Jammu and Kashmir at an economic crossroads
Mohammad Hanief
m.hanief@gmail.com
The Economic Survey 2025-26 of Jammu and Kashmir marks an important milestone in the Union Territory’s post-transition economic journey, presenting a data-driven account of recovery, resilience and reform. At a time when global economic uncertainty, geopolitical disruptions and inflationary pressures continue to test regional economies, Jammu and Kashmir has demonstrated a capacity to stabilise growth while gradually reshaping its development model. The survey reflects not just numerical progress but a broader transformation in governance, infrastructure creation and social investment.
The overall size of the economy has expanded steadily, with nominal Gross State Domestic Product estimated at approximately ?2.86 lakh crore and real growth projected at 5.82 per cent during 2025-26. This performance is significant in a region that has navigated pandemic disruptions, security challenges and structural adjustments over the past decade. Over the medium term, the Union Territory has recorded a consistent compound annual growth rate, underscoring economic resilience rather than volatility. Rising per capita income, now estimated at Rs 1.68 lakh, signals gradual improvement in household earnings and purchasing power, while also pointing to a narrowing gap with the national average.
The sectoral composition of the economy highlights a clear structural shift underway. Agriculture and allied activities continue to play a vital role in sustaining livelihoods, particularly in rural areas, but their relative share has declined as the services sector expands. Services now account for the largest contribution to Gross State Value Added, driven by tourism, transport, trade, financial services and public administration. The secondary sector, led by construction and manufacturing-linked activities, has gained momentum through sustained public investment in infrastructure and industrial estates. This evolving structure suggests a gradual movement away from subsistence-led growth towards a more diversified economic base.
Fiscal management has emerged as a critical enabler of this transition. Improved revenue mobilisation through enhanced tax compliance and growth in non-tax revenues has strengthened the government’s fiscal position. Power tariffs, GST and excise collections have contributed significantly to revenue growth, while digital financial management systems have improved transparency and expenditure control. Capital expenditure has remained a priority, reflecting a strategic focus on asset creation, infrastructure development and long-term economic capacity rather than short-term consumption-led spending.
Agriculture, despite its declining share in output, remains central to employment and social stability. The survey highlights a deliberate policy shift towards modernisation, diversification and market integration. Programmes aimed at improving land productivity, irrigation coverage and crop diversification have begun to yield results. Food grain production has increased modestly, while vegetable cultivation has moved the region closer to self-reliance. High-value crops, organic farming practices and value-added processing are gradually reshaping rural incomes and reducing vulnerability to price fluctuations.
Horticulture continues to be a cornerstone of the rural economy, generating substantial income and employment. Expansion of orchard areas, adoption of high-density plantations and improvements in post-harvest infrastructure have enhanced productivity and market competitiveness. Integration with national digital trading platforms has improved price discovery and farmer participation in wider markets. Export performance, particularly in almonds, walnuts and other niche products, underscores the sector’s potential as a driver of agri-based trade and rural prosperity. Floriculture has added a complementary dimension, linking agriculture with tourism and creating new seasonal employment opportunities.
Industrial development has gained traction, supported by policy reforms, improved ease of doing business and targeted incentives. The operationalisation of new industrial units and rising investment commitments reflect increasing investor confidence. Micro, small and medium enterprises have received particular attention, given their capacity to generate employment and anchor economic activity locally. Employment generation schemes and entrepreneurship missions have expanded self-employment opportunities, especially among youth, helping address one of the region’s most pressing socio-economic challenges.
Tourism remains a key pillar of the services sector and a vital source of income for thousands of households. Tourist arrivals crossing 1.78 crore during the year signal a strong revival after recent setbacks. While episodic disruptions continue to affect sentiment, the broader trend points towards recovery and diversification. Investments in infrastructure, connectivity and destination development are gradually expanding tourism beyond traditional hotspots, promoting year-round activity and spreading benefits to lesser-known regions.
Social sector outcomes presented in the survey represent one of its most compelling narratives. Health indicators have improved markedly, with sharp reductions in infant and neonatal mortality rates and near-universal institutional deliveries. Expansion of healthcare infrastructure, medical education and digital health platforms has improved both access and quality. Life expectancy in the Union Territory now ranks among the highest in the country, reflecting sustained public investment in preventive and curative healthcare systems.
Education outcomes mirror this progress. High enrolment rates across schooling levels, declining dropout ratios and improved transition rates indicate strengthening foundational education systems. Expansion and accreditation of higher education institutions have enhanced academic capacity and quality. Improved national rankings of universities reflect growing institutional credibility, while parallel investments in sports and youth engagement point to a holistic approach to human capital development.
Social welfare initiatives have expanded in both coverage and depth. Revised pension schemes, housing programmes, food security measures and targeted interventions for women, children, senior citizens and tribal communities highlight a governance model focused on inclusion. The introduction of free public transport for women and expansion of livelihood support schemes have direct implications for mobility, safety and economic participation. Together, these measures aim to ensure that economic growth translates into tangible improvements in everyday life.
Infrastructure development stands out as a defining feature of the current growth phase. Investments in power generation, transmission and renewable energy seek to address long-standing deficits while supporting future demand. Road and rail projects have significantly improved connectivity, reduced travel times and enhanced market access. Expansion of rural road networks and bridge construction has strengthened all-weather connectivity, particularly in remote and mountainous areas. Improvements in air connectivity and logistics infrastructure further integrate the region with national and international markets.
Governance reforms underpin much of this progress. Jammu and Kashmir has emerged as a leader in digital service delivery, with a dramatic expansion of online public services. E-governance platforms have improved administrative efficiency, reduced delays and enhanced transparency. Performance monitoring through district-level indices and aspirational development programmes has introduced competitiveness and accountability into governance, ensuring that development outcomes reach the grassroots.
Taken together, the Economic Survey 2025-26 presents a picture of cautious but grounded optimism. The data reflects real gains in growth, income, infrastructure and social development, while also highlighting the need for sustained reforms to address unemployment, regional disparities and environmental sustainability. The challenge ahead lies in maintaining fiscal discipline, deepening private investment, aligning skill development with emerging sectors and ensuring that growth remains inclusive and resilient.
Jammu and Kashmir today stands at an important economic crossroads. The foundations for a more diversified, integrated and inclusive economy are being laid. If current reforms are sustained and governance continues to evolve, the Union Territory has the potential to convert economic recovery into long-term prosperity and social stability for its people.
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