Military hostilities between India and Pakistan would carry steep economic costs for both nations, experts warn, driven by today’s interconnected markets and the high expense of modern warfare. According to Dr. Nadeem-ul-Haq—former deputy chairman of Pakistan’s Planning Commission and veteran IMF adviser—New Delhi could see its GDP growth shrink by as much as three percentage points in the event of a war.
India’s economy, valued at approximately $3.7 trillion in 2024 with a $75 billion defense budget, faces an estimated $20 billion to $50 billion in immediate military expenditures for weapons procurement and troop mobilization. Depending on the conflict’s duration and intensity, that could slow the country’s growth rate by 1 percent to 3 percent.
Pakistan, with a $375 billion economy and an annual defense spend of $7 billion, risks even greater proportional impact. Current IMF projections peg Pakistan’s GDP growth at 2.6 percent for this fiscal year, but a major conflict could tip it into contraction. Short-term war expenses for Pakistan might top $10 billion to $15 billion, further straining an economy still on the path to stabilization.
Beyond direct military costs, both countries would suffer from disrupted trade routes and plummeting foreign investment—especially India, which could see capital inflows dry up amid heightened risk perceptions. Key sectors such as manufacturing, technology, and tourism would be hit hard. Popular destinations in India—Kashmir, Rajasthan, Goa, and Kerala—would likely witness dramatic declines in visitor numbers, while international travelers might avoid the region altogether due to safety concerns.
International security analyst Antonio Bhardwaj calculates that a brief conventional war could cost India between ₹1,460 crore and ₹5,000 crore per day in direct military outlays. When factoring in wider economic fallout, losses could exceed $17.8 billion (around ₹1.34 lakh crore) each day of sustained conflict.
These assessments coincide with Pakistani government warnings of credible intelligence suggesting India may launch an operation within 24 to 36 hours, alleging Pakistan’s involvement in a recent incident in Indian-administered Kashmir—which Islamabad firmly denies. Pakistan’s leadership has offered to convene a neutral commission of experts to investigate the allegations, while also pledging to respond decisively to any aggression.
Diplomatic ties between the two neighbors remain at a low ebb, with embassies downgraded and the Indus Waters Treaty currently suspended, underscoring how quickly regional tensions can escalate into both security and economic crises.
