There was a mixed response in Jammu and Kashmir to the Rs.41, 000.07 crore budget proposed for it for FY 2025-26.
While people, especially the middle class, welcomed the Centre’s decision to provide income tax exemption up to Rs.12 lakh, there was widespread disappointment expressed over the drop in central government assistance for the UT.
Compared to the FY 2025-26 allocation, J&K was allocated Rs.42, 277 crore in FY 2024-25 and Rs.41, 604 crore in FY 2023-24.
This year’s budget allocation is the first for an elected government in J&K after a gap of six years.
By and large, traders and local chambers of commerce and industry reacted positively to the proposals, particularly with regard to initiatives like relief on taxes, greater support for micro, small and medium enterprises (MSME), customs duty exemption on 36 life- saving drugs, etc.
However, they suggested that more could have been done for the tourism and hospitality sector, a key driver of the J&K economy. A special mention was made about the need to project J&K as a medical tourism destination and for J&K be included in the list of top 50 tourist destinations earmarked for development.
Concern, however, was voiced over the absence of a special economic package for local industry, which requires a boost.
The Kashmir Trade Alliance (KTA) said allowing taxpayers to retain a substantial part of their hard-earned income is a welcome step.
Kashmir Chamber of Commerce & Industry (KCC&I), President Javid Tenga, however, said that KCC&I was hoping for a budget increase of at least 20–25 per cent instead of a dip of Rs.1,200 crore in budget 2025-26 as compared to the budget allocation for 2024-25.
He said, “This reduction raises serious concerns about how development (in J&K) will take place…”
Tenga, however, was happy with the doubling of the Credit Guarantee Fund (CGF) for MSMEs from Rs.5 crore to Rs.10 crore and the enhancement of the Prime Minister’s Mudra Scheme from Rs.10 lakh to Rs.20 lakh.
Young entrepreneurs stood to benefit from this, he said, adding that the high unemployment rate in J&K could come down as well.
The KCC&I president also expressed the hope that at least eight to ten tourism destinations in J&K would be included in the central government’s plan to develop 50 new destinations.
The KCCI said there are “several commendable initiatives” in the 2025-26 budget that promise to enhance economic activity in Jammu and Kashmir, and added that these are “steps in the right direction.”
The Federation of Chambers of Industries Kashmir (FCIK) said Budget 2025-26 has the potential for reducing unemployment and strengthening the demand-supply chain ecosystem.
It said the initiatives proposed for the manufacturing sector would go a long way in realising the vision for a “National Manufacturing Mission” to support sector-specific industries of all sizes.
“Recognising MSMEs as the second engine for economic growth and as a cornerstone of the Indian economy, with specific provisions to enhance their scalability, technological up-gradation and access to capital,” is a welcome development, said Shahid Kamili, head of the FCIK Advisory Committee.
MSMEs contribute 30 percent to India’s GDP, nearly 45 per cent of exports and give jobs to around 80 million Indians.
The KCC&I also welcomed the announcement of a new scheme that targets five lakh first-time entrepreneurs, with a special focus on women, Scheduled Castes (SCs) and Scheduled Tribes (STs).
Giving term loans of up to Rs.2 crore over the next five years would empower many to launch independent ventures, foster innovation and encourage economic diversification, it said.
The Centre’s move to develop Agri Districts under the Prime Minister Dhan-Dhaanya Krishi Yojana (PMDDKY), it said would benefit about 1.7 crore farmers.
Kashmiris also welcomed the plan to provide broadband to all government secondary schools and primary healthcare centers.
The announcement of six new schemes and an increased Kisan Credit Card (KCC) loan limit to ₹7 lakh is a big boost for farmers across India, including J&K. However, J&K farmers also need a strong crop insurance scheme to protect them from losses caused by adverse weather conditions.
Out of the Rs.41, 000.07 crore allotted to J&K, Rs.40, 619.30 crore will be in the form of central assistance to bridge the resource gap in the UT.
Around ₹279 crore is to be allocated as contribution to the Union Territory Disaster Response Fund (UTDRF) and Rs.101.77 crore is for funding of infrastructure projects.
This year, the Centre has also allocated Rs.9,325 crore to the J&K Police, Rs.8,897.72 crore for revenue expenditure and Rs.428.01 crore for capital expenditure.
It is proposed that the UT of Ladakh will get Rs.4,692.15 crore, which will be divided almost equally as revenue and capital expenditure.
Opposition J&K parties have predictably expressed disappointment over the budget proposals, saying most of the region’s demands have not been met.
J&K Peoples Conference chief Sajad Lone said, “The proposed allocation to J&K is approximately 1,000 crore less than the previous allocation.”