New Delhi— As tensions rise following India’s recent strikes on terrorist infrastructure in Pakistan and Pakistan-occupied Kashmir, the stark economic divide between the two South Asian neighbors underscores the vastly different trajectories they’ve followed since independence in 1947.
India has emerged as the world’s fastest-growing major economy, with the World Bank estimating its GDP at $3.88 trillion in 2024—more than ten times the size of Pakistan’s, which stands at just $370 billion.
According to the IMF’s latest World Economic Outlook, India is expected to surpass Japan in 2025 to become the world’s fourth-largest economy, with a projected nominal GDP of $4.187 trillion. The country also boasts robust foreign exchange reserves of $688 billion.
In contrast, Pakistan is teetering on the edge of economic collapse. With foreign exchange reserves of just $15 billion, the country remains heavily reliant on IMF loans. It narrowly avoided default in 2023 with a $3 billion IMF bailout and is now seeking an additional $1.3 billion in climate resilience funding.
While India has pursued consistent economic reforms and democratic governance focused on poverty reduction and infrastructure development, Pakistan’s progress has been derailed by repeated military coups, political instability, and a long history of supporting cross-border terrorism. These policies have not only isolated Pakistan diplomatically but have also backfired domestically, fueling violence in regions like Balochistan and the Khyber Pakhtunkhwa province.
Pakistan’s initial post-independence growth had matched India’s, thanks largely to U.S. aid and financial support from Gulf nations. However, that trajectory began to diverge as India emphasized institutional stability and global economic integration.
A recent report from global ratings agency Moody’s highlighted the diverging fortunes. It projected stable macroeconomic conditions for India, supported by strong public investment and resilient private consumption—even in the face of potential geopolitical tensions.
Moody’s warned, however, that any prolonged escalation between India and Pakistan could significantly hurt Pakistan’s fragile economy, disrupting access to foreign financing and further straining its limited reserves. The agency also noted that India’s limited trade exposure to Pakistan—less than 0.5 percent of total exports in 2024—insulates it from significant economic fallout.
While rising defense costs could pose a short-term fiscal challenge for India, its long-term economic fundamentals remain solid. Pakistan, on the other hand, continues to grapple with an economic crisis compounded by internal unrest, dwindling investor confidence, and mounting debt obligations. (Source: IANS)
