Srinagar is the summer capital whilst Jammu is the winter capital of the state. The state is divided into districts of which there are six in the Srinagar area, six in the Jammu area and two in Ladakh.

The state was governed by a bicameral state government of 36 member Legislative Council and 76 member Legislative Assembly. The last government was led by Dr Farooq Abdullah of the National Conference party. However, in 1990, the government was dissolved and the state placed in the direct control of the state governor. There were no elections since 1990 and the state remained in the control of the governor under the Indian regime. However, elections were held in 1996 when through rigging and paramilitary pressure, India was able to implement a puppet state government headed by Dr Farooq Abdullah of the National Coneference. All Pro-Freedom parties were banned from these elections and their leaders placed under custody during the polling.

Nearly 80% of the people are involved in agriculture, producing rice, wheat, wheat, maize and fruit; there are also valuable forests. Most of the manufacturing industry is based in and around Jammu. The state specialises in traditional handicrafts such as silk-spinning and carpet weaving. Due to the heavy conflict with the Indian authorities and the heavy-handedness of the Indian troops, the states agriculture and industry has declined since 1990.