Impact of the Pahalgam Terror Attack: Kashmir Tourism
22nd April 2025. A terror attack in Pahalgam, Kashmir. 26 dead, 20 injured. Such an attack is not the first in the region, which has for decades been sensitive to geopolitical tensions and active warfare. There had, however, been a long hiatus in terrorism activity in the region before this event, which allowed for economic development. As a result of the events of the 22nd, this development has ground to a standstill. Especially, in industries like tourism, which directly contributes 7% to the territory’s GDP, violent incidents have dire consequences for the local economy.
Immediately following the attacks, hotel bookings were revoked, flight tickets canceled. Major tourism companies reported cancellations of 80-90% of their bookings in Kashmir, particularly in the summer period. In this April to June period, Kashmir receives around a third of its annual tourism, suggesting a significant immediate fall in GDP and potentially seasonal unemployment for those who typically receive employment in the summer months. Besides large businesses losing revenue, small vendors who rely on tourist footfall during this season also begin to suffer. Vendors and guides, who make large amounts of money from tourist sales and tips, may become unable to support their families the way they previously did. Another potential immediate impact might be the re-focusing from tourism spending to military aid. In a move to bolster its defence, the government might be inclined to increase short-term defence spending, which can indirectly reduce job creation in the tourism sector.
In the longer term, investment in the region becomes uncertain due to a fall in investor confidence. As the region becomes perceived as unstable, foreign or non-Kashmiri businesses might cease to invest as highly. Large tourism companies might then cease setting up in Kashmir as their business becomes rather unpredictable. This is further worsened by the region’s brand image taking a significant hit. Over the last decade, Kashmir has built a reputation for being a safe tourism destination, but potential visitors will now be forced to question that image. This deteriorating brand image can also disrupt current development projects in the region, preventing new hotels or tourism locations.
The market uncertainty and negative externalities arising from the terror attack in Pahalgam highlights that the attack doesn’t just claim lives, but damages an already fragile economic ecosystem. However, this isn’t the be all, end all. Kashmir has, in the past, regained its image of being a safe destination and can do it once more, through security assurance and proactive marketing.
– By Vedant Sriram
Works Cited
https://www.fortuneindia.com/business-news/pahalgam-terror-attack-to-hit-kashmir-tourism-hard/122478
https://www.aljazeera.com/features/2025/4/25/we-are-condemned-kashmiri-tourism-pays-the-price-of-pahalgam-killings
