct impact on employment generation, thus, creating jobs at minimal costs. Apart from the distinctive advantages offered by this sector, it has been successful in creating direct and indirect employment to a large number of people across the state. Accordingly, Handicraft sector occupies an important place in the economic structure of the state for its significant contribution. This is evident from the fact that this sector has been able to produce goods worth Rs. 1650 crores at the end of the year 2010-11.

Handicraft industry represents a unique expression of a particular culture or region by way of its local craftsmanship. Kashmiri Handicraft products which include Carpets, Shawls, Namdhas, Crewel, Wood-Carving, Paper-Machie, etc are acclaimed throughout the world for their exquisite designs, excellent craftsmanship and functional utility. These world famous traditional crafts are produced by talented and artistic Kashmiri craftsmen and the products made by them find their customers not only in India but abroad as well.

The Handicraft activities are especially carried in Kashmir valley which is called “the home of Handicraft goods”. Apart from being environment friendly, these activities are best suited to the state as they are more labor intensive and less capital intensive. Besides, the establishment of this sector requires less of infrastructure as well.

Status and Performance of Handicraft Sector:

The handicrafts industry occupies an important place in the economy of the State. This sector engages approximately 3.74 lakh artisans in the state. The overall production of the handicraft sector has been quite encouraging as it increased from Rs. 821.53 Crore in 2003-04 to Rs. 1650.30 Crore during 2010-11, thereby registering annual average growth of 14%. The export of handicraft products increased from Rs. 595.00 Crore to Rs 1004.10 Crore during 2010-11. The exports had decelerated during 2008-09 and 2009-10 which is primarily attributed to the global recession in the world market. To give boost to this Industry, the State Govt. is laying focus on product design, diversification, providing adequate credit facilities, enhancing weaver’s productivity through up-gradation of skills, use of efficient looms, providing market access through incentives and wide publicity.

Table: 1 Production of Handicraft Goods (Rs in Crores)

Year	Carpet	Shawls	Papier Machie	Other items	Total
2003-04	450.53	275.00	13.50	82.50	821.53
2004-05	425.00	315.00	24.00	123.00	887.00
2005-06	425.00	310.00	30.00	135.00	900.00
2006-07	450.50	320.00	35.00	144.50	950.00
2007-08	761.27	420.58	37.92	394.82	1614.59
2008-09	457.60	303.45	35.49	303.46	1100.00
2009-10	638.17	201.03	10.15	151.15	1000.00
2010-11	735.10	343.10	38.32	533.78	1650.30
%age composition of Handicraft production	45 %	21 %	2 %	32 %	100 %
Average annual growth rate	9 %	4 %	26 %	78 %	14 %

Source: Economic Survey J&K, 2012-13

The figures given above show the craft-wise production in the handicraft sector from 2003-04 to 2010-11. The overall production of the handicraft sector has been quite encouraging which goes in line with hypothesis first of the study as it increased from Rs 821.53 Crore in 2003-04 to Rs 1650.30 Crore during 2010-11, thereby registering annual average growth of 14%. As regarding the composition, the carpets account for major chunk and constitute 45% of the total volume of production. This is followed by “other products” (chain stitch, namda, crewel, wood carving etc.) with 32% and shawls 21%. Papier Machie constitutes only 2% of the total production value. Craft-wise trend analysis indicate that while the over-all production volume has almost doubled during the period 2003-04 to 2010-11, there has been six-fold increase in production of “other products” registering average annual growth of 78%. Papier Machie and Carpets have recorded average growth of 26% and 9% respectively with lowest increase recorded for shawl products viz. only 4%.

Table: 2 Exports of Handicraft Goods during 2003-04 to 2010-11 (Rs in Crores)

Year	Carpet	Shawls	Papier Machie	Other Items	Total
2003-04	334.00	196.00	10.50	54.50	595.00
2004-05	307.50	210.00	17.50	107.00	642.00
2005-06	325.00	220.00	27.50	132.50	705.00
2006-07	351.50	275.00	31.50	127.00	785.00
2007-08	649.02	310.29	33.65	207.51	1200.47
2008-09	326.00	226.50	41.00	112.00	705.50
2009-10	407.73	137.13	30.27	86.14	661.27
2010-11	412.25	302.00	66.50	223.15	1004.10
%age contribution	41.08 %	30.08 %	6.62 %	22.22 %	100.00 %

Source: Economic Survey J&K, 2012-13

Carpets and shawls alone account for 71% of the total export of handicraft products followed by “other products” (22%) and papier machie (7%). The export of handicraft products increased from Rs 595.00 Crore to Rs 1004.10 Crore during 2010-11. The exports decelerated during 2008-09 and 2009-10 which is primarily attributed to the global recession in the world market. However, during 2010-11, the exports were of the order of Rs 441.24 Crore. The department is taking necessary steps to boost the export of handicrafts products in the State.

Table 3 and fig 1 below gives a picture of the performance of handicraft industry in terms of its production, employment and exports.

Table: 3: Percentage Change in Production, Employment and Exports during the Period 1980- 2010

S. No	Year	Production (Rs in Crores)		Employment (Lakh nos.)		Exports (Rs in crores)
1	1980	57.82	-	1.44	-	39.92	-
2	1981	58.31	(0.84)	1.52	(5.55)	39.93	(0.025)
3	1982	80.82	(38.60)	1.63	(7.23)	39.95	(0.05)
4	1983	96.54	(19.45)	1.68	(3.06)	39.97	(0.05)
5	1984	100.00	(3.58)	1.76	(4.76)	39.99	(0.05)
6	1985	105.00	(5.00)	1.85	(5.11)	40.00	(0.025)
7	1986	128.75	(22.60)	2.06	(11.35)	42.34	(5.85)
8	1987	150.32	(16.75)	2.38	(15.53)	44.00	(3.92)
9	1988	190.44	(26.68)	2.49	(4.62)	48.76	(10.22)
10	1989	230.21	(20.88)	2.38	(-4.4)	58.43	(19.83)
11	1990	200.00	(- 13.12)	2.25	(-5.46)	34.60	(-40.78)
12	1991	180.00	(- 10.0)	2.13	(-5.33)	33.99	(-1.76)
13	1992	171.65	(-4.63)	2.01	(-5.63)	33.00	(-2.91)
14	1993	200.17	(16.61)	2.21	(9.95)	33.59	(1.78)
15	1994	220.85	(10.33)	2.49	(12.66)	110.54	(229.08)
16	1995	250.00	(13.19)	2.78	(11.64)	293.50	(165.51)
17	1996	260.00	(4.00)	2.90	(4.31)	88.14	(-69.97)
18	1997	275.00	(5.76)	3.00	(3.45)	118.30	(34.22)
19	1998	280.00	(1.81)	3.10	(3.33)	247.00	(108.79)
20	1999	633.03	(126.08)	3.20	(3.22)	556.99	(125.50)
21	2000	696.33	(9.05)	3.29	(2.81)	439.90	(-21.02)
22	2001	765.94	(9.01)	3.87	(17.63)	504.25	(14.57)
23	2002	775.00	(1.18)	3.45	(-10.85)	549.20	(8.91)
24	2003	821.53	(6.00)	3.52	(2.03)	595.00	(8.38)
25	2004	887.00	(7.96)	3.58	(1.70)	642.00	(7.89)
26	2005	900.00	(1.46)	3.66	(2.23)	705.00	(9.81)
27	2006	950.00	(5.55)	3.74	(2.19)	785.00	(11.34)
28	2007	1614.59	(5.26)	3.50	(-6.41)	1200.47	(52.92)
29	2008	1100.00	(-31.87)	3.22	(-8.00)	705.50	(-41.32)
30	2009	1000.00	(-9.09)	3.20	(-0.62)	661.27	(-6.27)
31	2010	1650.30	(65.03)	3.51	(9.68)	1004.10	(51.84)

Source: Calculated from the data obtained from Directorate of Handicrafts, J&K and Economic Survey (2009-10) J&K.

Note: Figures within parenthesis indicate yearly growth rate.

Figure 1: Yearly Growth Rate (Production, Employment and Exports)

As is evident from table 3 above, the Handicraft sector has shown a significant rise throughout the years. Starting with the year 1980, with the production of Rs. 57.82 crores, there has been a continuous rise till 1989 (Rs.230.21 crores) after which a sudden fall in the production is being noticed bringing it down to Rs. 171.65 crores upto a period of 1992 partly indicating the impact of peak turmoil period which inturn led the artisans to be less productive because of the psychological disturbances and partly because of the negligence of government towards this sector. However, from 1993 the growth rate of the production sector started to rise again and a significant rise was marked in the year 1999 (633.03 crores) which was about 126.08% in comparison to the previous year. Accordingly, there has been a steady increase in the employment sector as well which is seen to rise from 1.44 lakhs in 1980 to 2.38 lakhs in 1989 after which there has been a decrease in the employment till 1994. As indicated in table 3 there has been a remarkable increase in the employment sector in the year 2001 (3.87 lakhs) and finally in the year 2008, this figure rose to 3.91 lakhs. Similarly, over the years the export sector has shown also increased from a mere amount of Rs.39.92 crores (1980) to as high as 1080.80 crores (2009). Inspite of few down-swings export sector has been able to maintain a remarkably increasing trend.

By and large production in the handicraft sector has witnessed a sustained increase, but, its yearly rate of growth has been erratic subject to violent fluctuations. The growth of Handicraft sector shown in the table 3 reveals that there has been phenomenal though irregular growth in the production, employment, and exports of this sector. This sector has registered an increase in its production to 26.88% in 1988 as against a growth rate of 0.84% in 1981, after which there has been a significant fall in the production upto -4.63% in 1992. Further, it can be noticed that the growth rate of production in the handicraft sector again rose in the subsequent years recording a growth rate of 65.03% in 2010 as against -9.09% in 2009. Similarly the employment sector has also witnessed an irregular rise in the annual growth rate. It recorded a Growth rate of 72.91% in 1988 as against a growth rate of 6.25% in 1981. Afterwards, this sector faced a fall in its growth rate to 9.68% in 2010 as against -0.62% in 2009. The export sector which contributes significantly to the State economy has registered an increase from a mere growth rate of 0.025% in 1981 to 51.84% in 2010 with erratic growth trends in between the two periods. Figure 4.1 gives a bird’s eye view of the data given in table 3.

Table: 4: Yearly Growth Rate of Production, Employment and Exports in the Handicraft Sector with 1980 as base year (fixed base)

S. No	Period	Production (%)	Employment (%)	Exports (%)
1	1980	-	-	-
2	1981	0.847	6.25	0.025
3	1982	39.77	13.19	0.075
4	1983	66.96	16.66	0.125
5	1984	72.95	22.22	0.175
6	1985	81.59	28.47	0.200
7	1986	122.67	43.05	6.06
8	1987	159.97	65.27	6.06
9	1988	229.36	72.91	10.22
10	1989	298.14	65.27	22.14
11	1990	245.90	56.25	46.36
12	1991	211.31	47.91	-13.32
13	1992	196.86	39.58	-14.85
14	1993	246.19	53.47	-17.33
15	1994	281.96	72.91	-15.85
16	1995	332.37	93.05	176.90
17	1996	349.67	101.38	635.22
18	1997	375.61	108.33	120.79
19	1998	384.26	115.27	196.34
20	1999	994.82	122.22	518.73
21	2000	1104.30	128.47	1295.26
22	2001	1224.69	168.75	1001.95
23	2002	1240.36	139.58	1163.15
24	2003	1320.84	144.44	1275.75
25	2004	1434.07	148.61	1390.48
26	2005	1456.55	154.16	1508.21
27	2006	1543.03	159.72	1666.03
28	2007	2692.44	143.05	1866.43
29	2008	1802.45	123.61	1667.28
30	2009	1629.50	122.22	1556.48
31	2010	2754.20	143.75	2415.28

Source: Calculated from the data obtained from Directorate of Handicrafts, Srinagar, J&K, Economic Survey (2009-10) J&K.

Figure 2: Yearly Growth Rate with Fixed Based (1980)

The compound decadal growth rate as indicated in the table 5 above witnesses a slight increase in the production, employment and exports of the Handicraft sector. It is seen that the compound growth pattern has remained more or less same within a period of 30 years which makes us accept our hypothesis second. In 2000-10, the growth rate in terms of production, employment and exports has been recorded as 10.51%, 10.84% and 10.94% respectively as against 10.08%, 9.99% and 10.38% from 1980-90.

Simple Linear Regression Model:

The current study is further enlarged by making use of the available data related to Production, Employment and Exports in order to obtain a linear trend and correlation. This allows us to make use of the equation y = a + bx, where x signifies an independent variable and y signifies a dependant variable; a and b are the intercept and the slope of the equation respectively.

In table 6 the available data related to production and employment were projected to obtain a linear trend and correlation, so as to obtain the value of intercept and slope in the equation y = a+ bx, the detail of the available data is as follows:-

Y = Employment

X = Production

Hence the required equation of our regression line is

= 0.698 + 0.0014 X

As we know that there is a strong relationship between production and employment. It is seen that the two given variables share a strong positive relationship as indicated by the coefficient of correlation between X and Y which is equal to 0.84 indicating that with an increase in the value of X, there is an increase in the value of Y. The estimated employment function as given by the equation = 0.698 + 0.0014 X reveals that with an increase of 1 percent in the value of X (production), there will be an increase of 0.0014 percent in the value of Y (employment). This implies that with an output of Rs 1 crore in the handicraft sector, about 14000 people will be employed.

In table 6 below, the available data related to production and exports were projected to obtain a linear trend and correlation, so as to obtain the value of intercept and slope in the equation y = a+ bx, the detail of the available data is as follows:

Y = Exports

X = Production

Table 6: Trend Values of the Production and Employment are given as (Estimation of Employment Function)

Year	X (Production) Rs in crores	Y (Employment) Actual value lakh Nos	X²	Y²	XY	=a+bx Estimated values
1980	57.82	1.44	3343.14	2.07	83.26	1.10
1981	58.31	1.52	3400.05	2.31	88.63	1.10
1982	80.82	1.63	6531.87	2.65	131.73	1.20
1983	96.54	1.68	9319.97	2.82	162.18	1.26
1984	100.00	1.76	10000.00	3.09	176	1.28
1985	105.00	1.85	11025	3.42	194.25	1.30
1986	128.75	2.06	16576.56	4.24	265.22	1.39
1987	150.32	2.38	22596.10	5.66	357.76	1.48
1988	190.44	2.49	36267.39	6.20	474.19	1.65
1989	230.21	2.38	52996.64	5.66	547.89	1.81
1990	200.00	2.25	40000.00	5.06	450	1.69
1991	180.00	2.13	32400.00	4.53	383.4	1.60
1992	171.65	2.01	29463.72	4.04	345.01	1.57
1993	200.17	2.21	40068.02	4.88	442.37	1.69
1994	220.85	2.49	48774.72	6.20	549.91	1.77
1995	250.00	2.78	62500.00	7.72	695	1.89
1996	260.00	2.90	67600.00	8.41	754	1.93
1997	275.00	3.00	75625.00	9	825	1.99
1998	280.00	3.10	78400.00	9.61	868	2.01
1999	633.03	3.20	400726.98	10.24	2025.69	3.46
2000	696.33	3.29	484875.46	10.82	2290.92	3.72
2001	765.94	3.87	586664.08	14.97	2964.18	4.01
2002	775.00	3.45	600625	11.90	2673.75	4.04
2003	821.53	3.52	674911.54	12.39	2891.78	4.23
2004	887.00	3.58	786769	12.81	3175.46	4.50
2005	900.00	3.66	810000	13.39	3294	4.56
2006	950.00	3.74	902500	13.98	3553	4.76
2007	1614.59	3.50	2606900.86	12.25	5651.06	7.48
2008	1100.00	3.91	1210000	15.28	4301	5.38
2009	1150.00	3.78	1322500	14.28	4347	5.58

Source: Calculated from the data obtained from Directorate of Handicrafts, Srinagar, J&K, Economic Survey (2009-10) J&K.

Table 7: Trend Values of the Production and Export are given as (Estimation of Export function)

Year	X (Production) Rs in crores	Y (Exports) Actual value Rs in crores	X²	Y²	XY	=a+bx Estimated values
1980	57.82	39.92	3343.14	1593.60	2308.17	61.83
1981	58.31	39.93	3400.05	1594.40	2328.31	61.83
1982	80.82	39.95	6531.87	1596.00	3228.75	61.85
1983	96.54	39.97	9319.97	1597.60	3858.70	61.86
1984	100.00	39.99	10000.00	1599.20	3999	61.88
1985	105.00	40.00	11025	1600	4200	61.89
1986	128.75	42.34	16576.56	1792.67	5451.27	63.64
1987	150.32	44.00	22596.10	1936	6614.08	80.85
1988	190.44	48.76	36267.39	2377.53	9285.85	110.94
1989	230.21	58.43	52996.64	3414.06	13451.17	140.76
1990	200.00	34.60	40000.00	1197.16	6920	118.11
1991	180.00	33.99	32400.00	1155.32	6118.2	103.11
1992	171.65	33.00	29463.72	1089	5664.45	96.84
1993	200.17	33.59	40068.02	1128.28	6723.71	118.23
1994	220.85	110.54	48774.72	12219.09	24412.75	133.74
1995	250.00	293.50	62500.00	86142.25	73375	155.61
1996	260.00	88.14	67600.00	7768.65	229164	163.1
1997	275.00	118.30	75625.00	13994.89	32532.5	174.36
1998	280.00	247.00	78400.00	61009	69160	178.11
1999	633.03	556.99	400726.98	310237.86	352591.37	442.88
2000	696.33	439.90	484875.46	193512.01	306315.56	490.35
2001	765.94	504.25	586664.08	586664.08	386225.24	542.56
2002	775.00	549.20	600625	301620.64	425630	549.36
2003	821.53	595.00	674911.54	354025	488810.35	584.25
2004	887.00	642.00	786769	412164	569454	633.36
2005	900.00	705.00	810000	497025	634500	643.11
2006	950.00	785.00	902500	616225	745750	680.61
2007	1614.59	1200.47	2606900.86	1441128.22	1938266.85	1179.05
2008	1100.00	705.50	1210000	497730.25	776050	793.11
2009	1150.00	1080.80	1322500	1168128.64	1242920	830.61

Source: Calculated from the data obtained from Directorate of Handicrafts, Srinagar, J&K, Economic Survey (2009-10) J&K.

Thus, the required equation of our regression line is

= -0.0099+ 0.816 X

The study reveals that the two variables i.e., production and exports are inter-related with each other and possess a strong correlation as revealed by the coefficient of correlation calculated between the two variables which in this case is 0.64. It indicated that with the increase in the production there is a simultaneous increase in the exports as well. Also, the equation = -0.0099+ 0.816 X which gives the estimated value of exports reveals that with 1 percent increase in the value of x (production), there is 0.816 percent increase in the value of y (exports), which implies that with an output of Rs 1 crore in the production, the exports is expected to rise by Rs 81.6 lakhs.

Contribution of Handicraft Sector to Gross State Domestic Product (GSDP):

The State Domestic Product (SDP) commonly known as state income is one of the important indicators to measure the economic development of the state. The following table gives a picture of the percentage share of the handicraft industry towards the SDP of Jammu and Kashmir.

Table 8: Contribution of Handicraft Sector to GSDP (Rs in Crores)

Year	Production	GSDP (At CurrentPrices)	Percentage Share
1999-2000	633.03	15659.81	4.04
2000-2001	696.33	16699.53	4.17
2001-2002	765.94	18039.35	4.25
2002-2003	775.00	20325.91	3.81
2003-2004	821.53	22194.43	3.70
2004-2005	887.00	24265.04	3.66
2005-2006	900.00	26537.22	3.39
2006-2007	950.00	29029.74	3.27
2007-2008	1614.59	31793.04	5.08
2008-2009	1100.00	21235.52	5.18
2009-2010	1150.00	21100.92	5.45

Source: Calculated from the data obtained from Directorate of Statistics & Planning J&K.

As indicated in the table above, it is seen that since 2000-01 there has been irregular growth in the contribution of handicraft sector towards SDP. It is seen that the share of handicraft sector in SDP during 2000-01 was 4.17 percent which reduced to 3.81 percent in 2002-03. Further it can be noticed that the share of handicraft sector towards SDP has continuously reduced upto 2006-07 accounting for 3.27 percent. Afterwards, contribution of handicraft sector to the GSDP of the state is seen to show an increasing trend indicating a share of 5.45 percent in 2009-10. An important fact that is revealed from the table above is that contribution of handicraft sector to the state economy though erratic but has increased over the period of time. This contradicts our hypothesis third that contribution of handicraft sector has remained static over the period of time.

CONCLUSION:

The handicrafts of J&K have achieved a worldwide fame because of its unique designs and utility. The state of J&K is dominated by small-scale and cottage industries which give handicraft sector a key importance in the state economy. As such handicraft sector is significantly contributing to the State economy and acts as a strong support to the state economy. Accordingly, state government is making continuous efforts to encourage the performance of this sector. With the inclusion of new schemes and policies the State government is trying to uplift this sector to face the growing competition at National as well as at global level. Also, this sector plays a great role in providing employment to the unemployed youth of the State. Being labor intensive handicraft sector can go a long way in solving the unemployment problem of the State. Besides, this sector plays a major role in enhancing the foreign exchange earnings of the State. Keeping in view the environmental and the industrial set up of the State and the importance of handicraft sector, it is required this sector should be encouraged by way more and more investments, setting up of additional training centres, skill up-gradation of the local artisans, better marketing facilities and innovations in order to let this sector flourish.

REFERENCES:

1. Ahsan, A. (1992) “Small-Scale Industries in Kashmir Valley”, unpublished dissertation.

2. Akther, Riazuddin.( 1988) “History of Handicrafts-Pakistan and India”, National Hijra council.

3. Directorate of Handicrafts, Sgr, J&K Govt. (2007)“Report on Handicrafts Survey”.

4. Digest of statistics (2008-2009) Statistics and Planning Department.

5. Jamwal, Suman. (1994) “Economy of Early Kashmir”, Jay Kay book house.

6. J&K Handicrafts, (S & E) Corporation Limited.

7. Kapur, L.M. (1992)“Social and Economic History of Jammu and Kashmir State”, Anmol publications.

8. Khan, I.M. (1999) “History of Srinagar (1846-1947)”,Cosmos publications.

9. Saraf, D.N. (1987) “Arts and crafts of Kashmir”, Abhinav publications, New Delhi.

10. Shah, A.M. (1992) “Export Marketing of Kashmiri Handicrafts”, Ashish publishing house.

11. Economic Survey (J&K), 2010-11.

12. Economic Survey J&K, 2012-13

S. No	Period	Production	Employment	Exports
1	1980-90	10.08%	9.99%	10.38%
2	1990-00	11.22%	13.20%	13.20%
3	2000-10	10.51%	10.84%	10.94%