J&K’s 2026 resilience agenda amidst global turbulence

By Abrar Khan

As we enter the new financial year, I see Jammu & Kashmir’s economy standing at a critical crossroads. With a nominal GSDP of ₹2.86 lakh crore, the region is no longer merely facing a “trade disruption.” What we are witnessing is a systemic Global Supply Fracture—one that is imposing what I describe as a “Landlocked Tax” on our economy.

Logistics costs have surged to nearly 22%, and this alone threatens to shave off close to 0.8% from our current 5.82% growth rate. For a region already navigating structural constraints, this is not a marginal challenge—it is a defining one.

In my view, survival in this environment demands a fundamental shift in governance. We must move away from a model of revenue collection toward one of liquidity protection, where the local entrepreneur is treated as a partner in economic resilience, not a passive participant.

Tourism remains the backbone of Jammu & Kashmir’s economy, supporting over 25 lakh livelihoods—from houseboat owners to artisans. Yet today, this sector faces an existential threat. Rising Aviation Turbine Fuel (ATF) prices are transforming leisure travel into what is effectively “necessity spending.” If left unaddressed, this could derail our ambitious target of 2.3 crore tourist arrivals and trigger an estimated ₹2,500 crore loss in hospitality revenue.

I strongly believe the government must immediately establish an Aviation Stabilization Fund (ASF) with an allocation of ₹500 crore. This Viability Gap Funding mechanism can help cap airfares on J&K routes, ensuring that the region remains accessible and competitive.

Nearly 70% of our population—around 35 lakh people—depends on agriculture and horticulture. Yet, these sectors remain heavily dependent on global chemical supply chains, leaving them vulnerable to external shocks. The solution, as I see it, lies in a decisive bio-input transition. By shifting toward locally produced bio-fertilizers, bio-stimulants, and organic pesticides, we can reduce input costs while enhancing soil health.

More importantly, this shift allows us to position J&K’s produce under a premium “Organic J&K” brand in global markets. In today’s uncertain geopolitical climate, agricultural self-reliance is not just desirable—it is essential for food security.

With a capital outlay of ₹26,836 crore this fiscal, a significant portion of J&K’s economic value continues to flow out through external contractors and large corporate entities. This, in my assessment, is a structural weakness that must be addressed through a Local-First Procurement Policy.

Lowering eligibility thresholds for local contractors by 15–20% can open access to Tier-1 projects. At the same time, a 20% price preference for local bidders would strengthen the MSME sector, which remains the region’s second-largest employer. Retaining capital within the local economy is not protectionism—it is prudent economic design.

The current global disruption has triggered payment delays and unintentional defaults, particularly among small businesses. Yet, our banking framework continues to penalize these borrowers through rigid credit thresholds. I believe it is time for a 150-point credit shield. Lowering the CIBIL-linked eligibility threshold from 750 to 600, combined with a 4% interest subvention for MSMEs, can prevent temporary financial stress from becoming permanent exclusion.

Entrepreneurs should not be burdened with what effectively becomes a “brand of financial disability” due to circumstances beyond their control.

For too long, J&K’s trade orientation has remained disproportionately dependent on the Gulf. That era, in my view, must now give way to diversification. We must actively pivot toward ASEAN economies, the broader Asian region, and emerging African markets. These regions offer expanding middle-class demand, particularly for premium, authentic, and GI-tagged products.

Our handicrafts and horticulture—apples, saffron, walnuts—have strong global appeal. Establishing dedicated trade corridors in these “new frontier” markets will reduce vulnerability to geopolitical volatility in West Asia.

At the grassroots level, thousands of artisan families remain disconnected from modern market systems. Bridging this gap is essential. I propose the creation of a sovereign-backed digital D2C platform for J&K’s ₹1,100 crore handicraft sector. Alongside this, district-level raw material banks can supply silk and pashmina at subsidized rates, reducing input costs for weavers.

Equally important is a logistics equalizer—a 10% direct DBT freight support for industrial exports—to offset the inherent disadvantage of being landlocked.

As I assess the current situation, it is clear that this crisis demands more than incremental adjustments. It requires a structural shift in how we think about economic resilience. By retaining capital locally, liberalizing credit, embracing agricultural self-reliance, and diversifying export markets, Jammu & Kashmir can transform this external shock into an opportunity for internal reform.

This is not a call for handouts. It is a call for enabling policy—one that equips the region to navigate uncertainty with confidence.

The time to act is now. What we need is nothing less than a Resilience Charter for Jammu & Kashmir’s economy.

(The writer is Chairman, J&K Economic Research and Development Forum.)