Energy Bottleneck Clouds J&K’s Growth Story

J&K’s economy is growing steadily but its power sector is fast becoming a major bottleneck

By Rohini Singh

At a time when Jammu and Kashmir’s economy is registering steady post-pandemic expansion, fresh data from NITI Aayog’s Climate and Energy Dashboard points to a growing stress point beneath this recovery, the power sector. Between 2023-24 and 2025-26, headline economic indicators show consistent growth, but electricity generation is declining, capacity additions remain negligible, and peak demand is rising sharply across both the Valley and the Jammu plains. The emerging gap between economic momentum and energy supply is becoming increasingly visible in official data, raising concerns about how long this trajectory can hold without structural intervention.

At constant prices, the Union Territory’s Gross State Domestic Product (GSDP) rose by about 8.3 per cent in 2024-25, reflecting healthy expansion in overall economic activity. This growth, supported by sectors like tourism, services, and reconstruction efforts, signals improving livelihoods and business sentiment. Population has grown only modestly, which should have translated into better per capita gains, though detailed income distribution data across districts remains limited.

Yet the electricity sector tells a different story. Installed power capacity has barely moved and even registered a slight decline in the latest year, while actual generation has fallen consistently over the past three years. This decline in output, despite stable capacity, suggests operational inefficiencies, possible hydrological variability in hydro projects, or maintenance issues affecting plants.

Demand, meanwhile, is surging. Peak power demand jumped more than 40 per cent in a little over a year, touching above 5,000 MW in recent records. This reflects increased economic activity, urban expansion, growing tourism, and higher household consumption during extreme seasons. The mismatch means the region is likely relying more on costly power imports from the northern grid to bridge the shortfall. Rooftop solar and distributed renewable capacity remain negligible, contributing less than 1.2 per cent of total installed capacity. This slow adoption of local clean energy limits both supply diversification and resilience against transmission losses over difficult Himalayan terrain.

Compounding the problem are systemic inefficiencies. Aggregate Technical and Commercial (AT&C) losses stood at over 40 per cent in the available data, indicating substantial power theft, faulty metering, and poor billing recovery. The gap between average cost of supply and average revenue realisation further strains the financial health of the power utilities, limiting their ability to invest in new infrastructure.

Officials note that some 2025-26 figures are provisional, yet the directional trends are clear and consistent with other official datasets. Without meaningful capacity addition, efficiency improvements, and faster rollout of renewables, the imbalance is set to widen. For a region with ambitious development goals, from industrial growth in Jammu plains to tourism revival in the Valley and remote districts, reliable and affordable power is foundational. Persistent shortages risk hurting small industries, handicrafts units, and cold storage facilities critical for horticulture. Households already face seasonal disruptions, while long-term economic expansion could slow if investors perceive energy insecurity.

As the financial year draws to a close, the administration faces a defining policy test. The UT government has set an ambitious target to triple hydropower capacity to around 11,000 MW by 2035, with several projects already under construction, multiple small hydro plants recently commissioned, and accelerated solarisation of government buildings underway.

Ongoing efforts under schemes like RDSS include large-scale smart metering and infrastructure upgrades aimed at cutting losses and strengthening the grid. If these initiatives gain pace and deliver results on the ground, they could help bridge the demand-supply gap, support sustained economic growth, and ensure reliable power reaches households and industries across J&K’s diverse districts in the coming years.