Abhishek Shaw
IIM Ahmedabad
Muddasir Ahmad Akhoon
IIM Ahmedabad
Working Paper
JEL Codes:
H56, P46, R11, R19, R28
● Economic Costs of Political Restrictions: Effects of the Article 370 lockdown in Jammu & Kashmir
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We evaluate the economic costs of the political restrictions in Jammu & Kashmir, India. The Union Government of India abrogated the special relatively autonomous status of Jammu & Kashmir on 5 August 2019, and imposed a lockdown in the state to quell potential dissent. The lockdownentailed restrictions on movement and a communications blackout, and continued with varying degrees of intensity until February 2021. In the meantime, the national Covid-19 lockdown was imposed in March 2020, worsening matters in the state. Using household monthly panel data in a natural experiment design, we estimate that the political lockdown caused total consumption expenditure to fall by 26 percentage points relative to neighbouring states (Himachal Pradesh & Punjab). Food expenditure fell 12 percentage points. The subsequent dual effect of the Covid-19 lockdown and the ongoing political lockdown caused consumption to go down by over 30 percentage points in Jammu & Kashmir compared to its neighbouring states. Our evidence suggests that while the uncertainty and fear of the Covid-19 lockdown was more costly in the very short-term, the political lockdown likely had more sustained negative effects on the Jammu & Kashmir economy.

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