INTRODUCTION
On March 7, 2025, Chief Minister and Finance Minister of Jammu and Kashmir (J&K) Omar Abdullah, unveiled the inaugural budget of the elected government in seven years. A particular emphasis is placed on the economic growth, tourism, agriculture, employment generation and sustainable development, while simultaneously tackling fiscal issues and governance changes. According to CM Omar Abdullah, the 2025-26 budget plans to establish a progressive roadmap for the state. He emphasises on a self-reliant Jammu and Kashmir that is marked by inclusivity, sustainability, and governmental reforms.
ECONOMIC CALCULATIONS
The budget is meant to deliver a robust economic development driven by budget control, smart spending, and income generation. The economy of J&K expanded from ₹1.64 lakh crore in 2019-20 to ₹2.45 lakh crore in 2023-24, with an anticipated growth rate of 7.5% for 2024-25. Over the course of 4 years, following the abrogation of Article 370, the Gross State Domestic Product (GSDP) of J&K has experienced a significant increase.
The government seeks to reduce its dependence on federal assistance by increasing tax collections and limiting unnecessary spending. The government also intends to bring the fiscal deficit under control and align with it with established benchmarks. Previous borrowings have resulted in public debt rising from 48% of GSDP in 2015-16 to 52% in 2023-24. Initiatives are being designed to ensure long-term stability, focusing on reducing expensive debt and improving repayment plans. Enhanced GST compliance, e-Stamping, and digital tax systems have increased tax revenue to ₹11,650 crore and non-tax revenue to ₹5,824 crore by January 2025. Initiatives have started to reduce high-cost debt, enhance financial transparency, and restructure liabilities for long-term stability.
Furthermore, J&K seeks to draw significant private and industrial investments with a ₹28,000 crore initiative. ₹50 crore has been allocated to assist entrepreneurs and venture capital funds. In March 2022, Lieutenant Governor Manoj Sinha inaugurated the foundation stone for the Mall of Srinagar, a significant project led by the Dubai-based company EMAAR, featuring Lulu Hypermarket as its primary tenant. The project was scheduled for completion by 2026, with the objective of enhancing the regional economy and creating employment opportunities.
As of March 2025, it is notable that there has been a lack of substantial advancement regarding the proposed Lulu Mall in Jammu.
Moreover, the primary objective is to increase tourism’s contribution to GSDP from 7% to 15% within the next 4-5 years. Government agencies have increased local procurement on Government e-Marketplace (GeM), totalling ₹1,527.74 crore.
MAJOR SECTORAL ALLOCATIONS
Power Sector Reforms: The government allocates ₹2,021.37 crore for enhancements in the power sector, reflecting an increase of ₹762.80 crore from the fiscal year 2024-25. J&K intends to become a power-exporting area by expanding its capacity by 7,500 MW during the next decade. Extensive solar initiatives are being advocated under the PM Surya Ghar Muft Bijli Yojana and rooftop installations.
The government claims that it has reduced power losses from 41% to 25% and aims to implement additional improvements by the year 2025-26. The government undertakes the implementation of smart meters, digital billing systems, and advanced cabling infrastructure to enhance the efficiency of revenue collection processes. The budget highlighted how the power sector is currently engaged in a process of debt restructuring and is aiming at mitigating its financial challenges. Additionally, families identified under the Antyodaya scheme will benefit from a provision of 200 units of complimentary electricity each month, thereby enhancing affordability and encouraging the adoption of solar energy solutions.
The budgetary plan devised by the government for the power sector emphasises on expansion of capacity, the promotion of solar initiatives, and the mitigation of losses. However, looking at the current situation, J&K continues to grapple with significant power shortages, particularly during the winter months. The existing 15% supply gap, coupled with significant transmission and distribution losses, indicates that, despite the investments made, the on ground realities continue to pose considerable challenges. The dependence on external power purchases underscores the pressing necessity for a more diversified energy portfolio. Although there have been advancements in billing efficiency and a reduction in losses, it is imperative for the region to expedite infrastructure enhancements. This will be crucial in securing a reliable power supply throughout the year and in diminishing reliance on external sources.
Road and Transport: The government has allocated a budget of ₹4,062.93 crore for the development of roads and bridges, indicating an increase of ₹439.28 crore compared to the preceding fiscal year, 2024-25. Noteworthy infrastructure initiatives, including the Banihal Bypass, the Jammu and Srinagar Ring Roads, and the Delhi-Amritsar-Katra Motorway, are in their completion stages. The enhancement of rural road infrastructure through the Pradhan Mantri Gram Sadak Yojana (PMGSY)-IV aims to establish connectivity for all villages with populations exceeding 250 individuals. The Srinagar Metro Rail project is currently undergoing an execution review.
Water Supply and Irrigation: The government also set aside ₹2,662.71 crore for water infrastructure, reflecting a raise of ₹817.87 crore compared to 2024-25. The Tawi Barrage project is approaching completion to facilitate irrigation and tourism. Under the Jal Jeevan Mission, 1,544 water supply projects are being finalised.
Employment and Entrepreneurship: The government has allocated ₹379.14 crore for Mission YUVA to generate 425,000 employment and establish 137,000 firms over five years. A ₹50 crore venture capital fund will facilitate startup innovation and incubation centres. The expansion of the IT, biotechnology, and renewable energy sectors will create high-value employment opportunities. Government-supported loans will assist MSMEs and self-help groups in broadening entrepreneurial prospects.
Agriculture and Rural Development: An allocation of ₹815 crore has been designated for the agricultural sector, aiming to create 2,88,000 employment opportunities. Efforts are now under way to promote a two-crop system and improve horticultural practices. The “J&K Green Mission” aims to promote the importance of cleanliness and the enhancement of green spaces within communities by advocating for practices such as waste segregation and vermicomposting.
Tourism Growth and Development: In the year 2024, Jammu and Kashmir experienced a remarkable influx of 2.36 crore tourists, with 7.68 lakh individuals drawn to the Gulmarg Gondola. Border tourism has expanded to include regions such as Gurez, Keran, Karnah, and Suchetgarh. The budget includes detailed Master Plans for Gulmarg, Pahalgam, introduction of new homestays, and the Sustainable Promotion of Emerging Alternate Destination (SPREAD) initiative aimed at fostering the development of alternative destinations. Sonamarg is poised to transform into a prominent centre for winter sports. The recent initiatives in Jammu have the potential to enhance both pilgrimage heritage and adventure tourism. An Eco-Tourism Policy has also been promoted which will emphasise waste reduction, sustainability, and environmentally friendly tourism. The tourist budget is ₹390.20 crore, exceeding FY 2024-25 by ₹121.77 crore.
The tourism budget for Jammu and Kashmir aims to facilitate growth; however, the adverse effects of climate change are significantly reducing the industry’s potential. The business in Gulmarg has experienced a decline of 20–30%, whereas Pahalgam and Srinagar have faced a 50% decrease in bookings, linked to an unusual dry spell. The delay of the 2025 Khelo India Winter Games has adversely impacted tourism, resulting in widespread cancellations. The diminishing snowfall presents significant challenges not only for the tourism sector but also poses a threat to water resources and agricultural practices, thereby raising important long-term economic concerns. Although recent tourism initiatives hold significant promise, the potential for ineffective outcomes stands if development remains unchecked and climate adaptation measures are inadequately addressed. It is imperative for the government to prioritise the development of sustainable infrastructure and enhance climate resilience in order to safeguard the tourism sector and overall economy of Jammu and Kashmir.
Education and Skill development: Under PM-SHRI, J&K is planning to modernise 396 schools and establish 15,000 pre-primary schools featuring with smart classrooms and ICT labs. With ₹180 crore set aside for higher secondary education, 40 schools will be converted into K–12 facilities. Four-year UG programs, more polytechnic seats and support for private universities will help expand higher education. YUVA hopes to revive the Udaan Scheme and generate 4.25 lakh employment and 1.37 lakh businesses in coming 5 years. Training in technology tourism, renewable energy crafts and startup incubation will be provided by J&K Skill and Entrepreneurship University. The education budget is ₹1,388.97 crore with an increase of ₹242.75, ₹ 379.14 crore is allotted for skill development with an increase of ₹ 269 crore.
The education budget proposed by the J&K government for the fiscal year 2025–26 reflects a commendable ambition; however, a recent report indicating that 52% of Class VIII students are facing challenges with fundamental reading skills underscores a significant shortfall in effective implementation. It is important to recognise that simply modernising schools will not adequately address the underlying deficits in foundational learning. In the absence of enhanced teacher training, robust accountability measures, and effective remedial programs, there is a significant risk that the budget will only serve as a statistical exercise rather than facilitating a true transformation. The successful execution of these initiatives is crucial for translating investments into tangible enhancements in learning outcomes.
Sports and Youth Engagement: J&K government has planned to open Khelo India Centres and High-Performance Training Centres to support sports at all levels. Dal Lake in Srinagar and Basohli in Jammu are the locations of National Centres of Excellence for Water Sports. Infrastructure and facilities are being increased with four elite cricket academies under development along with a new gymnastics academy in Srinagar. The government aims to involve 75 lakh young people in different sports to promote talent development and fitness.
Jammu and Kashmir demonstrated a remarkable performance at the 38th National Games, securing 24 medals, which comprised 5 gold medals. The coaching camps, provision of equipment, and technical assistance offered by the J&K Sports Council have significantly contributed to the enhancement of the region’s sports potential.
The allocation of government funds for the establishment of Khelo India Centres, High-Performance Training Centres, and elite academies serves to enhance these advancements. Jammu and Kashmir has the potential to cultivate young athletes who can compete on both national and international stages. Ongoing investment in training programs, infrastructure, and community involvement will position Jammu and Kashmir as a prominent centre for sports.
CONCLUSION
The Budget 2025-26 for J&K is meant to be a roadmap for economic growth, social progress, and infrastructure development. Reports indicate that after the abrogation of Article 370, the state’s economy has expanded. However, the envisaged economic transformation depends on the private investments, infrastructure development and commercial opportunities which in turn is dependent on the security situation, among other issues. It is also noteworthy that recent imposition of scheduled power outage by the Jammu and Kashmir Power Development Corporation Limited (JKPDCL) on March 10 and 11 can severely impact the expectations of investors thereby leading to poor response. Plans for massive investments of Rs. 250 crore by Lulu group and Dubai based EMAAR in 2022 to build Mall of Srinagar and a hypermarket have so far yet to realise. Despite initial enthusiasm, as of the present moment, there has been a lack of significant progress on such investments. The halted Mall of Srinagar project is another instance.
In addition, the effects of climate change are profoundly influencing the tourism sector, as diminishing snowfall has led to a notable decrease in bookings, thereby exerting additional pressure on the economy. In the absence of timely enhancements to infrastructure and the implementation of climate resilience strategies, the growth potential of J&K is undermined.
Another factor is the activities of vested interests in derailing the efforts at development. The recent fashion show in Gulmarg was once such instance, where a debate, was ignited on the propriety of holding a “vulgar’ show during the time of Ramzan. The history of this area underscores the difficulties inherent to promoting any form of development in the face of bureaucratic inefficiencies at the state level, as well as the tensions created by years of conflict. Much will depend on whether the Chief Minister can win the confidence of the people in terms of fulfilling their hopes and desires.
