Asia's largest fresh water Walur Lake in Bandipora has shrunk to half of its original size due to encroachments, inflow of untreated sewage, massive siltation and skewed government planning.
Raw sewage, rubbish and land encroachment threaten the survival of the lake which dominates Srinagar.
A resident, Muzaffar Bhat, said the depletion in the level of lake water would adversely affect the tourist's flow and take a toll on the economy of the state.
"If the situation remains the same then the lake will soon become extinct and the tourists will also not come over here. The main attraction for the tourists is this lake. It will also adversely affect the economic condition of the tourists do not visit," said Bhat.
Thousands of tonnes of sewage spew into the lake, feeding weeds and choking the lake and its aquatic life of oxygen.
However, the central government had sanctioned 200 million rupees to the Jammu and Kashmir government for conservation of the state's largest water body.
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A legislator, Nizam-ud-din Bhat, said that the funds allotted by the government should be properly utilized.
The state government has neglected the region's environment while battling a separatist revolt that has killed tens of thousands since 1989, environmentalists say.
The government has made previous pledges to clean up Kashmir's waters, saying cleanup operations have only been made possible because the insurgency is at its lowest level in years.