BREAKING NEWS
At present urban development of J&K largely depends upon central assistance because its capacity to raise revenue internally is limited. The Union Budget of 2025-26 provides Rs. 41,000.07 crore for J&K, out of which Rs. 40,619.30 crore is central assistance to bridge the resource gap. This assistance is essential for capital-intensive schemes like the Srinagar Metro lite outer ring road and smart city projects
Urban Development amidst Challenges
Urban development has been taking place at an unprecedented pace in Jammu and Kashmir (J&K) predominantly in an unplanned and haphazard manner. Though it is very crucial for driving economic growth, enhancing living standards, and addressing the region's unique challenges, including remoteness and poor connectivity. Despite that, our urban areas are ailing due to exacerbated planning and fiscal deficits. It is generating a complete mess in urban J&K with vivid urban problems particularly urban mobility, housing, waste management, environment degradation, sustainability, provision of services, amenities and facilities. With an estimated economic growth of 7.5% in 2024-25 and 9.5% in 2025-26, J&K can redesign its urban landscape through initiatives such as the Srinagar Smart City Mission and metro projects in Jammu and Srinagar. But funding projects like this and urban development depends significantly on district budgets, central funding, and state allocations, all of which suffer due to lower central funding and fiscal deficits. To ensure sustainability, it is essential to render urban institutions fiscally self-reliant in order to reduce the load on the treasury. Therefore, there is an undeniable need to explore and check how the funding mechanisms of J&K can fund futuristic urban development and carve a pathway to fiscal autonomy for ensuring and enhance long-term budgetary stability to urban development institutions.
Fiscal Limitations and Budgetary Dynamics
At present urban development of J&K largely depends upon central assistance because its capacity to raise revenue internally is limited. The Union Budget of 2025-26 provides Rs. 41,000.07 crore for J&K, out of which Rs. 40,619.30 crore is central assistance to bridge the resource gap. This assistance is essential for capital-intensive schemes like the Srinagar Metro lite outer ring road and smart city projects. In January 2025, an amount of Rs. 36.75 crore was disbursed for the Srinagar Smart City Mission. Historically, J&K has been disproportionately given the central grants, which accounted for 10% of all central grants to states during the period 2000 to 2016, even though it has only 1% of India's population. It was because it had the special category status and geopolitical significance. But the 2025-26 allocation indicates a cut of Rs. 1,000 crore from the Rs. 42,277 crore of 2024-25, which may translate into a real-term reduction of Rs. 2,000 - 3,000 crore if adjusted for inflation. The Kashmir Chamber of Commerce and Industry (KCCI) termed this cut as coming at the cost of the viability of grand urban projects and compelling the need to explore alternative funding models.
UT budgets also finance urban development. J&K's 2025-26 budget, laid down by Chief Minister Omar Abdullah, is Rs. 1.4 lakh crore with Rs. 2,761.74 crore allocated for the Housing and Urban Development department in the category of capital expenditure. This is an addition of Rs. 823.53 crore over the revised estimate in 2024-25. The budget is focused on new infrastructure, such as a new Legislative Complex in Jammu and water supply, sewerage, and public transportation improvement by the Atal Mission for Rejuvenation and Urban Transformation (AMRUT). New policy initiatives, such as abolishing stamp duty on gifts of property to blood relations and providing women free public transportation from April 2025, are proposed to enhance urban access and economic inclusion. In addition to these, J&K's finances continue to be weak, with estimated reductions in fiscal deficit contingent on the provision of a further Rs. 5,000 crore of central grants for 2024-25 and 2025-26. The cities and towns of the UT are upfront with low density spontaneous development, absence of organized commercial hubs, limited industrialization, poor industrial diversification, and missing circular economies which is restricting their capacity to finance the growing requirements of emerging urban development in time and space. Lack of innovative approaches or implementation of what is recommended as part urban reform or policy decision through master plans of urban development strategies is also a significant reason for failure to attain fiscal self-reliance till date when their counterparts in the rest of the country have made successful inroads in the matter.
District budgets, enhanced by centrally sponsored schemes such as AMRUT and the Smart Cities Mission are central to urban development. But they are bogged down by scarce local funds and bureaucratic resources. Even districts like Kulgam, Bandipur, and Ganderbal and others roll out these schemes, but state and central priorities are rarely coordinated with these generate a situation of dearth of urban development finance marring planned city and town shaping . Due to prolonged disturbance and political sensitive’s, huge security expenses e.g. Rs. 9,325.73 crore are spent on police in 2025-26 which bowdlerizes urban outlays and development requirements, underlines the greater necessity for rationalized and accustomed fiscal discipline. The 2015 Comptroller and Auditor General (CAG) audit report, shows glitches such as budget errors, unrealistic projections, and unused savings, which negatively obstructed efficient utilization of financial allocation. Environmental concerns, including deforestation and inadequate compensation for land for projects such as townships, urban infrastructure also add to the complexity in urban development and foretell delays and unrest.
Alternative Funding Model and Fiscal Reforms
Newfangled funding mechanisms, such as municipal bonds, need to be experimented for promotion of urban infrastructure development, with state or central guarantees to convince investors’ confidence, corresponding to city practices in vogue in Ahmedabad. Green financing for clean projects can merge with environmental requirements, assisting in reducing the potential damage of large-scale ventures. The weak economic asset base often is the reason for slender revenue base. The administrative issues, and risk of public resistance to new taxes or charges will have to be reshaped and reinvigorated with great care. Public consciousness-raising efforts and open governance can establish public confidence and approval for revenue reforms. Geopolitical considerations, demanding heavy security outlays, yet again highlight the necessity for fiscal autonomy to realign funds towards urban development. Yet challenges may persist but in due course of time efforts are bound to infuse the economic growth momentum and lead to the enhancement of resource recovery of ULBs to enable these to find a route to fiscal self –reliance and take care of the emerging needs of urban development, making growth sustainable in the process.
Way Out for Future
J&K's urban development can be maintained by integrating central assistance, state finances, and district funds, but fiscal autonomy is vital for long-term success and infuse financial vigour and viability. The Rs. 1.4 lakh crore 2025-26 state budget, with a priority for urban investment and substantial central assistance, provides a good foundation. However, reduced central financing, fiscal inefficiencies, and environmental issues pose coercions. Through imposition of user fees, effective utilization of PPPs, utilization of local and unused economic assets, increased capacity building for ULBs, and innovative financing, J&K can ease the burden on the exchequer and spur urban development. Collective action by central, state, and local governments along with proactive participation of stakeholders substantiated by a special revival package as the KCCI has recommended, will be essentially enable to address infrastructure deficiencies and redefine urban J&K landscape. Financial independence would not only also guarantee viability but also equips city institutions to address the region's unique demands, producing future-proof inclusive and resilient cities and towns and also disseminate benefits of development to rural area to infuse growth momentum with a circular economic and development benefits Fiscal self-reliance will not only ensure sustainability yet challenges may persist but in due course of time efforts would infuse a momentum to resource recovery of ULBs and these may find a route to fiscal self -reliance. but also empower urban institutions to meet the region’s specific needs, creating inclusive and resilient cities/towns for the future.
Despite central assistance aid/grants, central sponsored schemes, state budgetary allocation, district grants and urban development sector funds, grants and aids which form the basis for channelizing the urbanization, however, long-term urban sustainability remains a gray area. It would continue and remain undefined and ambiguous unless the urban agencies/institutions have complete financial autonomy. Financing large galaxy of urban local bodies (ULBs), like municipal corporations in Srinagar and Jammu, municipal councils, and municipal committees, is vital to minimize the tax burden on the exchequer. This approach can empower to eliminate the risk of unpredictable central fiscal outlays and ensure continuous and sustained funding of urban infrastructure and urban development. Today, J&K's ULBs have high reliance on external allocations owing to local economic constraints, but tactical reforms need to be introduced to upsurge their financial self –reliance and autonomy.
One such worthwhile policy which unavoidably needs to be effected is optimizing the revenue generation through user charges. ULBs can implement metered water supply systems, waste management charges, and public transport fares to recover costs while motivating resource savings. Reforms in the property tax, by taking advantage of the zero stamp duty regime, could widen the tax base by inducing property registration. Public-private partnerships (PPPs) has been almost a non-starter in J&K despite its advantages of recompensing the fiscal burden for urban development and provide a viable alternative to reduce the cost of capital on projects such as metro systems or smart cities and other mega urban development projects without diluting operating efficiency. The best practice PPP models, such as the Delhi Metro, can be adapted to J&K, particularly for tourist-related infrastructure in Srinagar, generating revenues through licensing fees or local business taxes. Greater focus on J&K's economic strengths, including tourism and horticulture, is the way forward to attaining fiscal independence. City markets or tourism hubs in urban areas such as Srinagar and tourist towns can fetch substantial revenue through local taxation and remunerative schemes. Boosting employability in small industries, facilitating initiatives such as self-employment scheme, start-ups, etc. can eliminate urban unemployment and fulminate resource recovery and tax returns. Strengthening ULB functionality through training and budgetary and collection tools in the digital space is essential to correct historical fiscal mismanagement. Granting fiscal authority to ULBs may assist in aligning the revenue policies, such as tourism-oriented programs or trade-oriented programs and other aspects based on the potentialities and resource availability each administrative unit possesses.
Email:--------------------------------- hamwani24@gmail.com
At present urban development of J&K largely depends upon central assistance because its capacity to raise revenue internally is limited. The Union Budget of 2025-26 provides Rs. 41,000.07 crore for J&K, out of which Rs. 40,619.30 crore is central assistance to bridge the resource gap. This assistance is essential for capital-intensive schemes like the Srinagar Metro lite outer ring road and smart city projects
Urban Development amidst Challenges
Urban development has been taking place at an unprecedented pace in Jammu and Kashmir (J&K) predominantly in an unplanned and haphazard manner. Though it is very crucial for driving economic growth, enhancing living standards, and addressing the region's unique challenges, including remoteness and poor connectivity. Despite that, our urban areas are ailing due to exacerbated planning and fiscal deficits. It is generating a complete mess in urban J&K with vivid urban problems particularly urban mobility, housing, waste management, environment degradation, sustainability, provision of services, amenities and facilities. With an estimated economic growth of 7.5% in 2024-25 and 9.5% in 2025-26, J&K can redesign its urban landscape through initiatives such as the Srinagar Smart City Mission and metro projects in Jammu and Srinagar. But funding projects like this and urban development depends significantly on district budgets, central funding, and state allocations, all of which suffer due to lower central funding and fiscal deficits. To ensure sustainability, it is essential to render urban institutions fiscally self-reliant in order to reduce the load on the treasury. Therefore, there is an undeniable need to explore and check how the funding mechanisms of J&K can fund futuristic urban development and carve a pathway to fiscal autonomy for ensuring and enhance long-term budgetary stability to urban development institutions.
Fiscal Limitations and Budgetary Dynamics
At present urban development of J&K largely depends upon central assistance because its capacity to raise revenue internally is limited. The Union Budget of 2025-26 provides Rs. 41,000.07 crore for J&K, out of which Rs. 40,619.30 crore is central assistance to bridge the resource gap. This assistance is essential for capital-intensive schemes like the Srinagar Metro lite outer ring road and smart city projects. In January 2025, an amount of Rs. 36.75 crore was disbursed for the Srinagar Smart City Mission. Historically, J&K has been disproportionately given the central grants, which accounted for 10% of all central grants to states during the period 2000 to 2016, even though it has only 1% of India's population. It was because it had the special category status and geopolitical significance. But the 2025-26 allocation indicates a cut of Rs. 1,000 crore from the Rs. 42,277 crore of 2024-25, which may translate into a real-term reduction of Rs. 2,000 - 3,000 crore if adjusted for inflation. The Kashmir Chamber of Commerce and Industry (KCCI) termed this cut as coming at the cost of the viability of grand urban projects and compelling the need to explore alternative funding models.
UT budgets also finance urban development. J&K's 2025-26 budget, laid down by Chief Minister Omar Abdullah, is Rs. 1.4 lakh crore with Rs. 2,761.74 crore allocated for the Housing and Urban Development department in the category of capital expenditure. This is an addition of Rs. 823.53 crore over the revised estimate in 2024-25. The budget is focused on new infrastructure, such as a new Legislative Complex in Jammu and water supply, sewerage, and public transportation improvement by the Atal Mission for Rejuvenation and Urban Transformation (AMRUT). New policy initiatives, such as abolishing stamp duty on gifts of property to blood relations and providing women free public transportation from April 2025, are proposed to enhance urban access and economic inclusion. In addition to these, J&K's finances continue to be weak, with estimated reductions in fiscal deficit contingent on the provision of a further Rs. 5,000 crore of central grants for 2024-25 and 2025-26. The cities and towns of the UT are upfront with low density spontaneous development, absence of organized commercial hubs, limited industrialization, poor industrial diversification, and missing circular economies which is restricting their capacity to finance the growing requirements of emerging urban development in time and space. Lack of innovative approaches or implementation of what is recommended as part urban reform or policy decision through master plans of urban development strategies is also a significant reason for failure to attain fiscal self-reliance till date when their counterparts in the rest of the country have made successful inroads in the matter.
District budgets, enhanced by centrally sponsored schemes such as AMRUT and the Smart Cities Mission are central to urban development. But they are bogged down by scarce local funds and bureaucratic resources. Even districts like Kulgam, Bandipur, and Ganderbal and others roll out these schemes, but state and central priorities are rarely coordinated with these generate a situation of dearth of urban development finance marring planned city and town shaping . Due to prolonged disturbance and political sensitive’s, huge security expenses e.g. Rs. 9,325.73 crore are spent on police in 2025-26 which bowdlerizes urban outlays and development requirements, underlines the greater necessity for rationalized and accustomed fiscal discipline. The 2015 Comptroller and Auditor General (CAG) audit report, shows glitches such as budget errors, unrealistic projections, and unused savings, which negatively obstructed efficient utilization of financial allocation. Environmental concerns, including deforestation and inadequate compensation for land for projects such as townships, urban infrastructure also add to the complexity in urban development and foretell delays and unrest.
Alternative Funding Model and Fiscal Reforms
Newfangled funding mechanisms, such as municipal bonds, need to be experimented for promotion of urban infrastructure development, with state or central guarantees to convince investors’ confidence, corresponding to city practices in vogue in Ahmedabad. Green financing for clean projects can merge with environmental requirements, assisting in reducing the potential damage of large-scale ventures. The weak economic asset base often is the reason for slender revenue base. The administrative issues, and risk of public resistance to new taxes or charges will have to be reshaped and reinvigorated with great care. Public consciousness-raising efforts and open governance can establish public confidence and approval for revenue reforms. Geopolitical considerations, demanding heavy security outlays, yet again highlight the necessity for fiscal autonomy to realign funds towards urban development. Yet challenges may persist but in due course of time efforts are bound to infuse the economic growth momentum and lead to the enhancement of resource recovery of ULBs to enable these to find a route to fiscal self –reliance and take care of the emerging needs of urban development, making growth sustainable in the process.
Way Out for Future
J&K's urban development can be maintained by integrating central assistance, state finances, and district funds, but fiscal autonomy is vital for long-term success and infuse financial vigour and viability. The Rs. 1.4 lakh crore 2025-26 state budget, with a priority for urban investment and substantial central assistance, provides a good foundation. However, reduced central financing, fiscal inefficiencies, and environmental issues pose coercions. Through imposition of user fees, effective utilization of PPPs, utilization of local and unused economic assets, increased capacity building for ULBs, and innovative financing, J&K can ease the burden on the exchequer and spur urban development. Collective action by central, state, and local governments along with proactive participation of stakeholders substantiated by a special revival package as the KCCI has recommended, will be essentially enable to address infrastructure deficiencies and redefine urban J&K landscape. Financial independence would not only also guarantee viability but also equips city institutions to address the region's unique demands, producing future-proof inclusive and resilient cities and towns and also disseminate benefits of development to rural area to infuse growth momentum with a circular economic and development benefits Fiscal self-reliance will not only ensure sustainability yet challenges may persist but in due course of time efforts would infuse a momentum to resource recovery of ULBs and these may find a route to fiscal self -reliance. but also empower urban institutions to meet the region’s specific needs, creating inclusive and resilient cities/towns for the future.
Despite central assistance aid/grants, central sponsored schemes, state budgetary allocation, district grants and urban development sector funds, grants and aids which form the basis for channelizing the urbanization, however, long-term urban sustainability remains a gray area. It would continue and remain undefined and ambiguous unless the urban agencies/institutions have complete financial autonomy. Financing large galaxy of urban local bodies (ULBs), like municipal corporations in Srinagar and Jammu, municipal councils, and municipal committees, is vital to minimize the tax burden on the exchequer. This approach can empower to eliminate the risk of unpredictable central fiscal outlays and ensure continuous and sustained funding of urban infrastructure and urban development. Today, J&K's ULBs have high reliance on external allocations owing to local economic constraints, but tactical reforms need to be introduced to upsurge their financial self –reliance and autonomy.
One such worthwhile policy which unavoidably needs to be effected is optimizing the revenue generation through user charges. ULBs can implement metered water supply systems, waste management charges, and public transport fares to recover costs while motivating resource savings. Reforms in the property tax, by taking advantage of the zero stamp duty regime, could widen the tax base by inducing property registration. Public-private partnerships (PPPs) has been almost a non-starter in J&K despite its advantages of recompensing the fiscal burden for urban development and provide a viable alternative to reduce the cost of capital on projects such as metro systems or smart cities and other mega urban development projects without diluting operating efficiency. The best practice PPP models, such as the Delhi Metro, can be adapted to J&K, particularly for tourist-related infrastructure in Srinagar, generating revenues through licensing fees or local business taxes. Greater focus on J&K's economic strengths, including tourism and horticulture, is the way forward to attaining fiscal independence. City markets or tourism hubs in urban areas such as Srinagar and tourist towns can fetch substantial revenue through local taxation and remunerative schemes. Boosting employability in small industries, facilitating initiatives such as self-employment scheme, start-ups, etc. can eliminate urban unemployment and fulminate resource recovery and tax returns. Strengthening ULB functionality through training and budgetary and collection tools in the digital space is essential to correct historical fiscal mismanagement. Granting fiscal authority to ULBs may assist in aligning the revenue policies, such as tourism-oriented programs or trade-oriented programs and other aspects based on the potentialities and resource availability each administrative unit possesses.
Email:--------------------------------- hamwani24@gmail.com
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