Investment in J&K: Big numbers, small footprints

In 2002, the US Defense Secretary Donald Rumsfeld famously remarked, “Money is a coward”—a blunt but accurate reflection of how capital behaves. It flows not to ambition or announcements, but to environments that offer safety, predictability, and institutional stability. 

Two decades on, this adage captures the investment conundrum in Jammu and Kashmir (J&K) with unsettling precision.

Despite the claims around post-2019 economic revival, a closer look at the data and delivery mechanisms reveals a story of promise sans much outcome. 

The launch of the New Central Sector Scheme (NCSS) in 2021 was billed as a transformative opportunity, meant to attract private investment by offering financial incentives, land and a streamlined regulatory regime. By early 2025, the government claimed that the scheme had mobilised Rs 10,471 crore in investment proposals—Rs 7,108 crore in Jammu and Rs 3,407 crore in Kashmir.

The promise of investment has further eroded due to bureaucratic inertia. In late 2024, a reported Rs 15,000 crore worth of investment proposals were stalled because of delays in releasing NCSS incentives. The Federation of Industries Jammu (FOIJ) has consistently flagged concerns about non-transparent allocation, poor coordination between departments, and the absence of a functional single-window clearance system.

The underlying issue is structural: a persistent belief that Memoranda of Understanding (MoUs) are equivalent to economic activity. But paper commitments are not capital investments. Proposals do not create jobs or generate tax revenues until they are backed by infrastructure, regulatory clarity, and timely execution. 

Independent assessments paint an even more cautious picture. A report by the Forum for Human Rights in Jammu and Kashmir, led by former Union Home Secretary G K Pillai, found that Net State Domestic Product (NSDP) growth dropped to 8.73% after 2019, compared to 13.28% between 2015 and 2019. In 2022-23, public debt rose to Rs 1.12 lakh crore, while unemployment stood at 10.7%, well above the national average.

The 2025-26 Union Budget added to industry concerns. Central assistance to J&K was cut to Rs 41,000 crore, down from Rs 42,277 crore the previous year. Adjusted for inflation, this represents a real-term contraction in fiscal support. More worryingly, the budget offered no sector-specific revival package, especially for horticulture, a sector that supports over half of Kashmir’s rural population.

Sector-wise performance continues to fluctuate. Agriculture, which contributes nearly 20% to J&K’s economy, saw erratic growth: from -3.3% in 2019-20 to 11.3% in 2022-23, before falling again. Manufacturing and services, despite headline announcements, show little sustained growth. In healthcare, for instance, only three major projects—two in Kashmir, one in Jammu—have progressed beyond paperwork despite repeated summit declarations.

There is a growing consensus among economists and local industry experts: what J&K needs is not more summits, but systemic reform. It requires a shift from state-led, event-driven development to market-facilitated, institutionally anchored growth.

More fundamentally, J&K needs a governance philosophy shift—from control to facilitation. State institutions must become enablers, not barriers. Unless the region modernises its economic governance and sheds its legacy of procedural inertia, the hype around investment will remain just that—hype.

As one local economist succinctly put it, “You do not chase capital. You build an ecosystem where capital comes looking for you.” For J&K, that means replacing grand announcements with credible delivery, efficient facilitation (not governance overreach), and replacing intent with integrity in execution.

(The author worked as the chief executive officer of J&K e-Governance Agency)