Jun 24, 2024

Next Exam Study – Economy of J&K


Jammu and Kashmir is an important tourist destination and has been a place of attraction for tourists since centuries. The lush green forests, sweet springs, perennial rivers, picturesque alpine scenery and pleasant climate of Kashmir vally, has remained an internationally acclaimed tourist destination, whereas Jammu region – the land of temples is attracting a large number of pilgrim tourists and the important destination has been Shri Mata Vaishno Devi Shrine. Ladakh region, the moon land has been a much sought-after destination, especially for the foreign tourists and is famous for adventure tourism. The tourism tag has placed always the state of Jammu and Kashmir in the limelight at national level as well as the international level.


Significant part of the study depends on secondary sources. But information has also been obtained from primary sources which include interviews, comments, observations, opinion, notes, etc. of the persons concerned with the economy of Jammu and Kashmir. The primary information was also gathered through discussion with persons in District Industries Centre (DIC), DSEO, Chief Agriculture office, ACD Office. Materials for the present study were collected from the published records available in the library of Baba Ghulam Shah Badshah University, Rajouri, Jammu and Kashmir, Agriculture Production Department, J&K, Directorate of Horticulture (P&M), J&K, DSEO, District Industries Centre, Rajouri, various Economic Survey, magazines, journals, annual reports and periodicals, have also been gone through to derive information pertaining to the present study.

Study of Economy

Nothing is perfect so is this study. The present study suffers from certain limitations. The study is based on the information from secondary source which reduce the degree of reliability. However, attempt has been made to collect maximum information from the official record of different sector in general and J&K in particular on the various aspects of the study. Most of the departments neither publish the information nor do they allow the outsiders an access to their records, internal workings etc. on the pretext of maintaining secrecy. This restricts the data availability. It was difficult to collect all the necessary data from grass-root level.

The state of Jammu and Kashmir offers a challenge to planners as well as administrators in tackling the manifold problems associated with the economic backwardness of the state. The Jammu and Jammu and Kashmir state accounts for 3.2% of the total geographical area and 1% of the total population of the country. However, its contribution to the national income is just about 0.7%. What is more disturbing and alarming is that the contribution is on decline and has declined from 0.85% in 1999-2000 to around 0.7% at present. While as the national income has grown at a robust rate of 8.2% during the last five years, the State income has grown at a much lower rate of about 6%. The Per Capita Income (PCI) has grown at rate of 4.13% during the 10th Plan period which is below the desired goals.

The State Economy is expected to grow at 6.87% as compared to the growth rate of 6.12% in 2008-09 (preliminary estimates). This growth rate is noteworthy considering the fall in growth momentum during the year 2008-09 because of the global economic slowdown and repeated rounds of disturbances of law and order that affected the state during the year.

The agriculture sector is likely to register a low growth rate of 1.87%. The Industrial sector, which is likely to grow by 11.87%, has helped to maintain the growth momentum in the State economy. The overall growth is mainly driven by the growth in the sectors; Construction, Trade & Hotels, Transport & Communications and Other Services. The Service sector is the major contributory sector of the state economy and is expected to grow by 6.56%.

The Government is very seriously looking at the economy of the state with a view to restructure it. The economy is gradually coming back on the rails and has decisively moved to a higher growth phase of 6% and plus during the current Five Year Plan. Making a distinct break from the past, the state economy is expected to register a growth rate of 6.87% during the financial year, 2009-10.

The yield rate of principal crops is far below the national averages. For example the yield rate of Maize is 15.05 qtls/hectare as compared to 19.07 qtls at the national level. Similarly the yields rate of Rice is 18.92 qtls/hectare to the national average of 21.27 qtls/hectare and in case of Wheat it is 18.72 qtls/hectare against the national level of 26.71 qtls/hectare. Deficiencies always reflect the level of development. Efforts, therefore, have to be made to increase both the production and productivity of this vital sector on sustained basis.

Flow of credit to agriculture sector has been disappointing throughout. The financial institution have been always reluctant towards this sector as compared to the industrial and services sector. Both the Government and the financial institutions have an added responsibility in the regard.

Jammu and Kashmir has not been a preferred destination for private investment and not much progress has been made in respect of PPP. Therefore, in the absence of private investment, planning cannot be merely indicative. This calls for proactive role the Government has to play in the economic transformation of the state. In view of resource constraints the state needs to get maximum possible benefits of the various infrastructural developmental programmes which cover road connectivity, rural electrification, water supply and irrigation etc, like PMGSY, RGGVKY, NRHM, PMRP, and BADP. Identification and execution of projects, cost and time overruns are some of the problems that deserve special attention.

Energy with Rs. 8196.95 crore is the priority sector for development followed by Social sector with an outlay of Rs. 6501.40 crore. General Economic Services and Transport with outlays of Rs. 2740.98 crore and Rs. 2660.81 crore are at No. 3 & 4 respectively for 11th Five Year Plan whereas agriculture has slipped to No. 5 with an outlay of Rs. 1818.21 crore.

A plan for economic reconstruction and development of J & K State, known as Prime Minister’s Reconstruction Plan (PMRP), was announced by the Hon’ble Prime Minister on18th November, 2004. The total package was for Rs.23303.97 crore, which was subsequently raised to Rs. 30867.71 crore. Another important programme known as Border Area Development Programme (BADP), a 100% centrally sponsored programme, with focus on improvement of infrastructure aims at meeting special needs of the people living in remote and inaccessible areas situated near the borders.

Because of its peculiar geographical location, remoteness and isolation from the main markets, political uncertainty and vulnerability to externalities and thereby resulting in limited capacity in public and private sectors the state has not been a preferred destination for industrial investors. It has a natural advantage of setting up industrial units in computers, electronics, precision goods, food processing, minerals, herbs and other related areas. In order to achieve a self sustaining economy with continued higher levels of investment and significant increase in income and employment, there is no option but to go for selective industrialization in the thrust areas and the boost has to come from within the emerging middle class youth through active and all out support from the government.

During the past years special attention has been given towards the development of industrial infrastructure in the form of Industrial Estates in the state. There are presently 51 such industrial estates spread over an area of 27718 kanals of land. 17 new industrial estates spread over an area of 11787 kanals of land are being currently developed, most of them in rural and industrially under-developed areas of the state.

Jammu and Kashmir has inherited a rich tradition of handicrafts which have no parallels. In the absence of large scale industries, the handicrafts sector has a great contribution towards employments and foreign exchange earnings. Keeping in view the importance of Handicrafts, Handlooms and other related traditional sectors in the state economy, the state Government is going to develop International Trade Centre (ITC) in order to promote trade facilities and to boost the exports of these exports oriented sectors. Similarly handloom sector is also a labour intensive cottage industry having considerable potential for generation of employment opportunities.

Banking structure in J&K consists of Commercial Banks, Regional Rural Banks and Cooperative Banks. During the period March-September, 2009 an addition of 12 bank branches has been made in the banking network of the state. Thus at the end of September, 2009, the state was served with 968 bank branches of all Scheduled Commercial Banks. Out of these bank branches 532 (55%) are located in rural areas, 178 (18.36%) in urban areas and 258 (26.65%) are in urban/Metropolitan areas.

The hallmark of development of an economy depends more on energy than on any other thing. In the state, the Hydel Power is the only source of energy. Against 16480 MWs of identified Hydro Power potential, 2318.70 MWs only constituting 14% have been exploited so far, consisting of 758.70 MWs in state sector and 1560 MWs under central sector. The total availability of power from all resources is just around 9147 MWs and the state is under stress to purchase power from other sources.

Commissioning of International Airport at Srinagar has opened new vistas for enhancing connectivity at International level which will in turn facilitate international tourism, promote international trade especially exports which will provide a big push to the economy and generate avenues of better employment.

The railways network is a recognized mode of commutation which has started making its presence felt in the state. This could be realized through commissioning of Qazigund-Mazhama-Baramulla rail link. With the inauguration of Qazigund-Baramulla section a long cherished dream of the people of the State has been realized.

Poverty is another area of concern. The poverty has been found highly concentrated in certain pockets of the state which are remote and isolated and where illiteracy is deep rooted. Special developmental programmes apart from education and connectivity for these areas can make a lot of difference. As per BPL survey report 2008, conducted by the Directorate of Economics & Statistics, J&K, the total BPL Estimated Population Ratio of J&K State has been arrived at 21.63 percent (24.21 lakh persons) with a dispersion of 26.14 percent (22 lakh persons) in Rural areas and 7.96 percent (2.21 lakh persons) living in Urban areas. This shows that about one fifth of the State’s population falls below the poverty line category. On the basis of BPL Head Count Ratio, the poorest districts in the State are Reasi, Ramban, Kishtwar, Poonch,Kupwara, Kargil, and Bandipora which have more than 30 percent estimated BPL Population ranging in between 37.93 to 31.09 percent.

Similarly the problem of unemployment is a social issue of serious concern in the present time. As per 62nd round of NSSO (2005-06), unemployment rate of 5.21% is much worse than the national average of 3.09%. poverty and unemployment go hand in hand. Though the solution to the problems of poverty and unemployment cannot be viewed in isolation from the development of the overall growth of different sectors of the economy like agriculture, industry, horticulture, handicrafts and tourism, certain specific measures need to be taken to address the issues.

As regards the widening of employment base, note has to be taken of the fact that the Government sector has almost become employment inelastic. Any more pressure on this sector will result into inefficiencies that the state can ill afford in a fast growing competitive world. The business corporate sector and industrial sector, so far neglected, need to be given high priority which will not only bring development dividends but will also contribute significantly towards expanding the employment base and easing out the over crowdedness in the state sector and thus paving way for improving competence in the state administrative machinery and ensuring good governance. A proper blend of education and trainings should contribute to the development of entrepreneurship among the youth who could be motivated for taking up self employment ventures which need to be facilitated by making procedures easy and significantly cutting on plethora of paper formalities so as to ensure hassle free flow of finance to the prospective entrepreneurs.


Tourism is another area which is a gift of nature to the state. But unless we are able to create the requisite infrastructure and other facilities of high quality of international standard for the tourists, the real benefits will not flow to people in terms of income supplementation and employment generation. The downstream multiplier effect of tourism is perhaps the most wide spectrummed and equitable. Realizing the potential impact of this sector on the economy of the state, the State Government established 19 Tourism Development Authorities at places having very good tourism potential. As regards tourism, not only does it require to be diversified but it also needs to be extended over the whole year. There is ample scope for adventure tourism, pilgrim tourism, sports tourism and health tourism besides the traditional pleasure/recreation tourism. The scope for making films and other TV/Video programmes is immense. Improvement in tourism infrastructure calls for better roads, efficient connectivity, board and lodge facilities and prompt services including guidance. With normalcy gradually returning, time is ripe to take major initiatives in creating the requisite high quality infrastructure for development of tourism as one of the lead sector of the state economy.


The economy of Jammu and Kashmir has suffered from disturbed conditions prevailing in the State for almost two decades. It would, therefore, be necessary to put the economy back on the rails to enable the average person to get employment opportunities. This would require giving fillip to the economic activities that have traditionally been the mainstay of the State’s economy and continue to hold significant potential for growth and employment. Such activities include Agriculture (including Horticulture), Food Processing, Handicrafts and Handlooms, and Livestock and Poultry farming on modern lines. It would be equally necessary to ensure diversification of the State economy, especially expanding the industrial base by generally have a traditional bent of mind. Diversification of agricultural activities is the need of the hour to keep up with the changed circumstances.

The potential of Horticulture in J&K is high, given the rich diversity in its flora and fauna and varied agro-climatic situation. The state enjoys monopoly in certain fruits, vegetables and medicinal plants and there is an immense scope for increasing the production of other horticulture produce that are marketed in rich and export markets. In order to achieve this objective, it is important that the limiting factors in both production and marketing of fresh produce are addressed speedily and linkages between farmers and buyers are established by developing agricultural/horticultural mandies at faster pace and on modern and scientific lines. This would not only reduce supply chain costs but would also help the farmers with an assured market for their produce. Technological improvements are necessary to bring about lower costs in processing as well as reducing wastages in fruits and vegetables.

Potential for bringing additional area under Walnut is enormous. As per preliminary estimates about 0.50 lakh hactates are available on which walnut cultivation can be undertaken successfully. This will help to create green cover in hilly areas and conserve soil from erosion, besides, proving high value wood for wood carving industry, as well as walnuts for export purposes.

Absence of Post Harvest infrastructure-non-establishment of cold storages has locked the growth of this sector. At present, post harvest losses are estimated about 20-30%. Surprisingly there is not a single cold storage facility for apple preservation in the vally. The lack of this facility forces the farmers to sell their produce at cheaper rates. According to the figures available, 4,00,000 tonnes of apple are ruined by the scab every year. Other diseases like alternaria, red might and powdery mildew also spoil the crop. Cold storage facilities should be created in all the districts of the State where the fruit could be stored for a longer period.

Jammu and Kashmir has unexploited capacity to produce products which have value demand and ready for attractive markets both in India and Overseas (e.g. bio aromatics, medical herbs, organic specialty vegetables etc. ). To enable exploitation of these opportunities, major programmes are needed to educate farmers to change traditional production habits and grow crops which the market will reward.

The food processing and horticulture industries are intimately related to areas of infrastructure that include processing facilities such as cold chain, refrigerator facilities, and transport by both rail and road to destination markets as well as market infrastructure for farmers to sell their produce on remunerative prices. This when addressed in totality would bring about a lower cost, high value delivering chain that can change the face of horticulture in the state. Horticulture holds a great promise for the state. Apart from strengthening and diversifying the traditional segments of fruits and mulberry, state need to harvest advantages in medical herbs, herbal medicines and herbal cosmetics for which there is growing demand in the international market. There is need to improve packing and standardization of the state’s horticulture produce.

The state has three distinct niches, while leisure tourism is available in Kashmir vally, Pilgrim in Jammu and Ladakh has the potential to after adventure tourism. For the promotion and development of the State from the tourism point of view, the Government should focus on the history related tourism, identification of new areas/tourists destinations and promotion of village tourism, pilgrimage tourism, tribal tourism, eco-tourism, health tourism, wildlife tourism and cultural tourism. Tourism has a multiplier effect on income employment generation and gives tremendous fillip to the economy. Looking towards the importance of tourism the Government should bring tourism on rail by making all the tourist resorts more attractive to the tourists.

Jammu and Kashmir is rich in handicrafts, so state Government must promote handicrafts industries by increasing shopping arcade in their existing properties and provide space for handicrafts industry to display their products.


The Jammu and Kashmir state with its varied and diversified geographic, agro-climatic and topographic features poses very peculiar and unique problems of development and administration. Closed corner location, remoteness and isolation from major markets, scattered population, and lack of economic infrastructure and dislocation of normal civic life during the last two decades- all these factors and characteristics define special developmental challenges. State has more challenging opportunities. It should strive to grab opportunities by overcoming their problems with a view to make them competitive globally.

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