NEW DELHI– As tensions flare between India and Pakistan following India’s targeted strikes on terrorist infrastructure under Operation Sindoor, the stark economic disparity between the two nations underscores their vastly different trajectories since gaining independence in 1947.
India, now the world’s fastest-growing major economy, reported a GDP of approximately $3.88 trillion in 2024—more than ten times the size of Pakistan’s $370 billion economy, according to World Bank data. The International Monetary Fund projects that India will become the world’s fourth-largest economy in 2025, overtaking Japan with a nominal GDP expected to reach $4.19 trillion. India also holds one of the world’s largest foreign exchange reserves at $688 billion.
In sharp contrast, Pakistan remains mired in economic turmoil, narrowly avoiding default in 2023 with a $3 billion bailout from the International Monetary Fund (IMF). The country is still heavily dependent on IMF assistance and is currently seeking an additional $1.3 billion climate resilience loan. Its foreign exchange reserves remain critically low at just over $15 billion.
While India has sustained democratic governance and prioritized economic development and poverty alleviation, Pakistan has been plagued by repeated military coups, political instability, and a security apparatus that continues to exert significant control over national policy. Analysts argue that Pakistan’s decades-long focus on sponsoring cross-border terrorism has come at a steep economic and social cost—both for its neighbors and for its own internal stability. The fallout from this strategy has fueled violent insurgencies in regions such as Balochistan and Khyber Pakhtunkhwa.
Once economically comparable, the two nations have diverged sharply. In the years following independence, Pakistan’s economy benefited from U.S. aid and support from oil-rich Gulf countries, growing at a pace similar to India’s. But while India embarked on structural reforms and leveraged its demographic and technological advantages, Pakistan’s reliance on external handouts and lack of consistent economic policy have left it vulnerable to repeated fiscal crises.
Amid the current geopolitical tensions, global credit rating agency Moody’s issued a statement noting that India’s macroeconomic fundamentals remain strong and resilient, even if military tensions with Pakistan escalate. “India’s economic activity is unlikely to be significantly affected given its minimal trade ties with Pakistan—less than 0.5% of its total exports in 2024,” the report stated.
Moody’s warned, however, that prolonged conflict could severely impact Pakistan’s fragile fiscal position, disrupt its access to external financing, and place additional pressure on its already strained foreign exchange reserves. While India may face some fiscal strain due to increased defense spending, Moody’s believes strong public investment and resilient private consumption will keep its economy on stable footing.
The economic divergence between the two neighbors now appears starker than ever—with India emerging as a global growth engine and Pakistan teetering on the edge of financial collapse. (Source: IANS)
