Kashmir’s fame never rested only on snow and scenery. This valley built its name on work. 

Nearly six centuries ago, two men planted the economic tree that still feeds us: Mir Sayyid Ali Hamadani, known here as Shah-e-Hamadan, and Zain-ul-Abidin, remembered as Budshah.

They turned a small Himalayan valley into a business hub of Asia. They invested in water, land, skills and fair markets. Their policies created wealth that lasted for generations. 

Today, Jammu and Kashmir’s economy stands at about ₹2.86 lakh crore, roughly 0.8 percent of India’s GDP. Per-capita income hovers near ₹1.6-1.7 lakh, while the national average sits near ₹2.2 lakh. Growth runs near 5-6 percent annually. 

The economy expands in official reports, while the average Kashmiri household still counts every rupee.

Budshah understood that prosperity begins with basics. He repaired canals and dug new ones at Zakura and Martand. 

Water from the Sindh and Lidder rivers flowed into the fields of Zaingeer and Mattan karewas. Irrigation expanded, yields improved, and farmers saw real gains.

The benevolent king also fixed taxation. Earlier rulers often took half the produce, but Budshah reduced the state share to one-fourth and even one-seventh in fertile belts. 

The sovereign stopped arbitrary collections, introduced standard weights and measures, and issued new copper coins to build trust in markets. 

Farmers and traders knew what they owed, and earned.

Granaries and public works secured food supplies and created employment. Chroniclers recorded that peasants rose into a life of comfort and stability. Research such as “Economic Development and Sultan Zainul Abidin in Kashmir” and “Economy of Kashmir under Sultans” presents a reign that advanced agriculture, crafts and trade together. 

Land revenue strengthened the treasury while cultivators retained a fair share of their produce. Output expanded on a large scale. Prosperity reached villages, workshops and markets alike.

Budshah also turned Kashmir into what historians call an “industrial garden.” He promoted silk culture and improved mulberry varieties. The monarch even invited master artisans from Persia, Samarkand and Bukhara. 

State-run karkhanas produced Pashmina shawls, silk, carpets, paper, glass, metalware and wood carving. Skilled families trained local workers, and a network of cottage industries supplied regional markets.

Decades earlier, Shah-e-Hamadan had arrived with scholars and craftsmen. They refined Pashmina weaving, carpet weaving, papier-mâché, wood carving, metal work and calligraphy. They linked skill with discipline, and laid the foundation of export industries. 

Their role resembles what foreign investment does today. They brought technology, trained people and built sectors that generated income for centuries.

Under Mughal, Afghan and Dogra rule, these crafts powered a long export boom. Kashmiri shawls reached Delhi, Kabul, Istanbul, Paris, London and Moscow. European portraits displayed queens wrapped in “Cashmere.” Tens of thousands worked in the shawl sector alone. Handicrafts formed the backbone of the old economy and earned foreign exchange long before modern statistics.

Now compare that legacy with today’s structure. 

Roughly 18 percent of J&K’s economy comes from agriculture, 21 percent from industry and 61 percent from services. Two-thirds of revenue receipts arrive through central taxes and grants. Local production forms a smaller share of public income than it once did. 

The size of the economy rises each year, but many households still feel tight budgets.

People sense strain even as GSDP increases. Several reasons explain this gap between data and daily life.

Kashmir lost its comparative edge in crafts. Machine-made shawls and carpets from other regions sell at lower prices. Branding and certification have lagged behind production skill. Artisans often work for middlemen on piece-based payments. Earnings remain modest despite long hours of detailed work.

Dependence on government spending has grown. Salaries, contracts and schemes form a large part of household income. Competitive production and exports play a smaller role than in Budshah’s time, when agriculture and crafts drove revenue.

Agriculture now faces new pulls and pressures. Landholdings shrink with each generation. Climate shifts affect apples, paddy and saffron. Erratic snowfall and untimely rain disturb planning. Value addition through grading, cold storage and processing remains limited. Farmers sell raw produce instead of branded products.

Craft sectors still operate with old structures. The karkhana spirit survives, though modern clusters with design labs, testing facilities and digital platforms remain scarce. Young people look for salaried posts instead of enterprise. Social respect tilts toward government jobs rather than business.

Years of unrest also added a risk premium to local enterprise. Investors weigh uncertainty carefully, tourism fluctuates with events, and borrowing costs rise when risk perception rises. Business needs continuity and reliable digital access to expand.

Against the fading strength of Kashmir’s cottage industries, Zain-ul-Abidin and Mir Sayyid Ali Hamadani would raise direct and uncomfortable questions today.

When Kashmir Says ‘Sikha Shahi,’ It Means More Than History

Kashmir Was Never Close for the Mughals

Why did irrigation once expand with ambition while orchard systems grow slowly today? Why do global-quality skills struggle to earn global prices? Why does an enterprise-driven valley rely so heavily on transfers?

Their answer would stress renewal. 

Treat crafts and horticulture as modern industries with clusters, design labs, testing facilities and strong branding. Use GI traceability to guarantee authenticity and secure premium returns.

Scale up agriculture through Farmer Producer Organisations, shared pack-houses and cold storage. Invest in food processing so value stays within the valley. Align education with business, design and digital skills tied to local sectors. Ensure policy continuity and reliable connectivity to attract long-term investment.

Kashmir still lives on the savings of its spirited sovereign. GSDP rises each year, while per-capita income stays below the national average. Public finances lean heavily on transfers and grants. Young people search for opportunity that matches their talent and ambition.

Water, work and wisdom once built Kashmir economy into a model of prosperity. The blueprint still exists in our own history and experience, but clear action and firm execution will decide the next chapter.

— The author is a Srinagar-based reputed financial educator.

© Kashmir Observer