Farm-led growth cushions J&K economy amid tourism slowdown

Srinagar, Feb 23:: Jammu and Kashmir’s economy continued to draw resilience from agriculture and allied activities during 2025–26, even as tourism-linked services faced a temporary slowdown, according to the Economic Survey 2025–26.

The J&K Economic Survey underlines that the primary sector remains not only a major contributor to output but also the single largest source of employment in the Union Territory.

“The primary sector, which includes crops – agriculture, horticulture; fishing and aquaculture, forestry and logging, has traditionally been a cornerstone of J&K’s economy,” the Survey states. It estimates that the sector will contribute 20.45 percent to the Gross Value Added (GVA) of Jammu and Kashmir in 2025–26, which is “slightly higher than the national average of 18.35 percent.”

This relative outperformance assumes significance at a time when parts of the services sector, particularly tourism-linked activities, experienced subdued growth. Officials view the strong showing of the primary sector as a key stabilising factor for the overall economy.

Beyond output numbers, the Survey highlights the sector’s central role in employment generation. “The importance of the primary sector remains significant, given its role in providing livelihoods to a substantial portion of the population,” it notes. As per the Periodic Labour Force Survey (PLFS) 2023–24, the primary sector “absorbs the largest share of the workforce (42.99 percent),” far exceeding employment levels in industry and services.

Within the primary sector, crops—dominated by horticulture—continue to form the backbone. The Survey records that the crop sub-sector’s share in GVA has risen to 11.43 percent in 2025–26. Horticulture-led growth, particularly in fruit cultivation, remains a defining feature of J&K’s rural economy and a major source of cash income for households.

Livestock has emerged as a strong growth driver. Its share in GVA has increased to 6.01 percent, while the growth rate for the sub-sector is estimated at 13.36 percent in 2025–26. This reflects increasing diversification within agriculture, with dairy, poultry and sheep husbandry gaining importance alongside traditional crop farming.

Fishing and aquaculture, though small in overall size, have also shown momentum, with the Survey estimating a growth rate of 10.02 percent in 2025–26. Forestry and logging have maintained moderate growth, while mining and quarrying, after a sharp spike in earlier years, have settled into a more stable growth trajectory.

The Survey links this performance to policy interventions aimed at productivity and income enhancement. “Efforts to modernise agriculture, improve irrigation, and introduce high-value crops are part of the broader strategy to enhance productivity and income in this sector,” it states, indicating that continued investment in rural infrastructure remains a policy priority.

The secondary sector, comprising manufacturing, construction and utilities, is estimated to contribute18.52 percent to J&K’s GVA in 2025–26. The Survey notes that the sector employs 25.7 percent of the workforce, according to PLFS 2023–24, making it the second-largest employer after agriculture.

Construction remains the dominant force within this sector. The Survey points out that the construction industry alone accounts for 14.94 percent of total employment, underlining the role of infrastructure creation in driving both growth and jobs. “This sector has been pivotal in driving industrial growth and infrastructure development,” the Survey observes, adding that government initiatives aimed at improving connectivity and building infrastructure have supported robust activity.

Manufacturing, though smaller in scale, has recorded steady growth. The Survey notes that industrial policies are focused on “attracting investments, promoting small and medium enterprises (SMEs), and encouraging the development of industrial clusters to boost manufacturing and related activities.” It also stresses that industrial progress is expected to create “the necessary synergy for the primary sector and service sector to grow faster.”

The tertiary or services sector continues to dominate Jammu and Kashmir’s economy, contributing 61.02 percent to GVA in 2025–26 and employing 31.31 percent of the workforce. The Survey describes the sector as central to “generating employment, fostering economic stability, and driving overall growth,” with tourism playing a crucial role due to the region’s scenic landscapes and cultural heritage.

However, the Survey candidly acknowledges a moderation in services-sector growth during the year. “The relatively slower expansion of the services sector during the year reflects, inter alia, reduced activity in tourism-linked services following a recent untoward incident in the Union Territory,” it states. This incident led to “lower tourist inflows and subdued activity levels in related services.”

The impact was felt across hospitality, transport and allied activities. “The downturn in tourism activity had spillover effects on allied services such as hospitality, transport, particularly air transport and other service-related activities, thereby exerting downward pressure on overall economic growth during the year,” the Survey notes.

It also points out that public administration, a major contributor within services, is estimated to register “a marginal moderation in its share during the year,” which, given its size, also influenced the overall pace of expansion.

Despite these challenges, the Survey maintains that the broader services ecosystem—including trade, real estate, education and healthcare—continues to provide a strong base for medium-term growth. Officials believe that with the revival of tourism activity, the services sector is likely to regain momentum.

Overall, the Economic Survey 2025–26 presents a picture of an economy supported by strong fundamentals in agriculture and allied sectors, steady gains in construction and manufacturing, and a services sector facing short-term headwinds but retaining long-term strength. In a year marked by uncertainty in key service industries, it is the primary sector, as the Survey puts it, that continues to act as the “cornerstone” of Jammu and Kashmir’s economy.–