SRINAGAR: Jammu and Kashmir’s economy is projected to expand steadily in 2025–26, with the government estimating real growth of 5.82 per cent and placing the nominal size of the Union Territory’s Gross State Domestic Product at approximately Rs 2.86 lakh crore, according to the official Economic Survey 2026 that was placed on record in Jammu by Chief Minister Omar Abdullah. In real terms, the GSDP is estimated at about Rs 1.50 lakh crore, while nominal output is expected to grow by 8.89 per cent over the year, reflecting both output gains and price effects.
The latest estimates place Jammu and Kashmir slightly below the national growth projection but show a consistent expansion trend over the medium term. Between 2019–20 and 2024–25, the Union Territory is estimated to have recorded a compound annual growth rate of 4.47 per cent in real GSDP, a pace that compares favourably with several northern states, remaining higher than Delhi and Himachal Pradesh and marginally above Haryana during the same period. The government attributes this to recovery after the pandemic years, sustained public investment and a gradual broadening of economic activity.
Income indicators have also improved. Per capita income is estimated at Rs1,68,243 in 2025–26, continuing a long upward trajectory that has seen incomes rise sharply over the past decade. Although still below the national average, the gap has narrowed over time, with Jammu and Kashmir’s per capita income increasing to roughly three-fourths of the national level. During the last five years, per capita income in the Union Territory grew at a compound annual rate of 8.81 per cent, higher than several neighbouring states and Union Territories, suggesting faster income gains relative to much of the region.
The structure of the economy remains services-led. The tertiary sector is estimated to account for 61.02 per cent of Gross State Value Added, making it the dominant contributor to output. The primary sector contributes 20.45 per cent and the secondary sector 18.52 per cent. Despite the growing weight of services, agriculture and allied activities continue to employ the largest share of the workforce, absorbing nearly 43 per cent of workers, underscoring the continuing dependence of livelihoods on farming and related activities. Construction and infrastructure spending form the backbone of the secondary sector, generating employment alongside public works and urban development projects. The survey, however, notes some moderation in services growth, partly linked to reduced tourism activity following a recent untoward incident that affected visitor inflows and allied businesses.
Price conditions have shown some improvement. Inflation in Jammu and Kashmir eased from 4.5 per cent in 2024 to 3.8 per cent in 2025, indicating softer price pressures compared to the previous year. The government attributes this to supply-side management and administrative interventions. At the same time, cost-of-living indicators suggest that agricultural labourers in the region continue to face relatively higher consumer prices compared with several other states.
On the fiscal front, revenue mobilisation has remained steady. Revenue receipts of Rs 13,521 crore were realised up to November of the current financial year, amounting to around 64 per cent of the previous year’s collections during the same period. Tax revenue accounted for Rs9,136 crore and non-tax revenue for Rs4,386 crore. The share of non-tax revenue has risen in recent years, largely driven by higher power tariff collections, while Goods and Services Tax remains the largest contributor among taxes. Over the past few years, taxes on power, GST and excise have shown notable increases in collections.
Expenditure trends show that committed spending continues to dominate the budget. Revenue expenditure during the first eight months stood at Rs45,157 crore, while capital expenditure amounted to Rs7,933 crore. Salaries and pensions together account for more than half of the revenue outgo, indicating limited flexibility in day-to-day spending even as the government emphasises capital investment for infrastructure creation
Debt indicators reflect a shift in borrowing patterns. Public debt constitutes about 69 per cent of total liabilities, with internal market borrowings forming the bulk and loans from the Government of India accounting for only a small share. The survey describes this as a move towards market-based financing, longer maturities and improved debt management practices
The overall budget outlay for 2025–26 has been set at Rs1,12,310 crore. Central grants continue to form the largest portion of available resources, while own tax and non-tax revenues make up roughly a quarter of the total and the remainder is financed through borrowings and other receipts. This composition highlights the continuing dependence on central support even as the administration attempts to strengthen its own revenue base
Labour market indicators point to modest gains. The unemployment rate on the usual status basis has declined from 6.7 per cent to 6.1 per cent over recent years, while labour force participation and worker population ratios have improved. Employment and self-employment schemes have supported thousands of new units, and large numbers of unorganised workers have been brought onto formal registration platforms
Taken together, the macro-economic assessment presents a picture of gradual expansion marked by rising incomes, easing inflation and stable public finances. While services continue to drive growth and agriculture remains central to livelihoods, the administration sees ongoing investments in infrastructure, power, industry and governance reforms as key to strengthening the economic base and sustaining growth in the coming years.
