This is the second of a three-part series. Read the first article here.
When Jammu and Kashmir went to polls last year, what was uppermost on voters’ minds?
According to a post-poll survey by thinktank CSDS-Lokniti, it was not the restoration of its special status and statehood, but unemployment – 42% cited it as their biggest concern.
The findings were not surprising.
As we have reported in this special series, Jammu and Kashmir has been in the grip of an unemployment crisis that has worsened in the last five years.
Indeed, the union territory’s unemployment rate has consistently remained higher than the national average since 2019 – flying in the face of the Narendra Modi government’s assertion that its decision to scrap Article 370 of the Constitution that gave Jammu and Kashmir its special status has led to widespread development and prosperity of the region.
Experts, in fact, argue the opposite – that the rampant joblessness in Jammu and Kashmir is a sign of the crisis in its economy post-2019.
“Economic performance post-2019 has been worse on every indicator compared to years between 2014 and 2019,” said Dr Haseeb Drabu, economist and former finance minister of Jammu and Kashmir.
From August 2019 until six months ago, Jammu and Kashmir was ruled by New Delhi through the office of the Lieutenant Governor. The administration clamped down on protests, shutdowns, separatist groups, with even militant violence ebbing in the Valley.
But the enforced peace has not paid economic dividends. Instead, experts point to several policies and decisions of the Lieutenant Governor administration that have hurt private enterprise and employment as well as shrunk the recruitment pool in the government sector.
Three back-to-back lockdowns
The downward spiral began with the imposition of an unprecedented security clampdown and total communication blackout ahead of the union government’s decision to scrap Jammu and Kashmir’s special status and statehood in August 2019.
While the clampdown continued for months, the Valley remained shut till the end of the year.
In December 2019, the business body Kashmir Chamber of Commerce and Industry said that the lockdown had cost an estimated loss of Rs 18,000 crore to Kashmir’s economy.
While the union territory was still grappling with the August 2019 lockdown, the Covid-19 pandemic arrived in 2020. By the first anniversary of August 2019, the losses had touched Rs 40,000 crore, resulting in the loss of five lakh jobs. Following the second wave of Covid-19 in 2021, the overall loss to Jammu and Kashmir’s economy in three back-to-back lockdowns was estimated at Rs 60,000 crore.
The damage to local industries and enterprises shows up in the data. According to official data on Gross State Domestic Product, Jammu and Kashmir registered an average growth rate of 6.43% between 2014-15 and 2018-19. Between 2019-20 and 2023-24, the figure has come down to 3.97%.
‘No say in policy making’
But lockdowns explain only one side of Jammu and Kashmir’s economic slump.
Many argue the joblessness is also a result of the policies of the centrally-appointed Lieutenant Governor administration that have left the local industrial sector at a disadvantage.
A month after the scrapping of Article 370, the LG administration moved all government orders to the Government e-Marketplace – which allowed any company from anywhere in the country to bid for a contract of the Jammu and Kashmir government.
“Had there been a popular government, such a decision would not have been taken like this,” said Shakeel Qalander, former president of Federation of Chamber of Industries Kashmir. “In the last five years, policies [like this] instead of creating avenues within the industrial sector, have led to retrenchment.”
According to Federation of Chamber of Industries Kashmir, "most of the local manufacturers and processors were rendered workless” after the government directed its departments and all public sector undertakings to make their purchases through the Government e-Marketplace portal. “The local units were unable to compete with their counterparts from industrially advanced states for many reasons,” the forum said in a recent statement.
Qalander’s counterpart in Jammu, Lalit Mahajan, agreed. “The biggest issue at the moment is the threat to existing units which are on the verge of closure,” said Mahajan, chairman, Federation of Industries Jammu. “There are 400-500 units in Jammu which used to supply goods to the government. After 2019, the government introduced such a mechanism that our local units cannot compete. Everything is bought from outside.”
Around 40,000 manufacturing units in Jammu and Kashmir employ approximately 4 lakh people, said Qalandar.
The government has completely done away with the marketing support for micro, small and medium enterprises in the region, Qalander added. “The government’s procurement policy has sidelined local industry and allowed outsider manufacturers to supply goods here,” he said. “If there is a demand for a product in the union territory and that product is being produced by the local industries, why should that product be supplied by a manufacturer from another state? Why can’t the government procure from local industries like it used to before 2019?”
For example, under a central government scheme to improve electricity infrastructure, the power development department in 2024 installed around 25 electricity transformers, poles and other equipment in Srinagar’s Sanat Nagar industrial estate. “Would you believe that these transformers and equipment were procured from Jharkhand and other states even when there are 150 units in Jammu and Kashmir which manufacture the same goods?” remarked Qalander. “Ironically, four transformer manufacturing and six pole manufacturing units exist in the same industrial estate in which they had to be installed.”
Before 2019, Qalander said, local industrialists and businesspeople were consulted while drafting policies for the sector. “In the last five years, we have never been consulted,” said Qalander, a renowned industrialist and a recipient of a national award from the late Prime Minister Atal Bihari Vajpayee for his contribution to small scale industry. “In fact, the stakeholders have been thrown out of the industries-related boards where decisions are taken.”
Downsizing government workforce
Decades of political instability and violence in Jammu and Kashmir have not just stopped the creation of a thriving private sector but also led to an intense desire for the security of a government job.
But the government itself is reluctant to hire more people.
As per official statistics, on an average 10,000 employees retire from the government service annually in Jammu and Kashmir. But not all of them are replaced.
From August 2019 till August 2024, for example, nearly 36,000 people got government jobs in the union territory. That means only 7,200 vacancies were filled on average per year.
In fact, the Jammu and Kashmir government’s workforce has significantly downsized. The J&K government’s declaration under the Fiscal Responsibility and Budget Management Act 2006 reported 4.12 lakh employees on its rolls in 2022-’23 – the smallest government workforce in the last 10 years.
Perhaps, that also explains why almost every major institution in the union territory has unfilled positions. On March 4, Chief Minister Omar Abdullah informed the legislative assembly that more than 32,000 posts are lying vacant in 37 departments of the Jammu and Kashmir government.
‘Structures of economy’
The decline in government jobs does not completely answer the question of rising unemployment.
“We tend to see unemployment as an inability of the government to provide jobs,” said Haseeb Drabu, the former finance minister of Jammu and Kashmir. “But the fact of the matter is that the government cannot be the employer of last resort.”
The bigger failure, experts say, is the inability to move people out of agriculture.
For decades, agriculture was the mainstay of Jammu and Kashmir’s economy. The historic land reforms of the 1950s, which distributed land to the tiller without compensation to landlords, led to widespread economic prosperity. But the rise in population over the years has fragmented landholdings.
According to the agriculture census data, from an average landholding of 0.94 hectares in 1970-71, it has come down to 0.59 hectares in 2015-16. The national average is 1.66 hectares.
“While agriculture once absorbed 70% of the workforce, according to the 2011 census, it now supports 29% of workers and the number has continued to decline,” said retired economist Nisar Ali. “Agriculture, the backbone of J&K’s economy, no longer has the capacity to absorb the labour force, therefore the labour has to move. That’s why there is more and more yearning for jobs.”
But successive governments have failed to support a private sector that can create jobs. While the manufacturing sector has stagnated, even the service sector, despite steady growth, has failed to generate employment. It accounts for 61.06% to the union territory’s economy, but contributes only 28.82% in terms of employment.
The tourism industry in Jammu and Kashmir is a prime example.
Over the last few years, New Delhi has claimed major success in reviving the industry. Kashmir Valley, according to government data, has seen record tourist arrivals, investment in infrastructure projects and a focus on entrepreneurship development.
Yet, the problem of unemployment has persisted. “We have heard a lot about crores of tourists visiting Kashmir, but unemployment still doesn’t budge,” an economics scholar in Srinagar, wishing not to be identified, pointed out.
The LG government has not provided any figures on how many jobs the tourism sector has produced since 2019. “Tourism is one sector in which everything is dependent on people who will come from outside and the tourists who are coming are not investing in our economy. They are not high-end tourists,” the scholar added.
What’s worrying, according to the economics scholar, is that core sectors like agriculture and industry have not received as much attention as the tourism sector. “[As a result], on the ground, there is no such policy which will trigger a self-sustained growth in the J&K economy,” the scholar added.
