J&K’s economy and tourism in peril after Pahalgam massacre

Tourism boom in Kashmir Valley faces setback as targeted killings of tourists rise, impacting revenue generation and future prospects.

The targeted killings of tourists in Pahalgam in Jammu and Kashmir took place at a time when the region was witnessing a tourism boom. The number of visitors was at a 15-year high and the Union Territory (UT)’s own revenue generation had started showing signs of improvement. The home States of the victims reflected the diversity of tourists that the Valley had began attracting. Now, with several key destinations in Kashmir deemed unsafe by the government, over 80% of upcoming bookings have been cancelled. Amid escalating tensions at the border, the tourism sector is bracing itself for a bleak year.

Though attacks on tourists are rare, civilians in the Valley have increasingly become targets in recent years. In 2024, the share of civilians in militancy-related deaths in J&K was the highest in nearly two decades. If the latest killings are included, this year marks the highest share of civilians killed (data till April 30). Notably, when districts are ranked according to civilian deaths, Anantnag — home to Pahalgam, the site of the latest attack — ranks among the worst-affected in many years.

Chart 1 shows the number of tourist arrivals to the Kashmir Valley.

The number of tourists began rising in 2010 and continued to grow until 2012. When juxtaposed with data on terrorism incidents, the trend aligns with the period between 2011 and 2015 — years marked by fewer terrorism-related incidents in the Valley. Thereafter, tourist numbers gradually declined. They crashed in 2018 and 2019 before coming to a standstill in the following years due to the pandemic. However, the number of tourists surged again in 2023 and 2024. In fact, 3.5 million tourists visited the Kashmir Valley in 2024 — 1.6 times more than the previous peak recorded in 2012.

It was not just tourism that recovered. The UT’s ability to raise its own tax and non-tax revenue also improved in recent years. 

Chart 2 depicts the changing composition of J&K’s total receipts over time.

In 2024-25, over 46% of the UT’s revenue was budgeted to come from Central grants and another 10% from centrally sponsored schemes, underscoring the UT’s heavy dependence on the Centre. Borrowings were expected to account for an additional 17% of the UT’s revenue.