India Sets Global Benchmarks, Pakistan Faces Recurring Crises: CM Himanta Biswa Sarma

India is setting global benchmarks in growth, technology, and self-reliance, with a GDP of $4.19 trillion and strong financial cushions, while Pakistan faces recurring crises and shrinking influence, with a GDP of $357 billion and frequent IMF dependency. India leads in digital infrastructure, unicorn startups, and space technology, while Pakistan struggles with limited financial inclusion and infrastructure.

India's recent measures against Pakistan, following the deadly Pahalgam terror attack, have significant economic implications for both nations. The Indian government has suspended bilateral trade and the Indus Water Treaty, which has far-reaching consequences for Pakistan's economy.

Pakistan's economy is already strained, with foreign exchange reserves standing at $12 billion at the end of 2024 and a GDP of approximately $373 billion, less than one-tenth of India's GDP [1]. The suspension of trade between India and Pakistan, which stood at over $1 billion in 2023-24, will increase the cost of goods in Pakistan. About 60 percent of India's exports to Pakistan are chemicals and pharmaceutical products, which will now face disruptions [1].

The Indus Water Treaty, signed in 1960, allocates the water of six rivers between the two countries. While the eastern rivers of the Indus basin, Ravi, Beas, and Sutlej, were allocated to India, Pakistan received 80 percent of the water of western rivers Indus, Jhelum, and Chenab [1]. The suspension of this treaty, which has survived three wars, poses a threat to Pakistan's agrarian economy and hydro power projects. Pakistan's hydropower plants and agriculture heavily depend on water from the Indus Basin [1].

The economic repercussions for India are less immediate but still significant. The suspension of the treaty gives India an opportunity to build new infrastructure for water storage or re-routing without informing Pakistan. However, India's ability to absorb the additional water remains uncertain.

The global community, including the US, is urging both nations to exercise restraint and focus on de-escalation. US Secretary of State Marco Rubio held separate calls with Indian External Affairs Minister S. Jaishankar and Pakistani Prime Minister Shehbaz Sharif, urging them to avoid further escalation and cooperate on anti-terror efforts [2].

In conclusion, India's actions against Pakistan post-Pahalgam attack have immediate and long-term economic repercussions. While Pakistan faces potential disruptions in its economy and water supply, India gains an opportunity to develop its infrastructure. The global community is watching closely to prevent any further escalation.

References:

[1] https://www.financialexpress.com/what-is/economy-what-is/pahalgam-attack-what-are-the-economic-repercussions-for-pakistan-as-india-suspends-tradenbsp-indus-water-treaty/3826528/
[2] https://liveindia.tv/nation/us-secretary-of-state-marco-rubio-dials-up-india-pak-urges-nations-to-de-escalate-after-pahalgam-terror-attack/