The Pahalgam which was once overwhelmingly dependent on tourism has now become a ghost town. Things after the recent attack of April 22, 2025 have not been the same. The attack killed 28 people and most of them were tourists. This attack has turned this place from ‘mini-Switzerland’ to into a void of deserted streets and shuttered businesses.

Immediate Economic Fallout

• Mass Cancellations:  Following the attack, there has been a surge of cancellations for hotel bookings, cab services, and tour packages. Travel agents report that bookings for the next four to five months have been wiped out, leading to significant revenue loss for local businesses. Kashmir’s tourism has a share of 7-8 per cent in the state’s total GDP. 
• Business Standstill: Hotels, restaurants, shops, and transport services-many of which rely entirely on the seasonal influx of tourists-are now facing an existential crisis. Workers and small business owners, many of whom have taken loans to invest in the tourism sector, are left without income or clarity about the future.

“For 30 years, I have worked as a chef in Pahalgam. I have never witnessed such a significant incident here. I live in poverty, and my income entirely depends on tourists. Now, I find myself at a loss. I don’t own sufficient property to support myself. The tourism season was flourishing, and hotels were fully booked, but now, the financial loss will not just amount to crores but billions.”, shared a local chef who has served in Pahalgam hotels for the past 30 years.

• Stock Market Reaction: The attack triggered a sell-off in stocks related to the region’s economy. Shares of J&K Bank fell 9%, while hotel and airline stocks also declined, reflecting investor concerns about prolonged disruption in the tourism sector.

Broader Economic Ripple Effects

• Livelihoods at Risk: The tourism industry in Kashmir is valued at approximately ₹12,000 crore annually and directly supports the livelihoods of around 2.5 lakh locals. The attack has obliterated tourist confidence, putting these jobs and incomes in jeopardy.
• Debt and Financial Stress: Many local entrepreneurs have borrowed heavily or sold personal assets to invest in tourism-related businesses. With the future of a lost tourist season, they now face mounting debts and uncertainty about repayment.
• Impact on Allied Industries: The slowdown will have an impact on allied industries like handicrafts, retailing, transport, and agriculture. Like, Sopore fruit market, which supports traders and farmers in many districts, may witness declining demand if tourism stays stagnant.

Long-Term Consequences

• Reputational Damage: The attack has undone years of work in restoring Kashmir’s reputation as a secure tourist destination. Industry experts caution that it will be a long and complicated process to regain confidence among tourists.
• Threat to Economic Growth: The area had witnessed a recent revival in economic activity, with rising start-up growth and falling unemployment. The uncertainty caused by this attack has the potential to erase these gains, bringing investment to a halt and hindering employment creation.

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