The constitutional article in question allows the Jammu and Kashmir state Assembly to define the "permanent resident" of the state.
Many houseboats and hotels in Srinagar city, as well as at the hill stations of Gulmarg, Pahalgam and Sonamarg, have lost their guests who have cut short their stay in the Valley and decided to rush home.
"We have bookings for August and September and those have now become uncertain. Guests already booked with us who had to stay till August 10 have cut short their stay and rushed home", said Nazir Ahmad, a hotelier in Srinagar.
What is true of hotels in Srinagar city is also true of hotels in the hill stations.
"We were running full house till these rumours started doing the rounds in the Valley. Today, we have been reduced to less than half occupancy," said Altaf Ahmad, manager of a hotel in Gulmarg.
Gulam Nabi, a houseboat owner in the Dal Lake is as disappointed as the 'shikarawallahs' (boatmen) who ferried Gulam Nabi's guests to his houseboat from the lakeshore.
"I think it is already curtains for this tourist season in the Valley. Except for the pilgrims of Amarnath Yatra, who are brought in escorted convoys and taken back under tight security after performing the Yatra, we hardly have many visitors in the Valley these days", said Gulam Nabi.
Nazir Ahmad, a taxi driver who has been carrying tourists to hill stations from Srinagar city said: "I am attached with a hotel from where I carry tourists to various places. For the last three days, I have been idling. This has happened only because of the rumors in the Valley".
Despite the situation, authorities here argue that everything is normal.
"We are expecting fresh arrivals in September and October who come here especially to see the golden brown autumn season", said an official of the state tourism department.
( With inputs from IANS )