Friday 03 / October / 2025
On April 22, 2025, the Baisaran meadows near Pahalgam, usually echoing with laughter, pony rides, and family picnics, turned into a scene of horror when a terror attack claimed 26 lives, most of them tourists.
The incident not only shocked the nation but also raised fresh doubts about the peace in Indian administered Jammu and Kashmir. For an economy so deeply tied to tourism, the attack was devastating, bringing the Valley’s rising economic momentum to an abrupt halt.
Growing economic momentum before the attack
In the months leading up to the attack, the economic picture of Indian administered Jammu and Kashmir was one of optimism and growth.
Tourism had become a linchpin of the economy, contributing nearly eight percent to the Union Territory’s Gross State Domestic Product. In 2024, close to 35 lakh tourists, including more than 43,000 foreign visitors, flocked to the region. The first quarter of 2025 alone saw over 5.25 lakh arrivals, putting the Valley on track for a record year.
GSDP was estimated at ₹2.65 lakh crore for FY25, while per capita income grew at more than ten percent, reflecting prosperity spreading across households dependent on tourism and related activities. Pony operators, hoteliers, cab drivers, artisans, and local eateries thrived on the steady stream of visitors. All this progress was suddenly thrown into reverse after the Pahalgam tragedy.
An economy brought to a standstill
The economic fallout of the attack was immediate and severe. Tourist arrivals in Pahalgam collapsed by more than 95 percent within weeks. Hotel occupancy rates dropped from nearly 80 percent to below five percent, while the average room tariff tumbled from ₹13,000 to just about ₹5,000.
Houseboat stays, once considered a symbol of hospitality, fell from over 80 percent occupancy to barely five percent. Cancellations surged to almost 95 percent, leaving entire sectors—from handicrafts to transport—struggling to survive. This sharp reversal demonstrated not only how central tourism is to the Valley’s economy but also how livelihoods remain in the face of sudden shocks.
Government restores security and confidence
The government’s swift response on the security and development front became the turning point. The measures combined strong security deployment with visible confidence-building actions.
Additional forces were stationed at sensitive tourist destinations, CCTV networks and checkpoints were installed at entry points, and rapid response teams were placed on high alert. A powerful symbolic gesture came when the state government held a cabinet meeting in Pahalgam itself, underscoring that the UT remained open and safe for both citizens and tourists.
Signs of tourism’s gradual recovery
By June 2025, glimmers of recovery started to appear. Sixteen of the forty-eight sites closed after the attack were reopened, including Betaab Valley and the Mughal gardens of Kokernag and Verinag.
Tourist arrivals, though modest compared to the pre-attack surge, began to increase steadily, with about 300 arrivals reported daily since mid-June 2025. Hotel occupancy, which had dropped to near zero in May, gradually improved to 20-40% in Gulmarg reporting as high as 40 percent.
The “Return to Kashmir 2025” campaign, launched by the Tourism Department, played a key role in this revival by highlighting both the Valley’s natural beauty and the enhanced security measures in place.
Schools and colleges began organizing excursions to encourage local travel and create a sense of activity in the sector. The rebound may be gradual, but the steady footfall has instilled hope among the Valley’s stakeholders that the upcoming winter season could mark a significant turnaround.
Local livelihoods begin to rebuild
The revival of tourism meant far more than hotels reopening; it signalled a return of dignity and income for thousands of Kashmiris. Pony operators at Pahalgam’s meadows, taxi drivers in Srinagar, and tea vendors along Dal Lake began to see customers again.
Artisans reporting a 20 to 40 percent rise in sales of pashmina shawls and wooden carvings compared to the immediate weeks after the attack. Local eateries, once deserted, slowly began to buzz again as domestic families returned to explore. The resilience of the people was evident in their collective determination to keep Kashmir’s economy alive, with community groups spreading messages of unity and encouraging visitors to feel safe.
The opening up of the train route spanning one of the highest railway bridges in the world is proving to be an economic and tourism multiplier for the region.
Government initiatives to drive revival
The government played a proactive role in reviving activity through a mix of policy, promotion, and people-oriented strategies.
The “Return to Kashmir 2025” campaign was aggressively marketed on social media, showcasing both the region’s charm and its enhanced security measures. To generate footfall in the short term, the education department-initiated school and college excursions, ensuring a steady flow of visitors to reopened sites. Community organizations were roped in to train guides and operators in safety protocols, ensuring that tourists felt reassured at every step. Local festivals were organized with visible security arrangements, blending culture with confidence-building.
Social fabric strengthens resilience
Beyond numbers and bookings, government efforts have had a profound social impact. Locals report a renewed sense of safety and normalcy, with community gatherings and festivals resuming. Trust between residents and security forces has grown stronger, built on visible cooperation and transparent communication.
Above all, the resilience of ordinary Kashmiris, determined to protect their livelihoods and showcase their Valley as a place of warmth and hospitality, has been central to this phase of recovery. The spirit of unity and determination is once again redefining the narrative of Kashmir.
Structural strengths bolster economic activity
Alongside the revival, the broader economic transformation of Jammu and Kashmir in recent years adds significant momentum to recovery. Since 2019, the Union Territory has undergone structural reforms and large-scale investments that have fundamentally reshaped its growth trajectory.
Between 2021–22 and 2024–25, its economy recorded strong growth, with GSDP rising at more than seven percent annually, driven by infrastructure expansion, horticulture revival, and record-breaking tourism inflows. At current prices, the GSDP is estimated at ₹2.65 lakh crore in 2024–25, highlighting a structural shift in the regional economy.
Major industrial and investment policies have attracted proposals worth over ₹1.6 lakh crore, with nearly 2,000 units already operational, creating tens of thousands of jobs. Infrastructure has been a central pillar of this transformation, with the completion of landmark projects like the Chenab Rail Bridge, Zojila and Z-Morh tunnels, and significant expansion of road and air connectivity. Tourism has reached historic peaks, supported by winter sports, eco-tourism, and cultural initiatives, while digital governance and social welfare programs such as Ayushman Bharat and housing schemes have improved quality of life for residents. This combination of reforms, infrastructure, and investment has created a multiplier effect, integrating trade, agriculture, tourism, and industry, and positioning Jammu and Kashmir as an emerging hub of inclusive and sustainable growth.
In conclusions, short term projects coupled with long-term development initiatives, has proven its resilience; tourism and livelihoods are regaining momentum with visible support from government campaigns, local resilience, and improving security. At the same time, structural reforms, industrial diversification, infrastructure projects, and a strengthened investment climate are laying the foundations of a much broader and durable economic transformation.
The Indian administered Kashmir today stands not only at the crossroads of tragedy and recovery but also at the threshold of an economic renaissance. The scars of violence are gradually giving way to an era of development-driven optimism, where tourism is reinforced by industry, horticulture, digital services, and renewable energy. With peace and stability maintained along with continued reforms momentum, Jammu and Kashmir poised to emerge not only as India’s crown in geography and culture but also as a symbol of inclusive prosperity and fast-paced economic growth.
