Opinion | J&K Development Review 2025: From Conflict to Commerce

The morning chill settles across Srinagar’s Dal Lake as houseboats bob gently in water that once reflected the anxieties of a region perpetually on edge. Today, these same waters mirror a different story: one of tourists marveling at snowcapped peaks, investors scouting hydropower sites, and artisans weaving pashmina shawls not in fear but in anticipation of expanding markets. Six years after the constitutional upheaval of August 2019, Jammu and Kashmir stands at a remarkable crossroads where the language of development is beginning to drown out the echoes of violence, though recent incidents serve as sobering reminders that the journey from conflict to sustainable peace remains fragile and contested.

The numbers tell a story of dramatic transformation: terror incidents have witnessed a visible decline, particularly after 2020, with civilian deaths dropping significantly across districts like Anantnag, Baramulla, and Pulwama. The 62 percent reduction in terrorist activities since 2019 represents more than statistical success; it signifies thousands of lives no longer disrupted by curfews, encounters, and the constant fear that defined existence for decades. The Indian Army Chief noted that active local terrorists are now in single digits, with terrorist recruitment almost nonexistent and only two new recruits in 2025. This dramatic shift reflects a fundamental rejection of militancy by Kashmir’s youth, who increasingly see futures shaped by education and enterprise rather than armed struggle. The security establishment’s multi pronged approach has proved effective: intensified cordon and search operations, real-time intelligence sharing among security forces, and day and night area domination have contributed to this decline. Yet beneath these encouraging statistics lies a more complex reality. Militancy has evolved from large, visible militant formations to smaller, harder to detect hybrid factions supported by groups across the border in Pakistan, often relying on local overground workers for shelter and logistics. The April 2025 Pahalgam massacre, which claimed 26 innocent lives in a deliberate targeting of tourists based on religious identity, exposed the continued vulnerability of the region and briefly threatened to unravel years of confidence building. The attack prompted swift military retaliation through Operations Sindoor and Mahadev, demonstrating India’s resolve to respond decisively to cross border terrorism, but it also revealed how a single incident can jeopardize an entire economic ecosystem built painstakingly over years.

The Government of India notified a New Central Sector Scheme in February 2021 with an outlay of 28,400 crore rupees to promote and boost investment and industrial development. This massive financial commitment represents more than government largesse; it signals a fundamental reimagining of Kashmir’s economic identity from conflict zone to investment destination. The investment landscape has responded with cautious optimism. The government has received investment proposals worth 1.63 lakh crore as of December 2024, expected to create more than 5.9 lakh jobs. While actual grounded investment remains a fraction of these headline numbers, the trajectory points toward genuine economic transformation. Tourism, hydropower, and handicrafts have emerged as the three pillars of this new economy, each sector offering distinct pathways to employment and prosperity. The tourism sector’s revival has been particularly dramatic, evolving from near collapse during the pandemic to becoming the Union Territory’s most visible success story. Tourist arrivals climbed from 34 lakh in 2020 to a record 2.36 crore in 2024, including 65,000 foreign tourists. This extraordinary growth represents more than visitor numbers; it embodies a collective leap of faith by millions who chose to see Kashmir’s beauty rather than its history of violence. The 2025 season began promisingly, with 8.14 lakh visitors to Srinagar’s Tulip Garden in just 26 days, before the Pahalgam attack temporarily shattered confidence and triggered up to 90 percent cancellations in some segments.

The government’s response has been to diversify Kashmir’s tourism geography, pushing beyond traditional summer circuits to embrace winter tourism and border areas previously considered too sensitive for civilian visitors. Destinations like Sonamarg continue to draw visitors before peak snowfall restricts movement, while Yusmarg, Doodhpathri, Bangus Valley, and Gurez are gaining attention as offbeat winter destinations. These quiet locations, showcased increasingly through social media, appeal to travelers seeking less crowded experiences marked by frozen streams, snow laden meadows, and village life adapted to harsh winter conditions. Border tourism is gaining momentum, with places like Gurez, Tangdhar, Machil, Karnah, and Keran seeing an influx of visitors. The opening of these frontier valleys represents a powerful symbolic statement: areas that once witnessed cross border shelling and served as infiltration corridors now welcome tourists with chai and conversation. Gurez Valley has officially opened its doors to foreign tourists in 2025, marking a new chapter in border tourism. Previously requiring army permits, foreign visitors can now explore these pristine landscapes with permissions issued by civil authorities, a shift that speaks volumes about normalized security conditions. The economic impact extends far beyond hotel bookings and shikara rides. Kashmir’s tourism ecosystem encompasses over 1,500 houseboats, 3,000 plus hotel rooms, countless taxi operators, tour guides, pony handlers, and handicraft sellers, all dependent on visitor flows. Many stakeholders have taken loans or sold assets to invest in this growing opportunity, converting what were once survival strategies into growth bets, though the Pahalgam incident temporarily transformed these investments into potential liabilities.

Hydropower development promises to revolutionize Kashmir’s energy landscape and economic calculus. The estimated hydropower potential of the Union Territory stands at 18,392 MW, of which about 14,867 MW has been identified, but only 24.44 percent has been harnessed so far. This vast untapped potential represents both opportunity and challenge. The government plans to introduce a new hydropower policy to unlock the full potential of 20,000 MW, driving private investments and accelerating energy generation. Projects like Pakal Dul, Kiru, Kwar, and Ratle will add 3,000 plus MW by 2027, while new projects including Kirthai-I, Dulhasti-II, Bursar, Sawalkote, Uri-I Stage-II, Ujh, and Kirthai-II will add 4,500 MW within a decade, transforming Jammu and Kashmir from power deficient region to potential energy exporter. The shift toward smart metering and improved billing has already begun showing results, with over 4.25 lakh smart pre-paid meters installed, leading to remarkable improvements in revenue collection and reduced transmission losses. This administrative efficiency, often overlooked in discussions of grand development schemes, forms the unglamorous foundation upon which sustainable growth must rest.

Kashmir’s handicraft sector carries the weight of centuries of tradition while adapting to twenty first century market realities. Handicraft exports have more than doubled from 563 crore in 2021-22 to 1,162.29 crore in 2023-24. This growth reflects both increased demand and improved market access through digital platforms and e-commerce integration. The Handicrafts and Handloom Sector supports 4.22 lakh people, mostly from economically weaker sections, with Srinagar’s recognition as a World Crafts City and inclusion in UNESCO’s Creative City Network marking a proud achievement. The government’s focus on geographical indication registration for traditional crafts aims to protect Kashmir’s heritage while ensuring artisans receive fair compensation for their skill and labor. Thirteen traditional crafts are in advanced stages of GI registration, with seven more targeted, ensuring global recognition and protection against cheap imitations that have long plagued authentic Kashmiri products. The proposed PM Unity Malls in Srinagar and Jammu promise to provide artisans with direct market access, cutting out exploitative middlemen who have historically captured disproportionate value from these exquisite handicrafts.

Yet beneath these encouraging narratives lurks the persistent question of execution versus announcement. While investment summits have generated memoranda of understanding worth over 70,000 crore rupees, actual grounded investment tells a more modest story. The gap between political rhetoric and economic reality remains substantial, with bureaucratic inertia, limited infrastructure, and lingering security concerns continuing to deter many potential investors despite attractive incentive packages. The fiscal ecosystem presents its own challenges: around 78 percent of the Union Territory’s budget goes to revenue expenditure covering salaries, pensions, and administrative costs rather than development or capital investments, limiting resources available for building the industrial ecosystem necessary for sustainable growth. Kashmir’s economy remains heavily dependent on government spending and traditional sectors, with the promised industrial revolution still more aspiration than achievement.

The social and political dimensions of Kashmir’s transformation remain as complex as its economic trajectory. The Gross State Value Added increased from 1,64,103 crore in 2019-20 to 2,45,022 crore in 2023-24, reflecting genuine economic expansion that has translated into improved living standards for many residents. Per capita income has risen, infrastructure has expanded dramatically with over 2,00,000 crore worth of road construction projects including 105 tunnels underway, and access to government schemes previously unavailable has brought tangible benefits to ordinary Kashmiris. The restoration of statehood, promised by the central government and demanded by local political leadership, remains a contentious issue that shapes public sentiment and political dynamics. The first comprehensive budget in seven years, presented in March 2025 with an allocation of 1.12 lakh crore, represented a symbolic return to normalcy and democratic governance after years of direct central rule.

The winter of 2025-26 unfolds with Kashmir once again demonstrating its remarkable resilience and capacity for reinvention. Fresh snowfall has transformed Gulmarg, Sonamarg, and Gurez into winter wonderlands that attract visitors seeking the magic of Himalayan winters. The economic significance of winter tourism remains substantial, with thousands of people including taxi drivers, ski instructors, guides, artisans, porters, pony operators, and small shopkeepers relying on the season for income. The expansion of homestays and boutique lodges in rural and semi urban areas has helped spread tourism benefits beyond traditional hubs, creating micro economies in villages that once survived solely on subsistence agriculture and remittances. Border tourism continues to gain traction despite occasional security incidents, with improved road connectivity and the growth of rural hospitality infrastructure making previously inaccessible areas viable tourist destinations. The Log Hut Café in Dawar, Gurez, established by the Indian Army and run by trained local staff, exemplifies the kind of public private initiative that can sustainably develop frontier regions while providing employment and preserving authenticity.

As 2026 progresses, Jammu and Kashmir embodies both the promise and fragility of post conflict development. The 62 percent decline in terror incidents since 2019 has created space for economic activity and social normalcy that seemed impossible a decade ago. The 28,000 crore in committed investments across tourism, hydropower, and handicrafts represents genuine confidence in the region’s future, even as execution challenges and security concerns temper expectations. The launch of winter tourism circuits in Gurez, Machil, and Keran signals a maturing tourism industry that can sustain itself year round rather than depending entirely on brief summer seasons. Yet the April 2025 Pahalgam attack demonstrated how quickly years of progress can be jeopardized by targeted violence designed specifically to shatter public confidence and economic momentum. The path forward requires not just continued security vigilance but sustained focus on inclusive development that ensures Kashmir’s youth see tangible opportunities in peace and prosperity rather than empty rhetoric. The region’s transformation from terrorism to tourism remains incomplete and contested, but the direction of travel offers genuine grounds for cautious optimism. Whether this moment of relative calm represents durable peace or temporary respite depends largely on choices made in the coming years by all stakeholders: government officials who must deliver on development promises, security forces who must maintain vigilance without alienating civilians, investors who must commit capital despite risks, and most importantly, ordinary Kashmiris who daily choose hope over cynicism and engagement over withdrawal. The story of Kashmir’s development in 2025 is ultimately a story of ordinary people reclaiming ordinary lives from extraordinary circumstances, one tourist season, one investment proposal, one handicraft export at a time, building a future where the valley’s beauty is celebrated rather than weaponized, where its youth dream of startups rather than strikes, and where the only guns that matter are those pointed at mountain peaks for adventure photography rather than at human lives for political violence.

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