By: Dr Naseer Ahmad Malik ( Research Scholar)
When I look at the Jammu and Kashmir Budget for 2026-27, I do not approach it with either exaggerated expectations or inherited cynicism. Budgets, especially in regions with prolonged economic stress, are rarely revolutionary documents. They are constrained by legacy costs, institutional inertia, and fiscal arithmetic. Yet they remain important because they reveal how a government reads the economy it governs. They show what is acknowledged, what is postponed, and what is quietly accepted as inevitable.
The first thing that stands out in this budget is its size. With a gross outlay of approximately 1.27 lakh crore and a net budgetary estimate of around 1.13 lakh crore, it is among the largest budgets in the region’s history. On the surface, this suggests expansion and confidence. But size alone tells us very little unless we examine how this money is structured and where it actually goes. Once that examination begins, the picture becomes more complicated and, in some respects, sobering.
A dominant feature of the budget is the overwhelming weight of revenue expenditure. Roughly 80,000 crore is allocated to salaries, pensions, interest payments, subsidies, and routine administrative costs. Capital expenditure, the component that builds assets and expands productive capacity, stands at a little over 33,000 crore. In simple terms, nearly three rupees out of every four spent are meant to keep the system running as it already exists, while only one rupee is meant to shape the future.
This imbalance is not unique to Jammu and Kashmir, but it is more consequential here because the economy has limited autonomous growth drivers. High revenue expenditure creates stability in the short term, but it also locks the state into a fiscal structure that is difficult to reform. Once salaries and pensions consume such a large share of public resources, every future budget inherits the same rigidity. Development then becomes a matter of adjusting margins rather than redefining direction.
The revenue side of the budget reinforces this constraint. Own tax and non-tax revenues together are projected at roughly 31,000-32,000 crore. This means that barely a quarter of the region’s expenditure needs are met from within its own economy. The rest comes from central assistance, shared taxes, grants, and centrally sponsored schemes. This is not simply a matter of dependence; it has structural consequences. When revenues do not grow in
proportion to expenditure, fiscal space shrinks, policy choice narrows, and long-term planning becomes cautious by necessity.
What concerns me more is the trajectory of revenue growth. The tax-to-GSDP ratio, which measures how effectively economic activity translates into public revenue, is projected to decline from around 7.5 percent to about 6.6 percent. This is not a healthy sign. It suggests that even when the economy grows nominally, the state is not capturing that growth efficiently. Either economic activity remains concentrated in low-tax sectors, or compliance and base-broadening efforts are inadequate, or both.
A budget that does not arrest this decline is effectively planning future expenditure on the assumption of continued external support. That may be realistic, but it is not a strategy. Over time, this creates a fiscal culture where sustainability is maintained through transfers rather than productivity. The danger is not immediate insolvency but gradual stagnation.
Employment is the issue through which most people experience the economy, and here the budget remains cautious to the point of evasion. The document acknowledges unemployment, particularly among youth, but the solutions offered remain fragmented. Skill development, self-employment schemes, startup incentives, and targeted placements dominate the narrative. These are not meaningless interventions, but they are insufficient when the underlying economic structure cannot absorb labour at scale.
Jammu and Kashmir produces a large number of graduates every year, many of them first-generation learners with high expectations and limited safety nets. The budget does not seriously engage with the mismatch between educational output and economic absorption. There is little discussion of how many jobs can realistically be created in the coming year, in which sectors, and at what wage levels. Without such clarity, employment policy risks becoming symbolic rather than substantive.
The emphasis on self-employment is particularly telling. Encouraging entrepreneurship in a constrained economy can easily turn into a way of shifting risk from the state to individuals. Not everyone can or should be an entrepreneur. In regions where market access is uncertain, credit is expensive, and demand is volatile, self-employment schemes often result in low-income, high-risk livelihoods rather than sustainable enterprises. The budget does not sufficiently acknowledge these constraints.
Welfare expenditure occupies a prominent place in the budget, and on humanitarian grounds, this is difficult to oppose. Free LPG cylinders for the poorest households, educational support for marginalised families, transport concessions, and assistance to orphans and the disabled provide real relief. These measures matter, especially in a region where economic shocks are frequent and social vulnerability is widespread.
But welfare, when examined as an economic instrument, raises questions of balance and linkage. Relief is necessary, but it does not substitute for opportunity. The budget expands welfare without clearly connecting it to productivity enhancement. There is little evidence of
a deliberate attempt to transition beneficiaries from long-term dependence to economic independence. Without such a pathway, welfare risks becoming a permanent fiscal obligation rather than a temporary support mechanism.
Infrastructure continues to be the centrepiece of capital expenditure. Roads, tunnels, power projects, urban infrastructure, and transport connectivity dominate the development narrative. These investments are necessary, but necessity should not be confused with sufficiency. Infrastructure creates potential; it does not automatically create outcomes. The budget allocates funds, but it does not convincingly explain how these assets will be leveraged to expand manufacturing, agro-processing, or export-oriented services.
The power sector is a case in point. Large sums continue to be invested, yet transmission losses, billing inefficiencies, and revenue leakage persist. The budget acknowledges these issues but does not treat them with fiscal urgency. As long as the power sector remains a net drain rather than a revenue-neutral service, it will continue to crowd out other developmental spending.
Agriculture and horticulture receive predictable attention, particularly through insurance schemes, cold storage, and logistical support. These interventions recognise climate risk and market volatility, but they do not amount to structural reform. Land fragmentation, limited processing capacity, weak cooperatives, and poor price realisation remain largely unaddressed. The result is an agricultural economy that survives but does not advance.
Tourism is again presented as a growth engine, and in good years it undoubtedly contributes to income and employment. But tourism is inherently volatile and highly sensitive to factors beyond fiscal control. A budget that relies on tourism for growth without simultaneously building shock-absorbing mechanisms exposes itself to revenue instability. There is insufficient diversification within the tourism strategy itself, and limited investment in linking tourism revenues to broader local supply chains.
Perhaps the most revealing aspect of the budget is its reform temperament. The document is careful, conservative, and incremental. Administrative efficiency is prioritised, and delivery mechanisms are streamlined. But deeper reforms-such as outcome-based budgeting, independent expenditure evaluation, or serious decentralisation of fiscal authority-remain peripheral. The focus is on spending better, not necessarily spending differently.
This is where the budget’s underlying philosophy becomes visible. It is designed to preserve order, maintain continuity, and avoid disruption. In doing so, it achieves a certain administrative competence. But economies facing structural challenges require more than competence; they require reallocation of risk, resources, and attention toward sectors that may not yield immediate political returns but are essential for long-term growth.
At this stage, the budget appears less like a blueprint for transformation and more like a document of management. It keeps the system functioning, absorbs pressures, and postpones
hard trade-offs. That may be understandable in the short run, but it also means that the same questions will return next year, with slightly larger numbers and slightly narrower margins.
When I move beyond the broad architecture of the budget and look at how it will actually play out over the next year, my concern is less about intent and more about outcomes. Budgets do not fail because governments mean badly; they fail because they misjudge capacity, overestimate multipliers, or underestimate structural drag. The Jammu and Kashmir budget shows all three risks in different measures.
Take capital expenditure, which is repeatedly projected as the engine of growth. The allocation of a little over 33,000 crore appears robust in isolation, but its impact depends on two things that the budget does not convincingly resolve: execution capacity and economic linkage. Over the past five years, J&K has consistently struggled to fully utilise capital allocations within the fiscal year, with spillovers becoming routine rather than exceptional. When projects are delayed, the economic stimulus expected from them weakens, while costs escalate. This erodes the very growth logic used to justify higher capital spending.
More importantly, the composition of capital expenditure remains heavily skewed towards traditional public works. Roads, buildings, and connectivity dominate, while investment in productive ecosystems remains marginal. Very little capital is directed toward industrial infrastructure such as common facility centres, testing labs, logistics hubs, or export facilitation. Without these, physical connectivity does not translate into economic mobility. Roads may reduce travel time, but they do not by themselves create markets.
The power sector illustrates this disconnect clearly. Despite continuous investment, transmission and distribution losses remain high, and revenue recovery remains weak. The budget acknowledges these inefficiencies but does not allocate resources in a way that signals urgency. There is no strong push toward prepaid metering at scale, tariff rationalisation linked to income support, or decentralised renewable solutions that could reduce long-term subsidy burdens. As a result, power continues to absorb public money without becoming financially self-sustaining.
Employment projections also deserve closer scrutiny. The budget avoids specifying job creation targets, relying instead on scheme-based interventions. From experience, these schemes tend to generate temporary engagements rather than stable employment. In a region where a large share of unemployed youth are graduates or postgraduates, such interventions are at best partial solutions. The budget does not seriously address the absence of mid-sized private employers – the kind that absorb labour in meaningful numbers. Without a clear plan to attract or nurture such enterprises, employment policy remains fragmented.
What troubles me is not the presence of welfare but its growing substitution for economic opportunity. Allocations for LPG, transport, education, and social assistance ease immediate burdens, but they do not change income trajectories. Over time, a budget that expands consumption support without expanding earning capacity risks normalising low expectations. People survive, but they do not advance.
Agriculture and horticulture, often described as the backbone of rural livelihoods, receive predictable but limited attention. Insurance schemes and cold storage support mitigate risk, but they do not address the deeper issues of scale, bargaining power, and value addition. Farmers remain price takers, dependent on external markets they cannot influence. The budget does not invest sufficiently in cooperative marketing, processing units, or branding strategies that could improve farm incomes sustainably.
Tourism continues to occupy a privileged position in the economic imagination of the budget. While tourist numbers are highlighted as a success indicator, there is little analysis of income distribution within the sector. Much of tourism revenue remains concentrated in transport, hotels, and intermediaries, with limited spillover to local producers. The budget does not meaningfully address this imbalance, nor does it prepare for downturns that are inevitable in a sector so exposed to external shocks.
Revenue mobilisation remains the quiet Achilles’ heel of the budget. Despite acknowledging weak own revenues, there is no serious attempt to broaden the tax base or improve non-tax income through rational pricing of services. User charges for utilities remain politically sensitive but economically necessary. Without gradual rationalisation paired with targeted subsidies, fiscal pressure will persist, and development spending will remain constrained.
From where I stand, this budget does not lack compassion or administrative order. What it lacks is economic boldness grounded in realism. It operates within a narrow corridor defined by existing structures, choosing to optimise within them rather than alter them. That choice explains its coherence and also its limitations.
For ordinary people, the impact will be mixed. Household costs may fall marginally. Access to services may improve incrementally. But the deeper anxieties – about stable jobs, upward mobility, and long-term security – remain largely unaddressed. The budget manages hardship better than it creates hope.
In sum, this budget is an exercise in containment rather than construction. It keeps pressures from boiling over, ensures continuity of services, and avoids fiscal recklessness. But it does not rewire the economic logic of Jammu and Kashmir. It stabilises a fragile equilibrium without changing its foundations. That, ultimately, is my assessment. Not dismissive, not alarmist – but grounded in numbers, structure, and lived reality. This is a budget that works to hold the present together. It does little to pull the future forward.
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