While contributing 0.77% to India’s GDP, Jammu & Kashmir grapples with the highest unemployment rate in the country, prompting urgent calls for transformative economic policies and youth engagement.
J&K’s economy ranks 21st in India in terms of its contribution to the country’s GDP, contributing 0.77% to it. The economy of this UT has shown resilience to shocks, having a history of experiencing disruptions, whether in the form of strikes, lockdowns, or even, currently, staggering unemployment. The UT has witnessed a structural transformation in terms of sectoral composition. The share of agriculture in J&K’s GDP shrank from 18.4% in FY21 to 16.9% in FY23, as did the share of industry, although only marginally, from 20% to 19.5%. The services sector, which includes tourism, made up for these decreases, growing from 61.6% to 63.6%.
The UT of J&K is currently facing a major challenge in the form of the highest unemployment rate in the country. The unemployment rate in October 2024 stands at 23.9%, while for youth it is 32%, and for females, it is even more staggering at 53%. The worst part is that unemployment keeps increasing with the level of education, with educated unemployment standing much higher than overall unemployment. This actually means that being educated decreases one’s chances of being employed. The effects are felt everywhere in the UT, including rising drug addiction, increased crime rates, PhD scholars stepping into street-side businesses, and a sharp decline in participation rates in education, with a fall in admissions to educational institutions, especially in the colleges of the UT.
The gravity of the situation can be understood from the fact that every year, on average, hundreds of PhDs apply for contractual teaching positions in various fields. For example, in 2024, 200 PhDs in economics applied for contractual teaching posts, which are meant for only a few months at substantially low wages. Similarly, in 2022, 97,793 candidates took the J&K Service Selection Board (JKSSB) exam for 1,200 sub-inspector positions, which were later cancelled.
A person with little insight into this phenomenon would understand how it would affect the future generations of the UT, especially when they are witnessing a PhD scholar selling street food and struggling to earn a livelihood. Scenes like these are among the main causes of the decline in admissions to educational institutions in the UT. It is obvious why a student would hesitate to join any educational institution when they know that being educated decreases the chances of earning an average livelihood. The situation looks even grimmer, especially considering the fact that these negatives reinforce each other, with unemployment leading to a fall in labour force participation rates, GSDP, literacy rates, and increasing drug addiction, which, in turn, drives crime rates up.
Unemployment acts as a multi-edged sword. On the one hand, it leads to the loss of output that could have been produced if the unemployed labour force had been gainfully employed. On the other side, it leads to a fall in labour force participation rates and contributes to the negative outcomes mentioned earlier. These costs of unemployment are undesirable, especially at a time when the northern states of the country are at the peak of the demographic dividend stage, with falling fertility rates and an increasing working-age population. The costs of this higher unemployment rate during the demographic dividend stage are felt not only in the present, where it dampens GSDP but also in the future, when the UT will have to bear the costs in the form of a higher dependency ratio, with a smaller portion of the population working and a larger portion dependent. This makes the situation even more dangerous, where this demographic opportunity could turn into a demographic disaster for the UT in particular and the country in general.
Though there are claims regarding the achievements of the UT, such as a compounded annual growth rate (CAGR) of 5.7% from 2014-15 to 2021-22, which exceeded the national average of 5.1% and demonstrated a remarkable upward trend, the actual materialization of these efforts remains questionable. The New Industrial Policy, which came into being in January 2021, has led to proposals worth Rs 84,544 crore in as many as 42 industrial sectors. Additionally, a report suggests that J&K realized investments worth Rs 2,153.45 crore during the financial year 2022-23, the highest compared to any financial year over the last decade. Similarly, in the first six months of the current financial year, the UT realized investments worth Rs 1,752.1 crore. Also, the makers of Burj Khalifa marked their formal entry into J&K by performing the groundbreaking ceremony for the first foreign direct investment in the UT—a shopping mall and a multipurpose tower on the outskirts of the summer capital, Srinagar.
But the question still remains: Are these efforts and initiatives materializing? The answer seems to be a big “no.” The UT has the highest unemployment rate in the country, with its most fertile section, the educated youth of working age, living in a state of despair and hopelessness. Efforts must be made by both the UT government and the central government to step in. Since the problem originates from the economic side, efforts should be focused there. Steps may include filling the vacancies lying vacant in various departments of the state, providing finance and training to youth for setting up businesses, offering incentives to private investors to establish businesses in the UT, and ensuring that the cream of the UT—highly qualified youth—is gainfully engaged. Considering the availability of resources in the UT, both physical and human, a Keynesian policy of “dig the holes and fill them up” wouldn’t be a bad choice.
Aamir Ahmad Teeli is a Doctoral Fellow at the Central University of Tamil Nadu. Dr Firdous Ahmad Malik is an Assistant Professor of Economics University of People Pasadena California, United States
By Aamir Ahmad Teeli (im*************@****il.com)
Dr Firdous Ahmad Malik (ma*************@***il.com)