The recently reported fiscal data on Jammu and Kashmir’s budget for 2026-27 highlights a persistent structural dilemma. A substantial share of public expenditure is absorbed by salaries, pensions, interest payments and power purchases. Together, these non-discretionary expenditures consume the bulk of the region’s financial resources, leaving limited fiscal space for development-oriented spending. This pattern reflects not merely a financial imbalance but a deeper governance and political economy challenge that has long constrained Kashmir’s developmental trajectory.

At the heart of this problem lies what can be described as a budgetary trap—a cycle in which recurring obligations crowd out productive investments, perpetuating economic stagnation and public dissatisfaction. Salaries and pensions are essential commitments in any democratic administration, ensuring livelihoods and social security for government employees and retirees. Interest payments are unavoidable consequences of past borrowing, while power purchases are critical for sustaining economic and domestic activity. However, when these expenditures dominate the fiscal structure, they reduce the government’s capacity to invest in infrastructure, education, health, innovation and employment generation.
This fiscal pattern is not unique to Jammu and Kashmir, but its implications are particularly acute in a region marked by political instability, security concerns and economic vulnerability. Development spending in conflict-affected or politically sensitive regions carries both symbolic and material significance. It signals state commitment, fosters public trust and creates opportunities that can mitigate alienation. When development remains underfunded, the state’s legitimacy risks being questioned, and public frustration deepens.
The dominance of revenue expenditure over capital expenditure reflects what economists often call consumption-oriented governance. Governments trapped in such fiscal structures struggle to shift from maintenance mode to transformation mode. In Kashmir, decades of administrative centralization, security-driven priorities and bureaucratic expansion have contributed to a large government workforce and mounting pension liabilities. While public sector employment has historically served as a tool of social stability and political accommodation, its fiscal sustainability is increasingly questionable.
Moreover, the rising burden of debt servicing indicates limited fiscal autonomy. Interest payments represent past borrowing decisions that now constrain present choices. When a significant portion of the budget is allocated to servicing debt, the government effectively finances its past rather than investing in its future. This creates an intergenerational equity problem, where future citizens bear the costs of today’s fiscal rigidity without enjoying commensurate developmental benefits.
Power purchase costs further illustrate structural inefficiencies. Despite being a region with significant hydroelectric potential, Jammu and Kashmir remains dependent on purchased power. This paradox points to governance deficits, delayed infrastructure projects and policy inconsistencies that prevent the region from harnessing its natural resources effectively. Reducing power purchase dependence through local generation could free substantial fiscal resources for development.
The broader implication of this budgetary structure is the political economy of expectations. Citizens often judge governments not by fiscal prudence but by visible development outcomes—roads, schools, hospitals, jobs and digital connectivity. When budgets fail to deliver tangible improvements, democratic disillusionment intensifies. In Kashmir, where political trust is already fragile, fiscal constraints risk reinforcing narratives of neglect and marginalization.
However, escaping this budgetary trap requires more than technocratic reforms. It demands political will, institutional restructuring and a reimagining of governance priorities. Fiscal reforms must focus on rationalizing public expenditure, modernizing the pension system, improving tax collection and enhancing the efficiency of public enterprises. Simultaneously, investments in human capital, infrastructure and innovation must be prioritized to stimulate economic growth and expand the revenue base.
Decentralization and local governance can also play a critical role. Empowering local bodies to manage development projects can improve accountability and ensure that public spending aligns with community needs. Transparent budgeting, public participation and data-driven policymaking can strengthen democratic oversight and restore public confidence.
Ultimately, Jammu and Kashmir’s budgetary challenge is not merely a financial issue but a governance dilemma. A budget dominated by recurring expenditures reflects a state caught between maintaining stability and pursuing transformation. While stability is essential, it cannot substitute for development. Without strategic investments in the future, fiscal stability becomes stagnation.
As policymakers deliberate on fiscal priorities, the central question remains: Can Kashmir shift from sustaining the present to investing in the future? The answer will determine not only the region’s economic trajectory but also the credibility of its democratic and administrative institutions.

Email:--------------------aarif.e12287@cumail.in