Every year, the anniversary of August 5, 2019, rekindles debate over the constitutional changes that transformed Jammu and Kashmir's relationship with the Indian Union.
Politicians revisit familiar arguments over Article 370 and Article 35A. Legal scholars examine questions of federalism and constitutional procedure. Human rights organisations document restrictions on civil liberties. These debates are important and deserve continued attention.
Yet they have also eclipsed another question that may prove just as consequential in the years ahead: the future of Kashmir's economy.
The constitutional changes did more than redraw the region's political relationship with New Delhi. They also accelerated a restructuring of economic governance, altering the framework within which land, natural resources, investment and development are managed.
Seven years later, the central economic question is no longer simply whether Jammu and Kashmir's economy is growing. Official indicators suggest that it is as is usually with government data which is subject to scrutiny by independent experts. The more fundamental question is whether that growth is accompanied by greater local participation, equitable benefit-sharing and meaningful control over the region's productive assets.
Economic growth and economic justice are not always the same thing.
I write not only as an economist but as someone who has spent more than four decades in business, served as President of the Kashmir Chamber of Commerce and Industry during one of the most turbulent periods in the region's recent history, and witnessed first-hand how conflict reshaped the lives of thousands of entrepreneurs.
My purpose is not to revisit constitutional arguments. Rather, it is to ask whether Kashmir's economic story has been adequately understood and whether the people who have borne the economic costs of conflict have ever received the attention they deserve.
It has become common in public discourse to describe August 2019 as the beginning of Kashmir's economic crisis. That interpretation is historically incomplete.
Kashmir's economy did not collapse with the revocation of Article 370. Its vulnerabilities were built over decades.
Since 1947, the region has experienced repeated wars, prolonged militarisation, political uncertainty, restrictions on movement, recurring violence and periodic disruptions to normal life. These conditions discouraged long-term investment, distorted market incentives and prevented the emergence of a stable industrial base. Tourism, one of Kashmir's principal economic strengths, repeatedly collapsed during periods of unrest. Manufacturing remained limited. Private investment flowed elsewhere. Generations of educated young Kashmiris sought opportunities outside the Valley because local enterprise could not absorb their aspirations.
Economists often measure development through Gross Domestic Product (GDP), investment flows or employment data. Such indicators are important, but they do not capture the cumulative cost of living under prolonged uncertainty. When entrepreneurs postpone investment because they cannot predict the future, when factories remain idle during recurring shutdowns, when exporters lose overseas buyers after months of interrupted communication, and when skilled workers migrate permanently, those losses rarely appear in official balance sheets. Yet they shape an economy for generations.
My own experience reflects this reality.
Years ago, my family invested in a modern marble processing plant, hoping to build a business that would create employment and demonstrate the industrial potential of Kashmir. The machinery arrived. The plans were complete. But the project never became operational. Conflict intervened before the enterprise could. The machinery remained packed in crates, eventually becoming a symbol not simply of one failed investment but of a wider economic tragedy. Later, I described this experience in an essay titled The Marble Plant Still in Boxes. Sadly, it is not an exceptional story. Thousands of Kashmiri entrepreneurs can recount similar experiences in which business decisions were ultimately overtaken by political events.
Business Victims
Public discussions on Kashmir understandably focus on loss of life, political rights and security. Comparatively little attention has been paid to another casualty of the conflict: its business community.
Since the armed insurgency intensified in 1990, traders, manufacturers, transport operators, artisans, tourism entrepreneurs and small businesses have carried an enormous burden. Their losses were not simply commercial failures; they were conflict-induced losses.
The figures are striking.
According to estimates compiled over the years by the Kashmir Chamber of Commerce and Industry (KCCI) and other trade bodies, Kashmir experienced nearly 3,000 days of complete or near-complete economic shutdown between 1990 and 2020 because of curfews, strikes, lockdowns and prolonged restrictions. That is equivalent to almost eight cumulative years during which ordinary economic activity was either suspended or severely disrupted. Few economies anywhere in the world could withstand such sustained interruption without suffering lasting structural damage.
The consequences extended far beyond temporary financial losses.
Factories closed permanently. Hotels stood empty. International buyers shifted to competing suppliers. Exporters lost established markets. Artisans were unable to fulfil overseas orders. Retail businesses consumed their working capital simply to survive repeated closures. Many industrial units that had once been commercially viable became financially distressed through circumstances entirely beyond their control.
For countless entrepreneurs, the conflict did not merely reduce profits. It erased decades of accumulated capital.
Those who had borrowed from banks found themselves unable to service loans, not because their enterprises lacked commercial viability but because repeated disruptions prevented them from operating normally. Nevertheless, these businesses were often treated as ordinary commercial defaulters. Loans became non-performing assets. Properties were mortgaged. Family enterprises built over generations gradually disappeared.
During my tenure as President of the Kashmir Chamber of Commerce and Industry, this became one of our foremost concerns.
The Chamber repeatedly submitted memoranda to the Government of India, including the Ministry of Home Affairs, arguing that these were not ordinary business failures. We sought recognition that conflict had imposed extraordinary economic costs requiring extraordinary policy responses. Our recommendations included compensation for documented business losses, restructuring of loans, interest waivers, revival of sick industrial units, restoration of working capital and special economic rehabilitation packages for conflict-affected enterprises.
Growth Without Ownership?
The debate surrounding Kashmir's economy often becomes polarised between two competing narratives. One argues that the constitutional changes of August 2019 opened the region to investment and accelerated development. The other portrays them as the beginning of economic decline. Reality, however, is more complex than either description suggests.
Official statistics indicate that Jammu and Kashmir's economy has continued to expand. The latest Economic Survey estimates the Union Territory's Gross State Domestic Product (GSDP) at approximately ₹2.86 lakh crore, with real economic growth projected at 5.8 per cent. Per capita income has risen steadily over recent years, while tourism has reached record levels, with nearly 2.4 crore visitors reported in 2024. Roads, tunnels and other infrastructure have expanded at an unprecedented pace.
Yet aggregate growth figures answer only one question: how large is the economy?
Do they not answer another question that is equally important: who benefits from that growth?
Gross Domestic Product cannot measure whether local entrepreneurs have greater opportunities than before. It cannot tell us whether communities retain meaningful influence over decisions affecting their land and natural resources. Nor can it reveal whether wealth generated from those resources circulates within the local economy or increasingly flows elsewhere.
That distinction lies at the heart of Kashmir's economic debate.
An economy may expand while ownership becomes more concentrated. Investment may increase while local participation declines. Infrastructure may improve while traditional industries struggle to compete. Economic growth and economic justice are related, but they are not identical.
It is this distinction that deserves greater public discussion.
The significance of August 2019 therefore extends beyond constitutional law.
Following the reorganisation of Jammu and Kashmir, significant changes were introduced in land regulations, industrial policy and investment frameworks. New rules widened eligibility for land ownership in certain categories, investment policies sought to attract outside capital, mining leases increasingly opened through competitive national bidding, while major tourism and infrastructure projects became more centrally planned than before.
Whether one supports or opposes these reforms politically is not the central issue of this article.
The more enduring question concerns the architecture of economic governance.
Economic development is not simply about attracting investment. It is also about determining who participates in that investment, who makes decisions regarding the utilisation of natural resources, and how the resulting wealth is distributed.
These questions acquire even greater importance in regions emerging from decades of conflict.
Throughout the world, post-conflict reconstruction has increasingly recognised that sustainable peace depends not merely on physical reconstruction but also on restoring confidence among local communities that they remain stakeholders in their own economic future. Northern Ireland, Bosnia and Herzegovina and Indonesia's Aceh province all illustrate, in different ways, that rebuilding institutions and ensuring local participation often prove as important as rebuilding roads and bridges.
The issue is therefore not whether investment should come from outside the region. Every developing economy requires external capital, technology and expertise. The real question is whether local enterprise grows alongside external investment or gradually becomes marginal within its own economy.
Paradox of Natural Wealth
Few regions possess the natural endowments of Jammu and Kashmir.
Its rivers constitute one of South Asia's largest hydropower resources, estimated at around 20,000 megawatts, although only a fraction has so far been harnessed. Its orchards produce internationally recognised apples, walnuts, cherries, almonds and saffron. Horticulture directly or indirectly supports nearly half of the region's rural population and remains one of its largest sources of private employment. Tourism has historically served as the Valley's economic lifeline, while forests, limestone deposits and marble reserves provide considerable industrial potential.
Yet despite these advantages, unemployment among educated youth remains persistently high. Manufacturing continues to account for only a modest share of economic output. Large numbers of young Kashmiris continue to leave the region in search of employment elsewhere.
This paradox cannot be explained simply by resource availability.
Economic history repeatedly demonstrates that prosperity depends less upon the existence of natural resources than upon the institutions governing their ownership, management and distribution.
Countries rich in minerals frequently remain poor. Countries with limited natural resources often prosper because institutions encourage innovation, entrepreneurship and broad participation.
The same principle applies to Kashmir. The question is not whether Kashmir possesses resources. It unquestionably does. The question is whether those resources generate broad-based local prosperity or whether much of the economic value created from them accrues elsewhere.
In 1962, the United Nations General Assembly adopted Resolution 1803 on Permanent Sovereignty over Natural Resources, affirming that peoples should exercise sovereignty over their natural wealth and utilise those resources in their own interests. Subsequent international covenants similarly recognised that no people should be deprived of their means of subsistence.
Economic self-determination should therefore not be understood narrowly as a demand for political sovereignty.
Rather, it concerns whether local communities have a meaningful voice in decisions affecting their economic future. It asks whether development reflects consultation, transparency and fair participation. It seeks to ensure that growth strengthens local capacity instead of weakening it.
The ideas I have outlined here did not emerge after the constitutional changes of 2019. They are rooted in conversations that took place many years earlier, when there was still cautious optimism that a political settlement to the Kashmir dispute might be within reach.
In 2006, shortly after I assumed office as President of the Kashmir Chamber of Commerce and Industry (KCCI), I was invited by the Hurriyat leadership to participate in discussions surrounding the peace proposals advanced by Pakistan's President General Pervez Musharraf. The dialogue, which involved political leaders, civil society representatives and professionals from different fields, sought to explore what a future settlement might look like beyond its political contours.
During one of those meetings, I was asked a question that has remained with me ever since.
"What is the economic future of Kashmir?"
My response surprised some of those present.
I argued that Kashmir's economy could not simply restart the day after a political agreement. Peace alone would not erase decades of accumulated economic damage. Before speaking of investment or development, we would first have to address the enormous economic burden created by nearly six decades of conflict. Without economic justice, political reconciliation would remain incomplete.
That discussion led me to propose three principles which, in my view, remain as relevant today as they were nearly two decades ago.
Recognising Economic Cost
The first principle concerned compensation for historical economic losses.
Since 1947, the people of the former princely state of Jammu and Kashmir have borne the economic consequences of an unresolved political dispute. Regardless of differing political positions, this is an undeniable economic reality. Wars, prolonged militarisation, recurring violence and political uncertainty have imposed high costs on ordinary citizens, businesses and successive generations of entrepreneurs.
The burden has not been carried by governments alone. It has been borne by orchard owners who lost export markets, artisans whose traditional skills became commercially unviable, transport operators whose livelihoods disappeared during prolonged shutdowns, hotel owners whose investments lay idle for years, and countless young people who left in search of opportunities elsewhere.
Conflict has imposed an opportunity cost that can never be fully measured.
Economists distinguish between direct losses and foregone opportunities. Kashmir has suffered both. It has lost businesses that closed permanently, but it has also lost industries that were never established, investments that never arrived, technologies that were never introduced and employment opportunities that never materialised because uncertainty discouraged enterprise.
For that reason, I argued then, and continue to believe today, that any durable political settlement should include an independent assessment of these cumulative economic losses. Such an assessment should not be viewed as an exercise in assigning political blame. Rather, it should serve as the foundation for reconstruction and economic rehabilitation. The responsibilities of all stakeholders, including India, Pakistan and the wider international community that has historically engaged with the dispute, deserve careful consideration within such a framework.
The second principle relates to the Indus Waters Treaty.
For more than six decades, the Treaty has been recognised internationally as one of the world's most durable water-sharing agreements. Its role in preventing water disputes between India and Pakistan deserves acknowledgment. Yet discussions about the Treaty have largely focused on interstate relations rather than on the communities from which these rivers originate.
Jammu and Kashmir is the source of the Indus, Jhelum and Chenab River systems. These rivers sustain agriculture, hydropower generation and economic activity far beyond the region itself. Yet when the Treaty was negotiated in 1960, the people of Jammu and Kashmir had no direct representation in those negotiations.
That historical fact does not invalidate the Treaty. It does, however, invite legitimate discussion about its economic implications for the region.
Questions of benefit-sharing, local development, environmental sustainability and community participation deserve greater attention than they have received. Around the world, resource-rich regions increasingly seek mechanisms through which local populations share more equitably in the value generated by their natural resources. Kashmir should not be excluded from that broader conversation.
The issue is not simply ownership of water. It is ensuring that communities from which these resources originate participate meaningfully in the economic opportunities they create.
The third principle remains closest to my own experience.
No lasting economic future can be built while ignoring the destruction suffered by Kashmir's business community.
For more than three decades, thousands of businesses were repeatedly forced to suspend operations because of circumstances entirely beyond their control. Their financial distress arose not from poor management or commercial failure, but from prolonged conflict.
Yet banking regulations seldom distinguished between ordinary insolvency and conflict-induced insolvency.
As President of KCCI, I repeatedly argued before the Government of India that enterprises affected by conflict required a policy framework comparable to those adopted in many post-conflict societies. Businesses that had suffered repeated shutdowns needed rehabilitation rather than liquidation. Debt restructuring, concessional finance, revival of sick industrial units and restoration of working capital were not demands for special privilege. They were measures intended to preserve productive capacity and employment.
Unfortunately, many of those concerns remain unresolved.
Following the constitutional changes of 2019, the transfer of the jurisdiction of the Debt Recovery Tribunal from Srinagar to Chandigarh added another layer of difficulty for many already distressed borrowers.
Small and medium entrepreneurs, many struggling to keep their businesses afloat, suddenly faced increased legal costs, repeated long-distance travel and procedural hurdles simply to defend their cases. For some, these practical obstacles resulted in ex parte proceedings or recovery orders because they were unable to appear before the Tribunal. Rather than facilitating economic recovery, such measures deepened the financial consequences of decades of conflict.
This experience reinforces a broader principle.
An economy emerging from prolonged conflict cannot always be governed through conventional commercial rules alone. Extraordinary circumstances often require conflict-specific economic remedies.
Towards Economic Justice
If there is one lesson that decades of conflict have taught us, it is that economic reconstruction cannot be reduced to higher GDP figures or increased public expenditure.
Roads, tunnels and investment summits are important. So are improvements in tourism, infrastructure and public services.
But economic recovery is ultimately measured by something more fundamental: whether people believe they have a meaningful stake in the future being built around them.
For Kashmir, that requires an Economic Justice Framework built on several interrelated principles.
First, there should be an independent assessment of conflict-induced economic losses sustained by businesses, households and productive sectors over several decades.
Second, conflict-affected enterprises should receive targeted rehabilitation through debt restructuring, financial relief and renewed access to credit so that entrepreneurship is encouraged rather than penalised.
Third, governance of natural resources should become more transparent, participatory and environmentally sustainable, ensuring that local communities share equitably in the benefits derived from hydropower, tourism, mining and other strategic sectors.
Fourth, reconstruction should focus not only on physical infrastructure but also on innovation, industrial diversification, skills development and employment generation for Kashmir's youth.
Finally, the Kashmiri diaspora, whose professional expertise and financial resources extend across the world, should be viewed as an important partner in rebuilding the region's economy rather than merely as distant observers.
Much has been written about the constitutional changes of August 2019, and the debate will undoubtedly continue. That is both natural and necessary.
Yet constitutions alone do not determine the quality of everyday life.
For ordinary people, justice is often experienced through economic opportunity. It is reflected in whether a young graduate can find meaningful employment, whether an entrepreneur can invest without fear of repeated disruption, whether a farmer receives fair value for his produce, whether an artisan can preserve generations of skill, and whether communities benefit from the natural resources that surround them.
For many in Kashmir's business community, the economic lockdown did not begin in August 2019. It had begun decades earlier.
The constitutional changes of 2019 intensified a debate that had long remained unresolved: how should a region shaped by generations of conflict rebuild its economy in a manner that is not only efficient but also equitable?
History will continue to judge political decisions. It should also judge whether sufficient attention was paid to the economic aspirations of the people whose lives those decisions transformed.
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