Firdous Ahmad Malik¹, Jaskaran Singh², Owais Ismaeil³, Naveed Ahmad Lone⁴, Nitin Bisht⁵

University of People, USA¹
Ramgarhia College Phagwara, Punjab, India²
Department of History, University of Delhi, New Delhi, India³
Government Degree College Boys, Pulwama, J&K, India⁴
H. N. B. Garhwal University, Srinagar (Garhwal), Uttarakhand, India⁵

ABSTRACT

The Jammu & Kashmir Economic and Development Outlook 2025-26 is a comprehensive Outlook of the economic performance of Jammu & Kashmir, its structural transformation and future development prospects. The analysis shows that the country is making some good progress in the area of infrastructure, tourism and public investment, but still has significant issues to address in employment creation, fiscal dependency, industrialization and private sector investment. It is expected that the nominal Gross State Domestic Product (GSDP) of Jammu and Kashmir at the current prices will stand at Rs. 2.86 lakh crore, with a real growth rate of 5.82 percent in 2025-26. The growth of per capita income has increased to Rs. 1,68,243, showing a moderate upward trend, and an annual growth rate higher than some of its adjacent states. The region, however, is still not converged with the national average per capita income and significant progress is needed. The service sector still leads the economy with more than 61 percent shares in GSDP. Although tourism has become a key contributor to the economy, still there are several concerns in the area of low value tourism and environmental sustainability and low proportions of international tourists. The most important change since 2019 has been the speeding up of investments in infrastructure. The long-term economic competitiveness will also be improved by major projects, such as Udhampur-Srinagar-Baramulla Rail Link, national highway development and better air connectivity, that will help ease logistical constraints, enhance market integration and promote long-term competitiveness. Despite good investment intentions, industrial development is a key challenge. Inflows of investment proposals have been received which are exceeding Rs. 1.63 lakh crore, but investment realization and foreign direct investment inflows are limited. The difference between announced investment and on ground implementation calls for strengthening of the institutional capacity, ease of doing business and investor confidence. There are also fiscal sustainability issues. Centre’s transfers are the dominant source of revenue for Jammu & Kashmir, with a modest proportion of its current spending coming from its own revenue. The productive economic base needs to be widened and the ability of domestic revenue generation needs to be enhanced, given the significant increase in public debt in recent years. Perhaps the most pressing development challenge is employment generation. While economic growth has been maintained, unemployment is higher than the national average, especially for women and youth. The report recognizes that there are a number of strategic opportunities that can shape the future of the region’s economy. They encompass the utilization of its estimated 18,000 MW hydropower potential, modernization of horticulture and food-processing industries, development of information technology and digital services, promotion of high value tourism and eco-tourism, development of handicrafts exports, investment in renewable energy and other such areas. The report has overall concluded that Jammu & Kashmir is at a pivotal phase of its economic development. The area has significant natural resources, strategic potentials, good infrastructure and evolving human resources. However, the long-term success will rely on turning public financial into private sector growth, on creating sustainable employment opportunities, on decreasing fiscal dependence and on developing in an environmentally responsible way. The next ten years will be critical in shaping the success or failure of Jammu & Kashmir’s economic development and its ability to build a sustainable, inclusive and self-reliant growth model that will lead to prosperity for all.

Download to read the entire article