Kashmir’s economy falters despite Article 370 abrogation claims
Unemployment, debt rise while investment, income decline
Srinagar: The much-touted promises by India’s Modi regime of economic revival and prosperity in occupied Jammu and Kashmir following the abrogation of Article 370 in August 2019 have proven hollow, as key economic indicators reveal a stark downturn over the past six years.
According to a comprehensive economic review, the transformation that was promised as a result of occupied Jammu and Kashmir’s conversion into a Union Territory has not materialized. Instead, the territory’s macroeconomic performance post-2019 remains deeply disappointing.
According to Kashmir Media Service, Jammu and Kashmir’s $30 billion economy has registered slower growth in both nominal and real terms. The Gross State Domestic Product (GSDP) has seen a sharper decline in real terms, placing IIOJK far below the India’s average. The services sector, which constitutes around 60 per cent of the local economy, saw growth fall drastically to 5.8 per cent in 2023-24 from 11 per cent a year earlier. Income from hotels and restaurants plunged from 38 per cent to just 13 per cent.
Similarly, real per capita income growth was cut in half, dropping from 6 per cent to under 3 per cent. Once at 84 per cent of the India’s average in 2011-12, IIOJK’s per capita income now lags at just 76 per cent — the widest gap recorded so far.
Unemployment has surged, with temporary spikes reaching crisis levels. In March 2023, the unemployment rate hit 23 per cent and still stands at 17 per cent in 2024. The jobless rate among youth aged 15-29 exceeds 30 per cent — nearly double the national average — placing J&K among the worst-hit regions in terms of employment.
Industry and manufacturing have stagnated, with the number of operational factories remaining stuck at 2016-17 levels. The number of industrial workers hit a decade low in 2022-23, indicating a shrinking industrial base. This decline is driven by a steep fall in fixed capital, which has halved since its 2016-17 peak — a downturn not explained by the separation of Ladakh.
While the administration claims it has attracted investment proposals worth Rs 84,544 crore across 42 sectors, actual ground investment in 2023 remained a modest Rs 2,518 crore.
In parallel, internal debt has nearly doubled in five years, with total government liabilities now standing at almost 60 per cent of GSDP. The fiscal deficit continues to hover around 6 per cent, well above permissible limits under India’s Fiscal Responsibility and Budget Management (FRBM) Act.
Observers say these figures present a grim picture of Jammu and Kashmir’s economic trajectory under direct Indian rule after abrogation of Article 370.
