Economic History of J&K

The present economy of J&K rests on farming in the valleys, orchards, crafts, tourism and rivers. To understand it, follow how each of these grew.

Dogra period (1846 to 1947)

• Treaty of Amritsar (1846): Gulab Singh took over Kashmir for Rs 75 lakh (Nanakshahi). Revenue came mostly from land revenue paid in kind and from taxes on shawls, saffron and trade.
• Shawl industry: Kashmir shawls were the great export of the 19th century. The industry fell sharply after the Franco-Prussian War (1870-71) cut demand in France. Carpets, papier-mâché and silk grew later.
• Silk: Maharaja Ranbir Singh promoted sericulture and a silk factory was built in Srinagar (about 1897) under Pratap Singh.
• Power: The Mohra hydel station (1905) on the Jhelum was the first major power project of the State.
• Roads and rail: The Jhelum Valley Cart Road (about 1890) linked Kashmir with Rawalpindi and was the main trade route. The Banihal Cart Road (Jammu to Srinagar) opened around 1922. Jammu was joined to Sialkot by rail in 1890.
• Banking: J&K Bank was founded in 1938 (Srinagar).
• Famine and reform: The 1877-79 famine exposed the weak land-revenue system, and settlement operations under Walter Lawrence (1889-1895) fixed revenue in cash.

After 1947

• Trade shock: Partition cut the Jhelum Valley road and the Sialkot rail link. Kashmir had to depend on the Banihal route to the Indian plains.
• Naya Kashmir (1944) and the Big Landed Estates Abolition Act (1950) broke the jagirdari system (see the next topic).
• Planning: The State began planned development with the First Five-Year Plan (1951-56). Under Article 370 the State had its own laws on land, industry and trade.
• Special Category: Central help came as grants (about 90 per cent grant and 10 per cent loan for plan schemes) as for other special-category states.
• From 1990: Militancy hit tourism, horticulture trade and crafts badly. Yatras and tourism revived slowly after 2002.
• GST (2017): J&K adopted GST from 8 July 2017.
• 2014 floods: The September 2014 floods destroyed assets worth thousands of crores and led to the Prime Minister's Development Package (2015).

Since 2019

• J&K Reorganisation Act, 2019: Article 370 was read down on 5 August 2019; J&K became a Union Territory with a legislature, and Ladakh a UT without a legislature.
• New laws: domicile rules (2020), adapted land laws (2020), Industrial Policy 2021-30, New Central Sector Scheme (NCSS) 2021.
• Connectivity: Chenab Rail Bridge and the Udhampur-Srinagar-Baramulla Rail Link (June 2025).