1. Terrorism as a hindrance to economic development in Jammu and Kashmir
(J&K)
Before the inception of terrorism in 1989, the economy of Jammu and Kashmir (J&K) was
primarily based on agriculture. A diminutive role was played by industry in the economic
development and the services sector was dominated by the tourism. J&K is known as, “Paradise
on Earth” because of its unmatchable picturesque beauty, eye-catching landscapes, is among the
most important tourist destinations of the world. J&K is to the Himalayas what Switzerland is to
the Alps. It is also called as the, “Switzerland of East”. J&K consists of three regions viz.
Jammu, Kashmir and Ladakh. All these regions are well known for tourism potential all around
the world. Jammu, also known as, “City Of Temples” is an important destination for pilgrimage
tourism. Some of the famous pilgrimage Sites located here are Vaishno Devi Temple, Raghunath
Temple, and Bahu Fort which attract tourists from across the world. Kashmir, known for its
enormous natural beauty and landscape, pleasant weather and rich heritage has been one of the
most preferred tourist destinations for over centuries now. Tourism is identified as the engine of
growth and Development of Jammu and Kashmir economy in general and Kashmir valley in
particular. The development of tourist industry can have a significant impact on the overall
growth of the state, because of its ability to create direct and indirect employment, as well as
growth in allied industries. But, with the inception of militant activities in the state from 1989
onwards, there was hardly any sector to talk of and that was a colossal setback to J&K economy.
History bears witness to the fact that whenever and wherever militancy or political movement
found roots, the economy of that region became a major casualty (Novita Singh, 2010).
Terrorism, conflict and instability in Jammu and Kashmir have been a major hindrance to its
development and progress levels. In J&K, due to terrorism, there is hardly any industrial sector
to talk of (except few areas of Jammu region); the agricultural sector, though a predominant
source of income and livelihood, fails to provide food security to the complete populace of the
Valley. It is the tourism industry that fills this vacuum. It is no surprise that the tourism industry
was given special status with a view to generate round the year activity. A special outlay of Rs.
22.06 crores was made available during the seventh plan period with which important schemes
like Gulmarg cable car and development of wayside facilities were taken up. The result was that
the tourist inflow made considerable upward movement in mid-eighties of the last century. In
1987, the last big season before the violence started, tourism accounted for approximately 10%
of the state's income. However, with the advent of terrorism in the State from 1989 onwards the
tourist trade completely collapsed. For example, tourist arrival was remarkable 7.2 lakh in 1988
but saw a drastic dip in 1991 when it was a negligible 6287. Violent protests, social unrest,
terrorist actions, the perceived violations of human rights, or even the mere threat of these
activities can all serve to cause tourists to alter their travel behavior. There are two things that are
pre-requisite for tourists to visit a particular place and that is- 1) Perceptions of political stability
and 2) Safety.

2. The effects from political instability such as armed attacks, bombings, attacks on tourists, wars,
change in government, which will daunt or impede the image of the destination through media
reporting and government policies and even word of mouth reporting. The valley of Kashmir has
been inundated in a vicious situation since 1989, which has jeopardized the sustainability of
tourism industry. The political instability in turn has greatly altered the direction, flow, pattern
and volume of tourists to the destination. By 1991 there was a virtual shut down of tourism
sector, which impacted the economy of the entire state and oozed down to every household.
Tourism and its related sectors were pummeled causing not only the creation of a negative
Kashmir image but also loss of livelihood to those dependent on it-directly or indirectly.
The handicraft industry occupies a significant position and is imperative to the economy of J&K
as it provides employment to more than 3 lakh people. It is profoundly reliant on tourism for its
survival because this sector is linked to the tourist influx. Tourists often purchase the world
famous Kashmiri carpets, shawls and crewel embroidery. Besides, paper machine items, wooden
art-ware and Kashmiri rugs have also been fancied by tourists who love to take them home as
souvenirs. However, post 1989, the performance of this sector is also plummeted. The value of
production has declined from Rs.154 crores in 1988-98 to Rs.150 crores in 1989-90. There has
been a delicate downward trend in the production of handicrafts since militancy gained
momentum. The production of handicraft sector has not flourished during this period.
Afterwards, that the production of handicrafts shows an increasing trend up to the period of
2008. However, after the mayhem resurfaced during 2008 to 2010, the production of handicrafts
has decreased drastically i.e. from Rs. 1614.59 crores to Rs. 325 crores only. Coupled with allied
sectors, the losses estimated by the tourism industry for 2010 were a monstrous ten billion
rupees. Jammu and Kashmir State‟s annual deficit brought to 220 billion rupees ($4.8 billion)
during the financial period 2009-10 due to these losses.
At international level, the 09/11 terrorist attacks on the US had declined the export of handicrafts
by 20 per cent during the first eight months of the current financial year. During April-November
2001, all segments of the handicrafts sector have shown a decline in exports. According to
provisional data provided by the export promotion council for handicrafts, exports declined by
20.97 per cent to $201.76 million. In rupee terms, the negative growth is estimated at 17.34 per
cent.
There is an ongoing conflicts in the J&K after the killing of a militant of Hizbul Mujahideen,
Burhan Wani. Tons of violent activities have taken place after this incident and it shook the state
with an unnecessary anger. Educational institutions are closed in some parts of Kashmir region
and students suffered unnecessarily in these regions. Services of IT sector are withheld in few
parts of Kashmir valley and in Poonch, Rajouri district of Jammu region. Therefore, these
conflicts over the terrorist killing, hampers the economic growth and hence, economic
development of the state.

3. The Organization for Economic, Co-operation and Development in 1990, argues that sustainable
development cannot be achieved without peace and stability, and peace and security are not
possible without meeting the basic needs of the people. Terrorism anywhere in the world leads to
turmoil and that affects the economic development. Due to terrorism and conflicts, there was a
major blow to those sectors of the J&K economy that were linked to the money economy. J&K
now lags far behind in the economic growth as compared to the national level. Due to lack of
better opportunities and incessant violent activities that leads to dismal scenario in the state,
many educated youth (particularly from the Kashmir valley) migrates to other parts of the
country in search of better living standard, thus, further depriving the state of the human
resource.
To boost economic growth, peace and security are essential requirements and that peace is
getting to prevail albeit laboriously. The state and the central governments need to work together
on this and come up with a proper and consolidated plan which will provide a push and
upliftment to the economic development in the state.