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The Economics of the Kashmir Conflict

By Bilal Hussain

Frequent shutdowns [curfews and protests] are tarnishing the economy of Indian-held Kashmir, a fact that is undeniable. While, it is very plausible that normalcy paves way for economic expansion, in Kashmir ‘normalcy’ acts but as a gizmo for economic captivity of the state. However, the state government and its overlords in New Delhi, use the ‘economic losses’ argument that the unrest in Kashmir leads to, as a ploy to subdue the popular sentiment of azaadi among the Kashmiri people. In this article, I attempt to explain how ‘normalcy’ is no different to ‘unrest’ when it comes to India’s economic colonialism of Kashmir since 1947.

A brief

Since June 2008, Kashmir has witnessed four cycles of unrest – Amarnath land row, Shopian rape and murder case, 2010’s summer turmoil and the recent 2016 uprising. Like previously, ‘normalcy’ in the Kashmir valley did not last long as the 2016 uprising conformed yet again, with the killing of Burhan Wani — a popular commander of Hizbul Mujahideen — by the Indian forces, and the cycle of violence that followed it. The state imposed curfew in Kashmir, consecutively for 53 days, and while it was lifted on 31 August 2016, it was re-imposed in some areas the very next day. Let us now examine the economic modalities of this ‘unrest’ period

The ‘unrest’ in its economy

The government projected that “the losses caused due to the unrest are estimated at more than INR 16,000 crore over a period of 5 months from 8th July 2016 to 30th November, 2016…The cost of security related expenditure is over and above the losses in the J&K State.” Similarly in 2010 the government had claimed that “the state loses INR 21,000 crores in 85 days and government suffers INR 161 crores daily loss on account of taxes and other levies.” In 2013, with 26 days of curfew in the valley following the hanging of Afzal Guru in February, the tourism industry had pegged the loss at an estimated INR 4,500 crore.

This time around in 2016, the state has brought down the loss figure from INR 21,000 crore in 85 days in 2010 to INR 16,000 crore for almost 150 days to avoid humiliations which it had to faced previously on this count: ‘Conflict In Economy: The Other Perspective’. This year the state has been careful while computing these economic losses. By its admission Kashmiris lost INR 8,000 crore on account of the 2016 uprising.

It is pertinent to mention here that J&K is a consumer state and any disturbance in the region economically hurts many Indian states more than J&K itself. The poultry farmers in Punjab were severely hit by the continuing unrest in the Kashmir valley, hampering imports of their products to the state. In one of my detailed write-up, I analyzed that in 2010 poultry traders in Punjab supplied over half a million eggs and 40,000 to 50,000 chickens per day to meet the demand within J&K. These supplies cost nearly 50 million rupees per day. Nearly 90 per cent of the poultry farmers of the border belt of the Punjab are dependent on the supply to J&K, as there is huge demand of poultry products throughout the year in the state.

Also, Kashmir is among the biggest mutton consumers in the subcontinent. Estimates put the quantum of annual imports of mutton, milk and poultry to INR 160000 million. About 5000 sheep and goats are consumed daily in the valley, while the annual figures of the quantity of mutton consumed in the valley, including Ladakh, is at 34.032 million Kilograms. Of these, 21.0 million kilograms are imported from various Indian states while the remaining 1303.2 million kilograms come from the local market. It is high time to take several measures to discourage the imports and at the same time to increase production locally so as to achieve self-sufficiency in the state.

What does ‘normalcy’ mean (in Kashmir)?

Let us now analyze the economic potential of the state in otherwise ‘normal’ times. Of the estimated hydropower potential of 20,000 MWs (Mega Watts) in the state, about 16475 MWs have been identified. This comprises 11283 MWs in Chenab basin, 3084 MWs in Jhelum basin 500 MWs in Ravi Basin and 1608 MWs in Indus basin. Out of the identified potential, only 3263.46 MWs i.e. 20 per cent (of identified potential) has been exploited until now which comprises 1211.96 MWs in State sector, 2009 MWs in Central sector, and 42.5 MWs in Private sector. The demand of power in J&K state, as per the 16th Power Survey conducted by Ministry of Energy, Government of India is around 2120 MWs. This amply shows how during ‘normalcy’ the J&K’s resources are being exploited by ‘outsiders’, read: Center, which otherwise could have pivoted way for the economic development of the state.

The ‘economic captivity’ doesn’t stop here. The government is shelving huge sums on the ‘infrastructure development’ of the state by contracting works to outsiders on daily basis, which obviously provides benefits more to outsiders rather than the local Kashmiris.

The economic subjugation continues in various forms and in 2011 the agreement between the Jammu and Kashmir government and Reserve Bank of India left the state virtually on the mercy of the Central Bank of India. The state now would have to frequently go to New Delhi with a begging bowl for petty finances as well. While, the earlier system was a unique route available to the J&K government, the equation has changed now, making J&K more than ever dependent on New Delhi on the economic front.

A last thought

Is it unrest or is it normalcy that is jeopardizing J&K’s economy? The normalcy cost it appears is equally heavy on Kashmir’s economy, and thus equally merits a detailed cost benefit analysis. Normalcy is but a façade in Kashmir that does not change anything on ground, but only perpetuates the Indian control over the region in multiple ways, be it economic or otherwise.

Photo: Bilal Bahadur

Bilal Hussain is a freelancer and writer based in Middle East. His principal interests are conflict economy, developmental sector, and ecological economics. The author can be reached at


For more stories, read Café Dissensus Everyday, the blog of Café Dissensus Magazine.

3 Comments Post a comment
  1. Nissar Ahmad #


    February 21, 2017
  2. Tariq #

    Very insightful article and well written as well.
    More power to you.

    February 21, 2017
  3. Nazim #

    A detailed account and well-researched article.

    November 7, 2018

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