Jammu Kashmir

The State Profile

December 2011

PHD RESEARCH BUREAU

PHD CHAMBER OF COMMERCE AND INDUSTRY
PHD House, 4/2 Siri Institutional Area, August Kranti Marg, New Delhi 110016
Phone: 91-11-26863801-04, 49545454, Fax: 91-11-26855450, 26863135
E-mail: [email protected] Website: www.phdcci.in
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Jammu & Kashmir: The State Profile is prepared by PHD Chamber of Commerce and Industry to
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PHD Chamber of Commerce and Industry

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PHD Research Bureau

 Jammu Kashmir

Foreword
With the majestic heights of its snow-capped mountains, green meadows,
enchanting lakes and its lush green forests, Jammu & Kashmir offers some of the
liveliest scenic beauty across the land. The state is strategically located with its
border touching Pakistan, Afghanistan, Tibet and China.

Jammu and Kashmir is one of the most sparsely populated states in India. In
consonance with the pronounced rural character of the population in the state, the
Salil Bhandari occupational distribution is biased in favour of agriculture. Leaving aside Ladakh
President which has little vegetation, the state of Jammu and Kashmir is richly endowed with
forests as also with mineral resources like coal, lignite, copper, lead, zinc, cobalt,
limestone, bauxite, borax and precious stones.

Popularly referred to as the valley of flowers, the state's economic progress is largely
dependent on horticulture and floriculture which are globally sold. Jammu &
Kashmir is known for growing a wide variety of fruits and flowers. Understanding its
immense potential, the state government has declared horticulture to be one of the
most important economic sectors, contributing immensely to it's financial
strengthening and the sector has potential to provide livelihood to a large number of
young unemployed work forces in the state and aid to rapid poverty alleviation.

Closed corner location, remoteness and isolation from major markets, scattered
population, lack of economic infrastructure and turbulence in civic life during the
last two decades, pose special developmental challenges to the state. The dormant
private sector and a limited diversification in its production activities have also been
observed due to the small size of domestic market. The state of Jammu & Kashmir
thus offers a challenge to planners in tackling the manifold problems associated with
the economic backwardness of the state.

The tourism sector has immense potential of backward and forward linkages in
terms of both income and employment and can contribute significantly to the
economy. Kashmir is known as the paradise on earth because of its numerous scenic
spots of attractions and beautiful weather. The other important aspect of tourism
potential is the existence of shrines, monasteries, temples and cave temples in the
three regions of the state.

I commend and appreciate the PHD research Bureau, in presenting the first
publication on Jammu & Kashmir by the PHD Chamber.

Salil Bhandari

I
 Jammu Kashmir

Preface
Jammu & Kashmir: The State Profile, is one of the first such studies the PHD Chamber
has come up with on the state and it gives me immense pleasure and honour to
present it to our esteemed readers as it captures the essence of the grass roots of the
picturesque state.

The study is an exhaustive report on the state's economy and its socio-economic
scenario. It includes its economic policies, agro policy, industrial policy,
Susmita Shekhar development in service sector and social infrastructural framework. The study also
Secretary General brings together latest developments in the state and highlights potential roadmap
for its further growth.

Jammu and Kashmir has always been characterized as a relatively backward

economic region. The chief characteristics of the state are the predominance of the
agricultural sector, low degree of urbanization, inadequately developed
infrastructure, widespread illiteracy, high birth rates and low levels of investment.
However, there is a wide scope for the development in the state in many unexplored
segments which could help the state break free from its current economic
stagnation.

The state is home to some of the world's most sought after varieties of fruits both
fresh and dry, exotic flowers, honey, saffron etc. Horticulture and floriculture
provide direct and indirect employment to about 23 lakhs people with possibilities
of further enhancement. In view of the potential for exports, a large number of
export oriented units have been approved by the Government of India and many
projects have been commissioned in recent years.

PHD Chamber has always aimed to be an important stakeholder to the development

of the northern and central states of India and the nation. I hope that this study helps
in further policy formulation in the state, so as to serve as a vehicle for its inclusive
growth and socio-economic development. We will carry out similar reports on all the
states that we serve in the days to come.

I commend and appreciate the tireless efforts of PHD Research Bureau, which has
come up with this report with their focused approach.

I hope that this report serves as a handy and informative readers' guide!

Susmita Shekhar

II
 Jammu Kashmir

Contents
Sr. No Topic Page No
1 Structure of the Economy 2
2 Economic Policy 10
3 Infrastructure 16
4 Social Infrastructure 19
5 Performance in Six Thrust Areas focussed by PHD Chamber 22
6 Jammu & Kashmir Budget 2011-12 24
7 Conclusion and Recommendations 25
 Jammu Kashmir

Tables
Title Page No.
State domestic product and its composition 2
Summary of socio-economic indicators 3
Fiscal indicators 6
Industrial investments proposals in Jammu & Kashmir 8
Investment opportunities in Jammu & Kashmir 9
Summary of agro statistics 12
Food grain production scenario in Jammu & Kashmir 13
Apple production of Jammu & Kashmir 14
Banking scenario in Jammu & Kashmir 15
Jammu & Kashmir's Deposits, Credits and CDR 16
Roads infrastructure 17
Telecom subscriber base 18
Educational infrastructure 21
Summary of health indicators 21
Performance in six thrust areas 22
Jammu & Kashmir Budget (2011-12) at a glance 24
Some important Contacts 27
 Jammu Kashmir

Charts
Title Page No.

Growth of real GSDP 2

Composite Ranking of the state 4

Socio-economic ranking of the state 4

Economic Freedom ranking of states 5

Pattern of per capita income of Indian states 6

Comparison of GFD as a % of GSDP 7

Industrial investment proposals 8

Share of Jammu & Kashmir in India's food grain production 13

Share of Jammu & Kashmir in India's Apple production 14

Population Below Poverty Line (BPL): Jammu & Kashmir 19

Literacy rate: Jammu & Kashmir 20

Literacy in comparison with other states 20

Availability of safe drinking water to households 22

 Jammu Kashmir

Abbreviations
Bn Billion
AEZ Agri Exports Zone
BPL Below Poverty Line
CD Ratio Credit Deposit Ratio
CIS Capital Investment Subsidy
DG set Diesel Generator set
FY Financial Year
GDP Gross Domestic Product
GFD Gross Fiscal Deficit
GSDP Gross State Domestic Product
IT Information Technology
ITES Information Technology Enabled Services
J&K Jammu and Kashmir
MT Million Tonnes
NSDP Net State Domestic Product
PD Primary Deficit
PHC Primary Health Centre
PRB Primary Revenue Balance
PWD Public Works Department
RD Revenue Deficit
SEZ Special Economic Zone
TRAI Telecom Regulatory Authority of India
 Jammu Kashmir

Jammu and Kashmir

Kargil
Kupwara
Srinagar
Baramula
Budgam Leh
Pulwama
Punch Anantnag
Rajauri
Udhampur Doda

Jammu
Kathua

Jammu and Kashmir also known as Heaven on the earth is the northern most state of India. To its north lie
China and Russia. On its east is Chinese Tibet. On the South and South-West lie the states of Punjab and
Himachal Pradesh. On the west is the North West Frontier Provinces of Pakistan, China and Russia. It
consists of three divisions -Jammu, Kashmir Valley and Ladakh. It has two capitals- Jammu, the winter
capital and Srinagar, the summer capital.

The state has some of the best tourist spots and owing to its high altitude, it is home to a lot of Himalayan
glaciers and rivers. Jhelum, Indus, Tawi, Ravi and Chenab are the major rivers flowing through the state.
Major tourist attractions in the state are Gulmarg, Pahalgam, Leh, Patnitop, and Ladakh. Some of the major
pilgrimage centers of the nation are located in the state, the two most important being the Amarnath
Caves and the Vaishnodevi Shrine .The Dal Lake houseboats are one of the major attractions of Kashmir.

The unique climatic conditions found in state contribute to its diverse soil and vegetation. It is blessed with
lush green forests, which forms one of the most important natural resources of the state. Numerous trees
grow in these forests some of the valuable ones are: Chinar, Deodar, Poplar, Fir, Pine, Mulberry and Walnut.
Some herbs with excellent medicinal value are also found in these forests such as Menthol, Digitalis, Rubus
and Artemisia. These forests provide excellent shelter to the numerous rare species of animals and birds.

PHD Research Bureau 1

 Jammu Kashmir

1. Structure of the economy

The state's economy has shown vibrant growth path during the recent years. GSDP (at current prices) has
increased from Rs.22194 crores in FY04 to Rs. 31793 crores in FY08. The real GSDP grew around 6%
(average) during FY2004-FY2008.

Growth of Real GSDP

7
6
5

4
3
2
1
0
FY 04 FY 05 FY 06 FY 07 FY 08
Source: PHD Research Bureau, Compiled from Directorate of Economics and Statistics, Jammu & Kashmir
Note: Data pertains to FY04 to FY08

Tertiary sector contributes around 46% in GSDP followed by the secondary and primary sectors both at
27% in FY2008. Share of secondary sector in the GSDP has also shown growth, it has grown from 23% in
FY2002 to 27% in the FY2008. However, the share of primary sector has come down from 31% to 27%
during the same period.

State Domestic Product and its Composition

Components FY02 FY05 FY08
GSDP at Current prices (Rs Crore) 18039.35 24265.04 31793.04
NSDP at Current Prices (Rs Crore) 15456.42 20723.93 27099.91
Economic Growth % (GSDP at factor cost, constant prices) 1.96 5.23 6.28
Sectoral Contribution in GSDP at current prices (%)
Primary* 31.4 30.51 26.92
Secondary** 22.94 23.82 27.2
Tertiary*** 45.66 45.67 45.88

Source: PHD Research Bureau, Compiled from Directorate of Economics and Statistics Jammu & Kashmir.

*Primary Sector includes Agriculture, Forest & Logging, Fishing and Mining & Quarrying
**Secondary Sector includes Manufacturing, Construction, Electricity, Gas & Water Supply.
***Tertiary Sector includes Transport, Storage & Communication, Trade, Hotel & Rest, Banking & Insurance,
Real Estate,Ownership of Dwelling & Business Services, Public Administration and other services.

2 PHD Research Bureau

 Jammu Kashmir

Summary of socio-economic indicators

State Capital Srinagar- (summer)& Jammu- (winter)
Area (Sq. km) 222236 Sq Km
Population (Census 2011) 12548926
Population Density(Sq. Km) Census 2011 124
No. of Districts 22
GSDP at Current Prices (2007-08) 31793 crore
Growth of GSDP at Constant Prices(2007-08) 6.28%
NSDP at Current Prices (2009-10) 35187 crore
NSDP at Constant Prices (2009-10) 30745 crore
Growth of NSDP at Constant Prices(2009-10) 6.63%
Per capita GSDP (2007-08) Rs 24,214
Fiscal Deficit ( FY 2010-11) 4.6% of GSDP
Poverty (FY2008-09) 21.63%
National Highway length (2009-10) 1245 Kms.
Rail Length March-2009 239 Kms.
Domestic Airport Jammu, Srinagar & Leh
Govt. Medical Institutions (2008-09) 3400
Per Capita Health Expenditure (2004-05) Rs. 1001
Literacy Rate (2011 Census)** 68.74%
Sex Ratio (2011 Census) 883
Important Rivers Jhelum, Indus, Tawi , Chenab and Ravi
Mountains The great Himalayas, Karakoram, Ladakh,
Hindu Kush, and Pir Panjal
Key Industries Tourism, Handicrafts, Sericulture,
Handloom, Horticulture, Food processing
& Agriculture.
Prospective Industries Floriculture
Main Industrial Cities Srinagar, Jammu & Kathua
Investment environment^ 4th rank
Composite ranking of the state# 8th rank
Agriculture^ 15th rank
Macro economy^ 3rd rank
Labour laws (2009)^^ 4th rank
Infrastructure^ 10th rank
Source: PHD Research Bureau, Compiled from Directorate of Economics and Statistics Jammu & Kashmir., RBI, Economic
Survey of India 2010, National highway authority of India
^India Today, 29th Nov 2010, an article by Bibek Debroy and Laveesh Bhandari,
^^Economic Freedom of the States of India 2011, by Laveesh Bhandari, Bibek Debroy and Swaminathan Aiyar and Census
of India-2011,
#State competitiveness report 2004 by National Productivity Council
** Literacy rate for population aged 7 years and above.

PHD Research Bureau 3

 Jammu Kashmir

Composite Ranking of the state

Jammu & Kashmir stands 8th on the basis of various socio economic parameters viz. macro economy,
investment environment, infrastructure, agriculture, primary education and consumer markets.

Composite Ranking of the state

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Source: PHD Research Bureau, Compiled from India Today, 29th Nov 2010, an article by BIbek Debroy and Laveesh Bhandari
Note: Only big states have been taken up with area over 35000 sq. km. and with population over five million.

Socio- Economic Ranking of the state

The state has been ranked 1st in Primary Health, 3rd in macro economy, 4th in industrial investments and
also primary education, 6th in the consumer markets, 10th in Infrastructure and 11th in agriculture.

Socio-economic ranking of the state

Primary Health

Macro Economy

Industrial Investment

Primary Education

Consumer Markets

Infrastructure

Agriculture

0 2 4 6 8 10 12 14 16
Source: PHD Research Bureau, Compiled from India Today, 29 November 2010, an article by Bibek Debroy and Laveesh Bhandari.
Note: Only big states have been taken up with area over 35000 sq. km. and with population over five million.

4 PHD Research Bureau

 Jammu Kashmir

Economic Freedom Ranking

The state has been ranked 4th in labour regulations, 9th in overall economic freedom, and 13th in legal
system and 14th in terms of size of the government.

Economic Freedom Ranking of States

Tamil Nadu

Gujrat

Andhra Pradesh

Haryana

Himachal Pradesh

Madhya Pradesh

Rajasthan

Jharkhand

Jammu & Kashmir

Kerala

Maharashtra

Punjab

Karnataka

Uttar Pradesh

West Bengal

Chhatisgarh

Orissa

Assam

Uttarakhand

Bihar

0 5 10 15 20 25

Source: PHD Research Bureau, Compiled from Economic Freedom of the States of India 2011, by Laveesh Bhandari, Bibek
Debroy and Swaminathan Aiyar.
Note: Ranking pertains to the year 2009

Competitiveness ranking of the state

1
Among the 14 smaller states of India ,Jammu Kashmir ranks 10th in the overall competitiveness ranking of
the states. Jammu Kashmir has been ranked 6th in terms of its economic strength, it has been ranked 7th in
terms of its business efficiency, 10th in human resource and 11th in infrastructure. Jammu & Kashmir has
been ranked 14th in governance quality .

1
Compiled from State competitiveness report 2004 by National Productivity Council.
Per Capita income refers to FY2008,

PHD Research Bureau 5

 Jammu Kashmir

Per-capita income
2
Per capita income of Jammu Kashmir is Rs 24,214which is quite low as compared to the national average
of 33,283. According to the latest comparable data, Jammu Kashmir is ranked at the 21st position in terms
of per capita income among all the Indian states.

Pattern of per-capita income of the Indian states

Goa
Delhi
Haryana
Maharashtra
Punjab
Gujrat
Kerala
Tamil nadu
Himachal Pradesh
Karnataka
Andhra Pradesh
Uttarakhand
Sikkim
West Bengal
Meghalaya
Chhatisgarh
Arunachal Pradesh
Tripura
Mizoram
Orissa
Jammu & Kashmir
Rajasthan
Assam
Jharkhand
Manipur
Madhya Pardesh
Uttar Pradesh
Bihar

0 20000 40000 60000 80000 100000 120000

Source: PHD Research Bureau, compiled from economic survey of India 2010-11.
Note : Comparable per capita income for all the states is available for 2008

Fiscal Deficit

J&K has a comfortable fiscal scenario and the situation has improved over the years as a result of efforts
being made in this direction. Gross fiscal deficit of Jammu Kashmir as percentage of GSDP has declined to
4.6% during FY 2011 as compared to the 5.8% in FY2010. Primary deficit as percentage of GSDP has
decreased from 0.5% to -0.7% during the same period. The revenue deficit declined further to -12.3% in
FY2011 from -11.6% of GSDP during 2010. Primary Revenue Balance has declined to -17.6% from -16.9%
of GSDP during the same period.

Fiscal Indicators
(% of GSDP)
Fiscal components FY2005- 08 FY2009 FY2010(RE) FY2011(BE)
(Average)
GFD/GSDP 6.4 6.7 5.8 4.6
RD/GSDP -6.8 -9.7 -11.6 -12.3
PD/GSDP 1.3 2.1 0.5 -0.7
PRB/GSDP -11.9 -14.3 -16.9 -17.6
Source: PHD Research Bureau, Compiled from RBI.
RD: Revenue Deficit, GFD: Gross Fiscal Deficit, PD: Primary Deficit, PRB: Primary Revenue Balance.
BE: Budgeted Estimates, RE: Revised Estimates, (-) sign refers to surplus.

2
Economic survey of India 2011

6 PHD Research Bureau

 Jammu Kashmir

Comparison of fiscal position with other states

Gross fiscal deficit of Jammu Kashmir was close to 6.4% on an average during the period between FY2005
and FY2008. It increased marginally to 6.7% during FY2009 but declined to 5.8% during FY2010. It has
come down significantly to the level of 4.6% during FY2011. It is lower than states like Himachal Pradesh
(5.1%), Sikkim (10.8%), Tripura (7.2%) and higher than Arunachal Pradesh (1.9%), Uttarakhand (3.3%) and
Nagaland (3.5%).

Comparison of Gross Fiscal Deficit as a % of GSDP

Sikkim

Assam

Tripura

Goa

Himachal Pradesh

West Bengal

Jammu & Kashmir

Uttar Pradesh

Madhya Pradesh

Tamil Nadu

Punjab

Haryana

Kerala

Rajasthan

Gujrat

Manipur

Nagaland

Orissa

Uttarakhand

Karnataka

Andhra Pradesh

Meghalaya

Chhattisgarh

Bihar

Maharashtra

Arunachal Pradesh

Mizoram

Jharkhand

0 2 4 6 8 10 12

Source: PHD Research Bureau, compiled from RBI, data pertains to Fy2011

Industrial Investments

Jammu Kashmir has taken a fast leap in providing a conducive investment environment it offer boundless
investment opportunities to the prospective Investors, It has attracted industrial investment proposals of
more than Rs6900 crores in the last four and a half years. State has rich resources of water, agro, forests,
herbal and minerals in addition to its unparallel natural beauty with tremendous potential for investment
in tourism sector.

PHD Research Bureau 7

 Jammu Kashmir

Industrial Investments proposals in J&K

(Rs Crore)
Year Jammu Kashmir India Share of Jammu
Kashmir (%)
2007 2104 834249 0.25
2008 1115 1523852 0.07
2009 1223 1040259 0.12
2010 1234 1736322 0.07
2011(up to July) 1303 1003916 0.12
Total 6979 6334538 0.11
Source: PHD Research Bureau, Compiled from Department of Industrial Policy and Promotion, Govt. of India

However, Industrial investments in Jammu Kashmir has declined during recent years, it came down to
Rs.1115 crore in 2008 from Rs.2104 crore in 2007. Since then it has been hovering around Rs. 1200
crore per annum. This is around 0.11 % of total investment in India.

Industrial investments
(as % of India's total industrial investments)

0.3

0.25

0.2

0.15

0.1

0.05

0
2007 2008 2009 2010 2011(up to July)

Source: PHD Research Bureau, Compiled from Department of Industrial Policy and Promotion, Govt. of India

Investment Incentives in Jammu and Kashmir

The government of Jammu & Kashmir is providing various incentives to setup industries in the state. There
is 100% exemption in excise duty for 10 years, income tax holiday for 5 years along with various other
subsidies are provided by the state government to facilitate industrialisation.

 100% excise exemption for 10 years.

 5 Years of 100% income tax holiday.
 Capital investment subsidy upto Rs. 30 lakhs and Rs. 45 lakhs for thrust area project.
 Land on 90 years lease.
 100% subsidy on testing equipments / Diesel Generator sets.

8 PHD Research Bureau

 Jammu Kashmir

 A host of incentives on capital goods, term loan, transportation, working capital, branding etc.
 Single window clearance for pre-project approvals of land, power and pollution.
 The insurance premium reimbursement to the extent of 100% on capital investment for a period of 10
years to all new and existing units.

Investment opportunities in Jammu Kashmir

Agro based industry & A vast natural resource base has helped the predominantly agrarian state to
food processing develop its base for cultivation of major fruits such apples, walnut, walnut kernels,
bitter apricot nuts, pears, almond, plum, cherries and saffron.75% of India's
production of apples and 97% production of walnut comes from the state.

Floriculture and The enormous assortment in flora and fauna and varied agro climatic condition,
Horticulture the scope of horticulture is very high in the state There is scope for increasing the
horticulture produce that are marketed in export markets. The state has ideal
climatic conditions for floriculture and is looking forward to the development of
the same. Recently Asia's largest 'tulip garden’ was launched in the state.

Handicrafts Handicrafts occupy an important position in Jammu & Kashmir. The state provides
a friendly environment for these labour intensive activities. The handicrafts from
Jammu & Kashmir have been in demand the world over .Silken carpets, wood
carvings, shawls, namda, crewel costume, jewellery etc hold a significant share in
export of the state.

Hydropower The estimated hydro power potential of the state is 20,000 MWs of which 16480
have been identified so far. Out of the identified only 14% i.e. 2318.70 MWs have
been exploited so far. 8 new power generation projects have been listed for
execution under the 11th and 12th five year plans.

Information Technology IT is an important emerging sector in the state. Government of Jammu Kashmir has
accorded industry status to the IT sector. An Electronic Industrial Park has been set
up at Rajbagh in Srinagar and a Software Technological Park (STP) has been
established at Rangreth.

Power Tariffs* The average rate of electricity for domestic consumers stands at 1.70 Rs/Kwh
which is lower than most other states in India. The rate for Non
domestic/Commercial consumer stands at 3.20 Rs/kwh, which is also a relatively
low rate in comparison with most of the other states of India.

Tourism The state is an important tourist destination and has been a attractive destination
for tourists, the world over. Large number of tourists visit the beautiful Kashmir
valley, Leh and Ladakh every year. 19 tourism development authorities have been
established at places having tourism potential .There is vast scope for adventure
tourism, pilgrim tourism, spiritual tourism, and health tourism leaving aside the
traditional recreational tourism.
Source: PHD Research Bureau, Compiled from various policy papers of the Government of Jammu & Kashmir
* Comparative study on power situation in the Northern and Central states of India, By PHD Research Bureau.

PHD Research Bureau 9

 Jammu Kashmir

Exports

The state is a major exporter of fruits, pulses, rice, handlooms and handicrafts. Jammu & Kashmir is well
known for its apple exports as about 75% of the national produce of apples is contributed by the state. It is
the 6th largest producer of walnuts in the world and an important producer and exporter of a wide variety
of dry fruits. Jammu &Kashmir has been declared as “Agri Exports Zone for Apples and Walnuts”. Besides
these it is a leading exporter of pashmina and raffle shawls which are recognised the world over. There is
an emerging, yet highly unexplored foreign market for flowers grown in the state and the government is
making efforts to tap the source through innovative incentives to the sector.

2. Economic policy of Jammu & Kashmir

The Jammu and Kashmir economy depends mostly on traditional forms of occupation. The state is affected
by continued violence and insurgency, the economy of Jammu and Kashmir is an undeveloped one.
Unaffected and unaltered by modern day industrial developments and changing times, the indigenous
traditional occupations of farming, animal husbandry and horticulture forms the backbone of the
economy. However in the recent years, the government of Jammu and Kashmir has taken several
significant steps to strengthen the financial condition of the state and improve the standard of living of the
indigenous local inhabitants.

Jammu & Kashmir, being part of the Indian Himalayan Region (IHR), also has some unique economic
disadvantages arising out of remoteness and poor connectivity, hilly and often inhospitable terrain,
vulnerability to natural disasters, a weak resource base, poor infrastructure, shallow markets and most
importantly a law and order situation threatened by militancy. Taken together, all these factors have
resulted in low economic activity, low employment and low-income generation. These economic
disadvantages have substantial implications for the size and nature of the development problem and for
the approach to be adopted. Recognizing the fact that the Himalayan states of the country have some
peculiar characteristics which hinder their socio-economic growth, the central government has clubbed
them as special category states for the purpose of devolution of financial grants.

Industrial Policy

Keeping in view the fact that the state of Jammu & Kashmir lags behind in industrial development, a need
had been felt for structured interventionist strategies to accelerate industrial development of the state
and boost investor's confidence. The industrial policy of 2004 was instituted with this view and it has been
extended till 31 March, 2015 to sustain the process of industrial progress. The state had laid great stress on
ensuring that the incentives and subsidies reached the genuine industrialists without much loss of time.
The new initiatives would provide the required incentives as well as an enabling environment for industrial
development; it would improve availability of capital and increase market access to provide a fillip to the
private investment in the state

10 PHD Research Bureau

 Jammu Kashmir

Highlights of the Industrial Policy

 Developing world class infrastructure is essential for speedy industrial development. The policy lays
emphasis on inviting private sector to participate in infrastructure development.
 With a view to encourage industrialization of the backward blocks of the state, the Capital
Investment Subsidy (CIS) under state's incentive package shall be extended to these blocks. The CIS
of the state is attractive and it makes provision for a 30% subsidy subject to a limit of Rs. 30 lakhs and
the definition of investment is more comprehensive.
 To encourage existing industrial units the industrial policy provides for extending the state CIS to
them.
 The policy has introduced an incentive for assisting industries of the state to acquire and promote
their own brands. This incentive will be extended for the first three years, 50% of expenses subject to
a limit of Rs. 20 lakhs in the first year, 30% of expenses subject to a limit of Rs. 15 lakhs in the second
year and 10% of the expenses subject to a limit of Rs. 10 lakhs in the third year.
 The government would install common effluent treatment plants in industrial clusters where ever
necessary, with central and state's resources. For individual units, installing their own pollution
control devices, subsidy will be provided on such equipment to the extent of 30% subject to a limit of
Rs. 20 lakhs.
 The limit of CIS available to the thrust area industries and prestigious units will be Rs. 45 lakhs and Rs.
60 lakhs. For prestigious industries in thrust areas the cap on CIS is Rs. 75 lakhs.

Information Technology Policy

Information Technology (IT) has an enormous influence on global economy. It has revolutionized the nature
of human interaction and has become a prime mover for services. Today the competitiveness of a country's
economy and well-being is getting closely aligned to its ability to innovate and participate in the IT industry. In
Jammu & Kashmir, IT is still a sunrise industry. IT Policy for the state of Jammu and Kashmir was launched in the
year 2004 with the view that IT has the potential to grow very quickly to become a major player in the growth
of the state's economy and contribute to better, transparent and effective governance

Highlights of the IT Policy

 IT Software and IT Services shall be deemed as manufacturing activity for the purpose of incentives for
the industry in line with the approved policy of Government of India. Depreciation norms and loan for
capital investments and working capital requirements would be made attractive.
 All promotional and liberalized policy instruments available to the IT software and IT services would
also be made available to the IT enabled services including the Information Content Industry.
 Interest subsidy scheme on the pattern available to other industries would be made applicable for
both computer hardware and software sectors, through the IT department.
 The government would facilitate creation of a Venture Capital fund of Rs. 25 crores, to begin with, in
association with the Financial Institutions to meet the equity requirements of the Small and Medium
Enterprises/IT Startups.

PHD Research Bureau 11

 Jammu Kashmir

Jammu and Kashmir State Forest Policy

Being the largest land based resource in the State; forests have immense potential for supporting
livelihoods and alleviating poverty. State forest policy was launched in the year 2010.

The basic objectives of the Jammu and Kashmir State Forest Policy are as follows:

 Conservation of biodiversity and natural habitat through preservation of natural forests with the vast
variety of flora and fauna.
 Rehabilitation of degraded forests so as to optimize their productivity and restore their potential to
provide ecosystem goods and services on sustainable basis.
 Poverty alleviation by meeting livelihood needs of forest dependent communities through sustainable
supply of forest produce by improving productivity of existing forests, and through forestry activities,
schemes and programmes.
 Extending tree cover outside forests to reduce pressure on natural forests for supply of forest produce.
 Checking denudation and soil erosion in catchments through integrated watershed management
techniques and practices.

Agriculture

The economy of the state is largely agrarian with 70% of the population dependent on it and about 49% of
the working population engaged in it. The contribution of the agriculture sector is around 26% in the
economy and it has grown at an average rate of about 1.8% between FY2003 and FY2008. Basmati rice,
rapeseed, oilseed, pulses, fruits like- apples, walnuts, cherries, pears almond are produced in huge
numbers in the state. The diverse climatic zone in the state gives ample opportunity for horticulture and to
cultivate crops like saffron which are unique for the state.

Summary of agro statistics

Sr. No Components Growth/ratio/ production
1 Agriculture(including livestock) GSDP at Current prices (FY2008) Rs.7658 crore
2 Growth of Agriculture & Allied real GSDP ( Avg. from FY2003 to FY 2008) 1.79%
3 Agricultural sector's contribution in GSDP(FY 2008**) 26.65%
4 Food Grain production (FY2011) 1371 (Thousand Tonnes)
5 State's contribution to national food grain production (FY2011) 0.56%
6 State's rank in national food grains production (FY2011) 19
7 Yield --total food grains (FY2010) 1617 (Kgs/Hectare)
8 Gross area irrigated (FY2009) 463.2 (Thousand Hectare)
9 Area under wells irrigation ( FY2008) 0.99(Thousand Hectare)
10 Population dependent on agriculture 70%
11 Rice Production (FY2011) 507.7 (Thousand Tonnes)
12 Wheat Production (FY2011) 289.9 (Thousand Tonnes)
13 Coarse Cereals (FY2011) 550.7 (Thousand Tonnes)
14 Pulses (FY2011) 23.2(Thousand Tonnes)
15 Oil Seeds (FY2011) 49.8 (Thousand Tonnes)
14 Fruits(FY2009) 205.08 (Thousand Tonnes)
15 Almonds(FY2009) 103 (Thousand Tonnes)

Source: PHD Research Bureau, Compiled from RBI & Ministry of Agriculture, Directorate of Economics and Statistics, J&K
Note: ** Advanced Estimates
12 PHD Research Bureau
 Jammu Kashmir

Jammu & Kashmir's food grain production has shown good growth during the last decade. It has grown
more than 23% between FY2001 and FY2011. During FY2001, food grain production of Jammu & Kashmir
was 1114.5 thousand tonnes, which has increased to 1371.5 thousand tonnes in the FY2011.

Foodgrain production in Jammu & Kashmir

(Thousand Tonnes)
Year Jammu & Kashmir India Share of Jammu
& Kashmir in India (%)
FY 2001 1114.5 196.81 0.6
FY 2002 1325.8 212.85 0.6
FY 2003 1322.4 174.78 0.4
FY 2004 1529.6 213.19 0.7
FY 2005 1499.0 198.36 0.8
FY 2006 1482.0 208.59 0.7
FY 2007 1572.7 217.28 0.7
FY 2008 1572.1 230.78 0.7
FY 2009 1721.3 234.47 0.7
FY 2010 1522.6 218.2 0.7
FY 2011 1371.5 241.56 0.6
Source: PHD Research Bureau, compiled from RBI, Ministry of Agriculture

Due to hilly terrain, food grains can not be cultivated on very large areas in Jammu & Kashmir, more over
the yield per hectare is also relatively low in the state, as a result the production of food grains in the state is
low and share of Jammu & Kashmir in India's food grain production is stagnant at around 0.7% over the last
few years.

Share of Jammu Kashmir in India's food grain production

(% Share)

0.9
0.8
0.7
0.6
0.5
0.4
0.3
0.2
0.1
0
FY FY FY FY FY FY FY FY FY FY FY
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Source: PHD Research Bureau, compiled from RBI, Ministry of Agriculture

PHD Research Bureau 13

 Jammu Kashmir

Horticulture and Floriculture

Jammu & Kashmir is home to some world famous varieties of fruits, dry fruits, honey and saffron.
Horticulture is one of the most vibrant sectors for the state economy. This sector provides direct as well as
indirect employment to the state population. To promote the horticulture in the state, the state
government has declared horticulture as a thrust area. Jammu & Kashmir also has ideal climatic
conditions for floriculture. A large variety of flowers is grown in the state for both domestic and
international markets. The State intends to propagate floriculture as an important economic activity and
hence thrust is on the commercial exploitation of the floriculture.

Apples are a major produce of Jammu & Kashmir. During the last five years production in the state has
increased from 1151.7 thousand metric tonnes in FY2006 to 1373 thousand metric tonnes in FY 2010.

Apple production of Jammu Kashmir

(Thousand Metric Tonnes)
Year Jammu & Kashmir India Share of Jammu
& Kashmir in India (%)
FY 2006 1151.7 1814.0 63.5
FY 2007 1222.2 1623.7 75.2
FY 2008 1268.5 2001.5 63.3
FY 2009 1332.8 1985.1 67.0
FY 2010 1373 1777.2 77.2
Source: PHD Research Bureau, compiled from National Horticulture board.

The production of apples in the state is growing every year as a result the percentage share of Jammu &
Kashmir in national production has also been increasing steadily; it has increased from, 63.5% in FY2006 to
77.2% in Fy2010.

Share of Jammu Kashmir in India's Apple production

(%)
90
80

70
60

50

40

30
20

10

0
FY 2006 FY 2007 FY 2008 FY 2009 FY 2010
Source: PHD Research Bureau, compiled from National Horticulture board.

14 PHD Research Bureau

 Jammu Kashmir

Services

During the last decade, the share of services sector has been stable in Jammu and Kashmir. The average
contribution of services sector in the GSDP of Jammu and Kashmir was around 45% during FY2001 to
FY2008. The service sector of Jammu & Kashmir is dominated by tourism and adventure sports.

IT and ITE Services -- The IT industry, though not well developed in the state, has tremendous potential for
growth. IT Policy for the state of Jammu and Kashmir was launched in the year 2004. Large pool of
educated and skilled youth in the state provides the required manpower for developing IT as the
knowledge-based industry. The geo-climatic condition offers an ideal location for setting up the IT
industry. The development of this industry would help the state economy to solve the current problems of
educated unemployment, weak industrial base, poor accessibility and small market. The new industrial
policy also provides a favourable environment for attracting investment in the IT industry.

Banking -- Banking services plays an important role in ushering economic development by mobilizing
financial resources. Banks have become the back bone for the development of the economy on all
parameters in any state. Banking structure in Jammu and Kashmir consists of commercial banks, Regional
Rural Banks, and co-operative banks.

There are more than 900 branches of different categories of banks in Jammu and Kashmir with more than
160 branches of nationalized banks. Regional rural banks and other scheduled commercial banks have
very strong network to facilitate developmental activities of state.

Regional rural banks and other scheduled commercial banks in Jammu & Kashmir contribute more than
68% of the total number of branches/ offices of banks in Jammu & Kashmir.

Banking scenario in Jammu & Kashmir

Banks in Jammu & Kashmir No. of branches in Jammu
& Kashmir
Nationalised Banks 163
Regional Rural Banks 242
State Bank of India and associates 134
Other scheduled commercial banks 397
All scheduled commercial banks 936
Source: PHD Research Bureau, Compiled from performance review of Jammu & Kashmir
Economy 2008-09
Note: Data pertains to Sep 2008

The business performance of the banks is generally measured in terms of credit deposit ratio (CDR). The
credit deposit ratio was recorded to be 48.49% for Jammu & Kashmir as against 74.93% for the country.
Highest credit deposit ratio of 56.49% was observed amongst other scheduled banks and lowest i.e.
29.19% in respect of State Bank of India and its associates in Jammu & Kashmir.

PHD Research Bureau 15

 Jammu Kashmir

Deposits, Credits and Credit Deposit Ratio of Banks

(Rs. Crore)
S. No. Jammu and Kashmir All India
Agency Deposits Credits Credit deposit Deposits Credits Credit deposit
ratio ratio
1 State Bank of India 4467 1304 29.19 794071 599378 75348
and its associates (17.10) (10.29) (23.19) (23.36)
2 Regional Rural Banks 1292 438 33.9 101496 57706 56.86
(4.94) (3.46) (2.96) (2.25)
3 Nationalized Banks 3929 1641 41.77 1665387 1229029 73.8
(15.04) (12.95) (48.64) (47.90)
4 Other Scheduled Banks 16441 9287 56.49 663387 495054 74.63
(62.92) (73.30) (19.37) (19.29)
5 Foreign Banks -- -- -- 199945 184713 92.38
(5.84) (7.20)
6 Total 26129 12670 48.49 3424286 2565880 74.93
(100.00) (100.00) (100.00) (100.00)

Source: PHD Research Bureau, compiled from performance review of Jammu & Kashmir economy 2008-09 Figures in the bracket shows percentage share.
Note: Data pertains to September 2008

Tourism -- Kashmir is known as the paradise on earth because of its numerous scenic spots of attractions
and beautiful weather. The other important aspect of tourism potential is the existence of shrines,
monasteries, temples and cave temples in the three regions of the state. The tourism sector has immense
potential of backward and forward linkages in terms of both income and employment and can contribute
significantly to the economy.

Tourism, once the mainstay, is now languishing and the sector is facing many challenges. In a climate of
armed militancy in Kashmir during the recent years, the flow of tourists to the valley has gone down. The
government of Jammu & Kashmir has been developing various tourist attractions such as golf, water
skiing, tobogganing, sledge-riding, etc. besides upgrading tourist infrastructure.

3. Infrastructure
The importance of infrastructure for sustained economic development and improving the living standards
of the population is well recognized. Yet, millions of people, across the world lack access to roads,
transport, electricity, safe drinking water, and proper sanitation and communication facilities. Inadequate
and inefficient infrastructure not only adds to transaction costs but also prevents the economies from
realizing their full growth potential. The state government has come up with many initiatives and schemes
to develop the infrastructure in the state. Investment of Rs. 857 crore in state sector and Rs.900 crore in
Central Sector for roads & bridges has been announced in the budget for Fy2012.

16 PHD Research Bureau

 Jammu Kashmir

Roads -- The state being dominated by undulating topography, road is the prime means of transport. The
total road length in the state is about 12,976km. The roads are maintained by the Public Works
Department (PWD) of the state government. The cause of concern is that at 35.71 km per 100 sq km, the
road density is one of the lowest in the country. The central government has attached high priority to the
development and up-gradation of its vital road network.

Road infrastructure
Category of road Length in Kms
National Highway 1245
State Highway 688
Major district roads 7671
Other district roads 3372
Total 12976
Source: PHD Research Bureau, Compiled from IBEF

Railways -- Railways have not developed much in any hilly state as compared with other states because of
3
the difficult terrain. Jammu & Kashmir have railway network of only 239Kms. The state government has
recognised the crucial role of railways in the process of economic development and in response to that the
government of India has also extended full cooperation in all respects by providing technical and financial
support for developing railways links in the state at a very fast speed.

Aviation -- Jammu and Kashmir have a very large area under mountainous topography, in difficult terrains
like high mountainous areas of Leh and Kargil when road connectivity is disrupted during winter months
due to heavy snowfall, the airways are the only source of access to such places. Airways connect all the
three regions of the state with other parts of the country and abroad.

Out of the three airports of the state, Srinagar airport has been upgraded as international airport named as
Sheikh-ul-Alam airport, where as the facilities at Jammu and Leh airports are also being upgraded. One
more airport at Kargil headquarters has been connected by decota service. Although some areas have
been covered by helipads, the difficult terrain and scattered area in the state need more airports and
better connectivity. For promotion of tourism in the state starting of air taxi services between Katra-
Bhaderwah is also under the consideration

Electricity -- The state of Jammu and Kashmir is bestowed with huge hydro electric energy potential which
if exploited fully will provide a strong thrust to economy of the state. However, it demands huge
investments, technical expertise, administrative reforms, congenial environment, proper regulations and
management, besides competitive marketing, policy formation and private participation.

3
Data pertains to March-2009

PHD Research Bureau 17

 Jammu Kashmir

The optimal exploitation of the available hydel resources in the state would not only meet the state's
demand but will ensure supply of power to northern grid to boost the overall development of the
country.

The estimated hydro power potential4 of the state is 20,000 Megawatts (MWs), of which 16480 MWs have
been identified so far. Out of the identified potential, only 2318.70 MWs or 14% have been exploited so far,
consisting of 758.70 MWs in State Sector from 20 power projects and 1560 MWs from three power
projects under Central Sector. The per capita power consumption of Jammu & Kashmir is 711 kWh which is
higher than the national average of 631 kWh.

The state government is striving to improve the situation of power in the state, recently many schemes has
been launched in the state like “Open Access Power Scheme” to benefit bulk consumers i.e. industries and
other commercial ventures has been announced in the budget of FY2011-12. Setting up of Bijli Adalats was
also announced for settlement of disputes and early realization of electricity dues.

Urban Infrastructure -- Urban infrastructure services include water supply, sanitation, drainage, solid
waste management, etc. the government of Jammu and Kashmir has launched several schemes to
improve the urban infrastructure. Provisions of potable drinking water for 1500 more habitations has been
made in the budget for FY2011-12, Rs.150 crore under JNNURM for completion of ongoing projects has
been sanctioned, Rs.326 crore investments in Housing & Urban Development Sector and Rs.148 crore for
maintenance of assets under non-plan expenditure, have also been made.

Telecom -- J&K contributes around 0.6% in total wireless and wire line subscribers in India. According to
TRAI, the total wireless subscriber base of Jammu & Kashmir was 58.19 lakh and wire line subscriber base
stands at 2.15 lakh in the month of Jun2011.

Telecom subscriber base

Name of the Region Wireless subscriber Wire line subscriber
Jammu & Kashmir 5819627 215481
India 851695668 24292764
Share of Jammu
& Kashmir in India 0.62% 0.68 %

Source: PHD Research Bureau, compiled from TRAI as on 30 June, 2011.

4
Source: Performance review of J&K Economy 2008-09

18 PHD Research Bureau

 Jammu Kashmir

4. Social infrastructures
Poverty -- Around 21% of population of the state is still living below the poverty line. The trend in
percentage of population below poverty line shows that although, it has been steadily declining in the
state from 40.83% in FY1974 to 23.82% in FY1988; the rate of decline has stagnated since then.

Population below poverty line (BPL): Jammu & Kashmir

45

40

35

30

25

20

15

10

0
1973-74 1977-78 1983 1987-88 1993-94 1999-00* 2004-05* 2007-08

Source: PHD Research Bureau, Compiled from Directorate of Economics and Statistics J&K, The Planning Commission.
Note * The figures are matter of debate and controversy and are non acceptable to the State Govt.

Share of rural population is very large in the state's BPL population. Around 22 lakh people of the rural
population are below poverty line, which comprises 26.14% of the total population as compared to the
urban population below poverty line which is only 7.96%. The state government has put forth a number of
poverty alleviation schemes with full financial and technical support from the central government, to ease
the burden of poverty among the masses.

Unemployment -- Unemployment has always been a chronic problem in the state. The unemployment
rate based on usual principal status was 5.2% which is higher than the all India level of unemployment i.e.
3.1%. The total number of registered unemployed as on 31st December 2008 was 120228.

Education & Literacy -- Education is one of the strongest means which is capable of bringing about the
desired change in the society .Education acts as a pillar of support and hence provides skills and
development for effective employment in the future.

According to the census 2011, literacy rate in the Jammu Kashmir is 68.74% which is lower as compared to
the all India rate of 74.04%. The encouraging fact is that the level of literacy has increased from a meagre
12.95% in FY1961 to 68.74% in FY2011.

PHD Research Bureau 19

 Jammu Kashmir

Literacy rate: Jammu & Kashmir vis-à-vis India

80.00

60.00

40.00

20.00

0.00
FY1961 FY1971 FY1981 FY2001 FY2011

Jammu Kashmir India

Source: PHD Research Bureau, Compiled from Economic Survey of India 2010-11

The state has a typical topography which is an obstacle in achieving a desired level of literacy. The networks
of educational institutes are sparsely spread and majority of the population lives in remote areas. J&K is
among the bottom six states in literacy rate among Indian states. However, in order to enhance the level of
literacy a number of initiatives have been introduced by the state government during recent years.

Literacy in J&K in comparison with other states

Kerala
Mizoram
Tripura
Goa
Delhi
Himachal Pradesh
Maharashtra
Sikkim
Tamil Nadu
Nagaland
Manipur
Uttarakhand
Gujarat
West Bengal
Punjab
Haryana
Karnataka
Meghalaya
Orissa
Assam
Chattisgarh
Madhya Pradesh
Uttar Pradesh
Jammu and Kashmir
Andhra Pradesh
Jharkhand
Rajasthan
Arunachal Pradesh
Bihar

0.00% 10.00% 20.00% 30.00% 40.00% 50.00% 60.00% 70.00% 80.00% 90.00% 100.00%

Source: PHD Research Bureau, Compiled from Economic Survey 2010-11

20 PHD Research Bureau

 Jammu Kashmir

Jammu Kashmir has remained educationally backward prompting the state government to take effective
steps in this regard. It has undertaken various takes initiatives from time to time to improve the education
system with the help of the centre. Some major schemes announced in the budget of FY2011-12 are:-

• 11 lakh children to be covered under mid-day meals.

• 19 model schools and 19 girl's hostels under Rashtriya Madhyamik Shiksha Abhiyan.
• 18 new polytechnic colleges being established in uncovered districts of the state.

Educational Infrastructure
Type of Institution Number
Basic/ Secondary Education
Schools/ Colleges 23120
Number of Students 19.30 lakhs
Higher Education
Higher education institutes 2687
Degree/ PG Colleges 72
Central Universities 2
State universities 6
Vocational and Technical Education
Industrial Training Institutes 47
Polytechnics 12
Educ. Training Colleges 12
Source: PHD Research Bureau, compiled from Directorate of Economics and
Statistics J&K , Directorate of Technical education J&K.
Note: Data pertains to FY2010

Health --The Health infrastructure in the state comprises of 22 district level hospitals, 375 Primary Health
Centres (PHC) and 238 state allopathic dispensaries. There are 11840 beds in the government hospitals of
Jammu & Kashmir. The state has an Institute of medical sciences and 3 dental colleges.

Summary of Health Indicators

Infant Mortality Rate * 50 per 1000 live births
Total Fertility Rate (2008) 2.4 children born per woman
Per Capita Health Expenditure NHA-04-05 Rs 1001
District Level Hospitals* 22
Primary Health Centres (PHC)* 375
Allopathic dispensaries* 238
Institute of medical sciences* 1
Bed strength in government hospitals* 11840
Ayurvedic Hospitals* 1
Dental colleges* 3
Source: PHD Research Bureau, Compiled from Annual Report to People on Health, September 2010 and
Directorate of Economics and Statistics Jammu & Kashmir, *data pertains to 2008-09.

PHD Research Bureau 21

 Jammu Kashmir

The per capita expenditure on health is Rs.1001 for the state, which is lower than the national average of
Rs.1201. Infant mortality rate of 50 per 1000 live births is lower than all India level. The state's effort to
strive for good health for everyone has shown good results and has been demonstrated through robust
indicators.

Availability of Safe drinking water

Jammu Kashmir is home to five rivers that are namely Jhelum, Indus, Tawi, Chenab and Ravi. More than
60% of the total households have access to safe drinking water in the state, which far below the national
average of 77.9%. This is a major area of concern.

Availability of Safe drinking water to households (%)

Punjab

Himachal Pradesh

Uttarakhand

Haryana

Rajasthan

Jammu & kashmir

0 20 40 60 80 100 120

Source: PHD Research Bureau, Compiled from Economic Survey 2010-11

5. Performance in the six thrust areas focused by PHD Chamber

The Six thrust areas of PHD Chamber of Commerce and Industry are industrial policy, Infrastructure,
Education and Skill Development, Health, Housing, Agriculture and Agribusiness. Jammu & Kashmir is
rapidly growing state and has done well in the areas focussed by the PHD Chamber.

Performance in six thrust areas

Rural Development State government has proposed several schemes for employment
and Agriculture generation to combat the challenge of rural unemployment and poverty.
Varied Agro-Climatic Zones aid to the healthy growth of a wide variety of
agricultural and horticultural produce like Apples, walnut, saffron, etc,
some of which are unique to the state. The potential for bio-diversification
due to agro-climatic and soil conditions is unique in J&K. Over 65% of the
population of more than one crore depend on agriculture and allied
sectors. However, the state faces massive deficit in food (40%), Oilseeds

22 PHD Research Bureau

 Jammu Kashmir

(70%) and vegetables (30%). VAT exemption and toll exemptions in the
agriculture sector has been given by the government to boost the
production as well as the income of the population engaged in agriculture.

Education and The literacy level of the state is lower than that of the national average. The
Skill Development hilly terrain and tough weather conditions and low income have hindered
educational development. In order to promote education and skill
development, the Department of Technical Education J&K, has started
apprenticeship schemes, community polytechnics, vocational training
programmes and other such projects in association with World Bank.
There are more than 70 degree/post degree colleges in the state and 8
universities. 18 new Polytechnic Colleges are also being established in
uncovered districts of state.
Health Jammu and Kashmir has been ranked no. 1 in providing the primary health
services. Jammu & Kashmir have more than 375 Primary Health Centres.
The state has a good health infrastructure and the efforts being made by
the state government are clearly reflected in the statistics. J& K have around
12000 beds in the government hospitals.
Housing The Jammu and Kashmir is implementing the National Housing Policy of
“Shelter for All” to address the issues relating to the development of
housing infrastructure. The state government has implemented some
Centrally Sponsored Schemes which helped in addressing the housing
problems both by way of construction and up-gradation. The initiatives of
the government through various schemes like VAMBAY, NSDP,
Development of Housing colonies for economically weaker sections have
yielded satisfying results in the urban areas.

Industrial Policy Industrial development has always been a thrust area in the agenda of the
government. Unfortunately, J&K has not been able to attract investments in
this sector and remained an industrially backward state due to its unique
economic and geographical disadvantages. In the perspective of industrial
growth, the Industries and Commerce Department has been established to
focus on attracting investment in the state for developing world class
infrastructure. To usher in new era of industrialization government has
come up with a new and comprehensive industrial policy which came into
being in 2004 and will valid till 2015.

Infrastructure The state has huge potential to generate hydroelectricity. Being a state
with hilly terrain, roads are the major mode of transportation in Jammu &
Kashmir. However, there is a need to improve the road network in the
state especially in hilly areas. The railways network also needs to be
extended. The state has good connectivity through air for both domestic
and international destinations. More than a dozen industrial areas have
been developed in the state in the regions around Jammu, Srinagar and
Kathua.

PHD Research Bureau 23

 Jammu Kashmir

6. Budget Highlights 2011-12

The budget of Jammu & Kashmir 2011-12 has been designed in order to promote all round development in
the state. Various schemes have been announced for all the major section of the society as well as for the
development of the industry an infrastructure.

For the development of the infrastructure, investment of Rs.800 crore and Rs.900 crore has been
announced for the development of roads and bridges under state sector and central sector respectively.

To improve the farm productivity in the state, investments of Rs.332 crore have been proposed in the
irrigation sector and Rs.326 crore investment has been proposed in housing and urban development
sector.

In order to meet the requirement of the skilled manpower Rs.316 crore has been earmarked under Skill
Development Mission and the daily wage rate has also been hiked from Rs. 110 to Rs. 125 per day.

To promote the agricultural activities VAT exemptions has been provided on various items like food grains,
pesticides and insecticides. Toll exemption has been provided to milch animals, poultry and beehives
colonies, etc.

Stipend of trainees in handicrafts and handloom sector has been hiked from Rs.100 to Rs.500 and from
Rs.200 to Rs.700 per month, along with Rs10crore of interest subsidy to boost handicraft sector. Loan slab
for artisans has been raised from Rs.50000 to Rs.100000.

Budget at a glance
Items 2009-10 (Actual) 2010-11 (BE) 2010-11 (RE) 2011-12 (BE)
A Revenue Receipts 17588 22849 23762 26701
B Revenue Expenditure 15324 17698 17698 22752
Revenue Surplus (A-B) 2264 5151 53588 3949
C Capital Receipts 4751 3135 4971 4511
D Capital Expenditure 7015 8286 10359 8460
Capital A/C Deficit (C-D) 2264 5151 5388 3949
E Total Expenditure 22339 25984 28733 31212
F Total Receipts 22339 25984 28733 31212
Budget Deficit (E-F) 0 0 0 0
Fiscal Deficit 3899 1800 2352 (3652) 2979
Primary Deficit / surplus -1760 451 -101 (-1401) -616

Source: PHD Research Bureau, Compiled from Budget of Jammu & Kashmir 2011-12
Note:1. Figures in braces represent the Fiscal Deficit and Primary Deficit worked out after taking into account also the one-off expenditure
of Rs.2300 crore for reduction of OD.
2. All entries have been adjusted for transfers from and to Public Account.

24 PHD Research Bureau

 Jammu Kashmir

7. Conclusions and Recommendations

Jammu and Kashmir known as the “Paradise on the earth” is the northern most state of India. The state
has some of the best tourist spots and it is home to many Himalayan glaciers and rivers. Jammu & Kashmir
has unique climatic conditions and has very diverse variety of soil in the state; as a result a wide range of
vegetation is found in the Jammu and Kashmir.

The state's economy has shown vibrant growth path during the recent years. J&K has grown around 6%
between FY2004 and FY2008. The tertiary sector contributes around 46% in GSDP followed by the
secondary and primary sectors both at 27%.

Fiscal indicators of the state are in comfortable zone, GFD (Gross Fiscal Deficit) is estimated at 4.6%
(FY2011) of GSDP. It is lower than special category states like Himachal Pradesh (5.1%), Sikkim (10.8%),
Tripura (7.2%) and higher than states like Arunachal Pradesh (1.9%), Uttarakhand (3.3%) and Nagaland
(3.5%).

The economic policy of the state focuses on the indigenous traditional occupations of farming, animal
husbandry handlooms, handicrafts and horticulture. The state has attracted around Rs6900crore of
industrial investments proposals in the last four and a half years (FY2007-11).

Agriculture is the mainstay of the economy of the state as more than 65% of the state population depends
on agriculture. The state contributes 0.6% (FY2011) in the total food grain production of India. Its
contribution in production of apples at all India level is 77.2%. To improve the domestic marketing and
promote export of major commercial fruit crops like apples and walnuts, the J&K state has been declared
as “Agri Export Zone for Apples and Walnuts”.

Industrial Policy was launched in the state in the year 2004; the Policy will be in affect till 31st March 2015.
The policy focuses on expediting the pace of development in the state and emphasise on the need to
promote local employment in the industrial units in the state. Industrial policy of Jammu and Kashmir
provides incentives and financial assistance to set up new industries in the state.

Services sector of Jammu & Kashmir is largely dominated by the tourism and allied activities, followed by IT
and ITeS. Kashmir is known as the paradise on earth because of its numerous scenic spots and attractions
and beautiful weather. Apart from natural beauty, the state is home to many shrines, monasteries and
temples which attract very large number of religious tourists as well.

In the social sector the literacy rate for the state is 68% which is lower than the national average of 74% and
has a lot of scope for improvement. The state has a good number of hospitals, primary health centres, and
allopathic dispensaries and state has been ranked 1 in the primary health services, however, per capita
health expenditure at Rs.1001 is lower than the national average. The level of poverty is 21% in the state
which is better than the national average of 27%.

PHD Research Bureau 25

 Jammu Kashmir

Recommendations

Jammu & Kashmir is located in the Himalayan region and has a significant part of the topography is under
hilly terrain which hampers the progress and development in the state. However Jammu & Kashmir is
blessed with many unique features which can make it one of the fastest growing states of India. The state
has huge potential of generating hydro electric power and being rich in natural resources it can provide
ample raw material to various industries.

J&K has grown at a sustained rate of almost 6% during recent past, which is below the national average.
Contribution of services sector is less than 50% in the state's economy, which needs to be increased by
encouraging investments in tourism and IT sector. Banking sector also needs to be focused as the Credit
Deposit Ratio of the banks in Jammu and Kashmir is far below the national average.

The state is ranked 15th in the agriculture, however, more than two third population of the state depends on
agriculture. The state needs to focus on agriculture with specific attention to floriculture and horticulture, to
harness the huge potential arising out of it. A lot more needs to be done to improve the income levels of the
farmers in the state as the per capita income of the state is among the lowest in the country.

The state has not been able to attract much industrial investment during the recent years and is considered
to be industrially and economically backward state. Infrastructure is lacking in most part of the state and it
needs to be developed on priority to facilitate the socio-economic development of the state. The roads
density is among the lowest in the country and railways too have a negligible presence in the state.

Poverty and unemployment are the two grey areas which need to be addressed; government needs to
focus on generating more employment opportunities through industrial development in the state. There
is a lot of scope for increasing investments in the agro based and food processing industry. Handicrafts, IT,
floriculture and horticulture, hydropower and tourism are the areas wherein huge investments can be
attracted as well. This would also help in reaping the exports potential of the state.

Despite having huge potential to generate power, the state is in a power deficit. Public private partnership
models should be promoted in harnessing the hydro electric power potential of the state.The literacy level
in Jammu and Kashmir is at a modest level as compared nationally which can be improved by improving the
educational infrastructure in the state.

The state government should focus primarily on the areas where the state has inherent advantage and
promote industrial growth by providing priority in respect of allotment of land, sanction of power and
grant of incentives and other clearances to the investors in these areas. J&K should encourage the flow of
investments from other parts of India as well as FDI (Foreign Direct Investment).

It is suggested that the policy makers in Jammu & Kashmir should identify and exploit the productive
capabilities of the three different regions of the state and formulate strategy accordingly for each region.
The government should thereby facilitate the process of economic take-off for promoting prosperity and
ensuring equitable economic development throughout the state.

26 PHD Research Bureau

 Jammu Kashmir

Jammu and Kashmir: Key contacts

S.no Sector/Area Key Contact

1 Agriculture Director of Agriculture

Civil Secretariat, Srinagar, Jammu & Kashmir
Srinagar +91-194-2310675, 2311569
Jammu +91-191-2505201, 2552145

2 Education Secretary,
Department of Education
Civil Secretariat, Srinagar, Jammu & Kashmir
Jammu +0191-2549675
Srinagar +0194-2450738

3 Health Principal Secretary

Health & Medical Education Department
Civil Secretariat, Srinagar.
J & K - 190011
Tel. Off. +91-194-2482317

4 Industrial Infrastructure Director, Directorate Of Industries & Commerce,

Pratap Park, Srinagar +91-194-2472935
Ist Floor Jawaharlal Nehru Udyog Bhawan,
Rail Head Complex,
Jammu +91-191-2474085

5 Rural Development Secretary, Rural Development Department

Jammu: +91-191- 2564763, 2560678, 9419002366

6 Urban Development Principal Secretary, Housing and Urban Development

Department
Srinagar- +91-194-2452263
Jammu +91-191-2542765

PHD Research Bureau 27

 Jammu Kashmir

About the PHD Chamber

P HD Chamber is a vibrant and proactive

representative organization of business
and mercantile community of northern and
Jammu
&
Kashmir
PHD signifies
PROGRESS • HARMONY • DEVELOPMENT

central India, serving their interest for over a Punjab Himachal Pradesh

century. This apex regional organization plays a Uttarakhand

Haryana
active role in India's development and Delhi

acts as a much needed link between Rajasthan Uttar Pradesh

government and industry, serving as a

catalyst for rapid economic
development and prosperity of Madhya Pradesh

the community in the region

Chhattisgarh
through promotion of trade, industry
and services.

With its base in the National Capital, Delhi,

Six Thrust Areas
the Chamber has Regional offices in States of
• Industrial Development
Bihar, Chhattisgarh, Haryana, Himachal • Infrastructure
Pradesh, Jammu & Kashmir, Madhya Pradesh, • Housing
Punjab, Rajasthan, Uttar Pradesh, Uttarakhand and • Health
• Education and Skill Development
the Union Territory of Chandigarh.
• Agriculture and Agribusiness

PHD Research Bureau

Dr. SP Sharma, Chief Economist
Mr. Harsh Vardhan, Assistant Secretary
Ms. Malini Bhattacharya, Assistant Secretary
Ms. Surbhi Sharma, Executive Officer
Ms. Vibhuti Vaid, Intern

28 PHD Research Bureau

Jammu Kashmir

Notes

PHD Research Bureau

Jammu Kashmir

Notes

PHD Research Bureau

PHD Research Bureau 27
 Conference Facilities
Conference Facilities
PHDHOUSE
PHD HOUSE --CHANDIGARH
CHANDIGARH

Bhushan Auditorium
Large Auditorium with variable
sitting arrangement
Capacity : 170

Bagrodia Board Room

Ideal for Board / Corporate
Meetings
Capacity : 15

The Chamber's approved Caterers at

the rates/menus approved by
the Chamber provide catering facilities
in PHD House.

For futher Details Contact: Mr. R. C. Pahooja,

PHD House, Sector -31A, Chandigarh -160031
Phone: 91-172-2638981, 09316010652 Email: [email protected]