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PoK's Economy Spirals: Stagnation, Unemployment, and Fiscal Crisis Deepen

A report highlights a severe and worsening economic crisis in Pakistan-occupied Kashmir, marked by persistent stagnation over the last decade. Key indicators show declining productivity, rising unemployment, and a significant drop in public development spending as subsidies and debt crowd out investment. High inflation and currency depreciation have eroded average incomes, reducing household consumption and weakening local demand. The region suffers from weak industrialization, poor infrastructure, and climate stress, reinforcing a cycle of vulnerability and dependence on external support.

Key Points: PoK Economic Crisis Worsens: Report Details Stagnation & Decline

  • Persistent economic stagnation since 2020
  • Rising unemployment, especially among youth
  • Sharp decline in public development spending
  • High inflation eroding household incomes
  • Growing dependence on remittances and external aid
2 min read

Pakistan-occupied Kashmir's economic situation turns from bad to worse: Report

A new report reveals Pakistan-occupied Kashmir's worsening economy, with rising unemployment, falling incomes, and crippling fiscal vulnerability.

"slowing growth, rising unemployment, rising poverty, and shrinking development spending - European Times report"

New Delhi, Feb 6

Over the last decade, Pakistan-occupied Kashmir has experienced persistent economic stagnation and a major contributor to economic deceleration, which is getting worse, is the region's growing fiscal vulnerability, a report has said.

According to the report in European Times, the deepening economic stagnation in PoK is marked by "slowing growth, rising unemployment, rising poverty, and shrinking development spending".

In 2020, public development spending accounted for 32 to 35 per cent of regional budgets.

By 2024-25, this share had fallen to 22 to 25 per cent, as rising subsidy bills, debt servicing, and administrative costs crowded out capital expenditure, said the report.

While high inflation eroded incomes, while weak industrialisation, declining infrastructure investment, and credit constraints constrained private-sector growth, greater dependence on remittances and federal transfers reflects fragile fiscal capacity.

Moreover, governance gaps, climate stress, and weaknesses in human capital have reinforced a cycle of vulnerability, restricting sustainable and inclusive development, the report stressed.

"Between 2020 and 2024-25, key indicators show declining productivity, rising unemployment, weakening public investment, and increasing dependence on external support. These trends have reshaped the region's economic, infrastructural, and social landscape," the report mentioned.

While average income stood at approximately $1,400 to $1,500 in 2020, it declined slightly to about $1,300 to $1,400 by 2024-25 due to high inflation and currency depreciation.

"This erosion of purchasing power has reduced household consumption and weakened local demand, further suppressing economic activity," the report revealed.

Meanwhile, the absence of industrial clusters, poor logistics, and weak access to finance have prevented industrial expansion.

"The region has failed to generate high-productivity employment, reinforcing dependence on agriculture, government jobs, and remittances," the report further stated.

In 2020, unemployment was estimated at around 6 to 7 per cent. By 2024-25, it had increased to nearly 9-11 per cent, with youth and educated workers most affected.

Agriculture's productivity has also declined to nearly 92-95 by 2024/25. Climate variability, floods, landslides, soil erosion, and limited irrigation facilities have reduced crop yields. Road connectivity remains uneven, particularly in remote mountainous districts.

Small and medium enterprises face difficulties accessing formal finance, forcing them to rely on informal lenders at high interest rates, said the report.

- IANS

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Reader Comments

P
Priya S
Very detailed report. It clearly shows how Pakistan has failed to develop the region it occupies. The youth unemployment rising to 11% is alarming. In contrast, look at the development in Ladakh and Jammu after it became a UT. Infrastructure and opportunities have increased. PoK deserves better.
V
Vikram M
The economic numbers are shocking but not surprising. Pakistan's own economy is in shambles, so how can they support another region? All the subsidies and debt mentioned in the article show it's a burden for them. The people there are caught in the middle. 🇮🇳
R
Rohit P
While the report highlights Pakistan's failures, we must also be cautious. Some Indian media outlets tend to amplify negative reports about PoK. We should focus on our own development challenges in hill states like Himachal or Uttarakhand too. Balanced perspective is needed.
S
Sarah B
Reading this from an international perspective. The data on declining development spending from 35% to 22% of the budget is a major red flag for any economy. It creates a vicious cycle of no new jobs and lower demand. The climate stress part is a global concern.
K
Kavya N
The part about SMEs relying on informal lenders at high interest is so true for many underdeveloped regions. Without access to formal credit, no business can grow. Pakistan should learn from India's MSME schemes and banking penetration efforts. Feel for the local entrepreneurs there.

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