From Valleys to Boardrooms

On a bright autumn morning in Pampore, the fragrance of harvest lingers over the fields, which for generations were the economic lifeblood of Kashmir. Trucks packed with apples, walnuts, and saffron wove through valleys, where families lived by the rhythms of the harvest. Today, however, Jammu and Kashmir’s economy tells a very different story—one marked by profound transformation, resilience, and new challenges.

The current economic environment blends Kashmir’s deep-rooted agrarian traditions with an emerging entrepreneurial spirit. A young local businessman, Zubair Mir, recounts that while his grandmother still hopes for a bountiful harvest, his cousin dreams of launching tech startups and boutique hotels. This generational contrast reflects a society redefining its economic future with modern ambitions. The rise of digital marketing, online handicrafts sales, and skill development initiatives suggests an economy more connected and diversified than ever before, although growth remains fragile and dependent on peace, infrastructure, and equitable opportunity.

Agriculture, which contributed over 45 percent to Kashmir’s Gross State Domestic Product (GSDP) forty years ago, has seen a decline. It was once the foundation of life for most Kashmiris, but industrialization struggled under geographic and political constraints. By 2011, agriculture’s share had shrunk to about 17.5 percent, with recent estimates placing it around 20 percent of GSDP in 2024-25. Despite this decline, nearly 70 percent of the rural population still depends on agriculture for livelihood, even as fragmented landholdings and climate change limit productivity.

The latest Economic Survey for 2024-25 projects Jammu and Kashmir’s nominal GSDP to reach `2.65 lakh crore with real growth at 7.06 percent. Per capita income is expected to rise by 10.6 percent to `1,54,703, a positive sign of improved well-being though still below India’s national average of roughly `2,15,935. The primary sector, including agriculture, forestry, and fishing, accounts for about 20 percent of GSDP, reflecting its steady but shrinking importance. The key agricultural sub-sector of horticulture has shown impressive expansion, with the area under fruit crops increasing by 10,000 hectares.

The secondary sector, comprising manufacturing, construction, and utilities, forms approximately 18.3 percent of GSDP. Despite ongoing hurdles such as logistical challenges and policy shifts, efforts like the Jammu and Kashmir Startup Policy and land allotments under industrial policies show promise. The tertiary sector, dominated by services, accounts for 61.7 percent of GSDP, driven by tourism, government administration, education, real estate, and burgeoning IT services. Tourism has made a strong comeback, with nearly 96 lakh domestic tourists and about 19,570 international tourists visiting in the first half of 2025, underpinning thousands of jobs in hospitality, handicrafts, transport, and guiding.

Jammu and Kashmir’s fiscal strategy for 2025-26 prioritizes both fiscal consolidation and growth. Projected total revenues stand at `90,529 crore, with 35 percent coming from state resources and 65 percent from central transfers. Tax reforms, including enhanced GST compliance, e-stamping, and digital tax administration, have boosted revenues, with GST collections hitting around `11,650 crore by early 2025. Expenditure focuses on strategic sectors such as education, health, agriculture, rural development, power infrastructure, and urban development, underlining government priorities for sustainable growth and improving social indicators.

Tourism, once battered by decades of conflict, now offers a hopeful story as the largest driver of service sector growth, capturing nearly 10 percent of GSDP in recent years. Destinations like Gulmarg and Pahalgam not only serve as postcards but also support thousands of jobs. Government initiatives and infrastructure improvements have fueled seasonal visitor surges, though challenges remain in making benefits more inclusive and reaching nonurban communities. Public administration reforms and investments in IT infrastructure, including startup incubators and entrepreneurship programs, aim to broaden the economic base beyond traditional activities.

Despite government policies promoting industrial land allotment and startups, industrial expansion remains modest. A lack of robust manufacturing jobs hampers employment generation among youth, many of whom remain dependent on services or informal sectors. Long-term growth depends on overcoming obstacles through infrastructure upgrades, policy stability, and investment incentives. Meanwhile, agriculture faces systemic risks due to fragmented landholdings, climate vulnerability, and youth migration to urban areas, though modernization efforts like high-density farming and climate resilience measures aim to restore productivity and incomes.

Looking ahead, sustainable growth in Jammu and Kashmir’s economy depends on balancing its three-sector composition. Reinforcing agriculture through technology, value addition, and climate adaptation is crucial. Realizing the untapped potential in manufacturing and industry requires stable policies, infrastructure, and investor confidence. Expanding and diversifying the services sector beyond tourism and government dependence into healthcare, education, IT, and finance will be essential. If the region can sustain growth while improving inclusivity, it stands to emerge as a potent economic engine for North India, rewriting its story from fragile to flourishing.

The author is an entrepreneur managing infrastructure and agricultural ventures in Kashmir. He is also a fellow of the Ananta Aspen Global Leadership Network (AGLN)