India Vs Pakistan: Elephant Vs Mouse? Economies Compared

India’s recent retaliatory airstrikes under Operation Sindoor mark an escalation in its long-standing conflict with Pakistan.

Triggered by the April 22 Pahalgam terror attack, in which 26 Indian tourists were gunned down, India struck nine terrorist hideouts in Pakistan and Pakistan-occupied Kashmir (PoK), targeting infrastructure linked to Lashkar-e-Taiba, Jaish-e-Mohammed, and Hizbul Mujahideen. 

The Indian Defence Ministry was clear: the targets were non-military to avoid unnecessary escalation, but Pakistan’s response was swift. It violated the ceasefire with artillery fire in Bhimber Gali and launched drone and missile attacks on Jammu, Srinagar, Pathankot, and Amritsar. Indian air defence systems intercepted most threats, even striking back at a Pakistani air defence system in Lahore.

Born Together, Torn Apart: India and Pakistan’s Shared Colonial Past
Before they became arch-rivals, India and Pakistan were comrades, fighting side by side against British colonialism. The Partition of 1947, driven by religious, political, and strategic calculations, carved two nations out of one. This separation came with devastating human and economic costs.

The Indian Independence Act (June 3, 1947) formalised the split, but the economic trauma both inherited had a shared origin: the British Empire’s exploitative economic design.
1947: A Crippled Economic Starting Line

1. Colonial Extraction Over Industrialisation
At independence, both countries were economically bankrupt. Once a hub of global textile trade, India had seen its industries decimated by colonial policies. The British turned the subcontinent into a supplier of raw materials (like cotton and jute) and a consumer of British goods, effectively dismantling India’s industrial base.

For example, Bengal, once a textile powerhouse, saw its weaver population collapse as Britain imposed heavy taxes on Indian producers and flooded the local market with British-made goods.

2. Infrastructure Built for Empire, Not People
The British built railways and ports—not for internal trade or national development—but to move raw materials from the hinterland to ports like Bombay and Karachi for export. After independence, both nations inherited a transport system unfit for domestic economic needs.

3. Mono-Crop Vulnerability
Colonial agriculture policies emphasised cash crops like cotton, jute, tea, and indigo, eroding food security. Famines like the Bengal Famine of 1770 were partly driven by such policies. This left both India and Pakistan with fragile, export-dependent agricultural systems.

Kashmir, Water & War: Colonial Fault Lines Fuel Modern Conflict
1. Water Wars Begin
The Radcliffe Line, hastily drawn by the British, gave India control of the Indus River headwaters, a lifeline for Pakistan’s agriculture. When India cut off irrigation canals in the 1950s, Pakistan nearly faced an economic collapse.

The 1960 Indus Waters Treaty, brokered by the World Bank, was a temporary fix. But the issue remains contentious, especially as climate change and population growth amplify pressure on water resources.

After the Pahalgam terror attack, PM Modi announced that water rightly belongs to India and will be used for India only now.
 
2. From Economic Strain to Arms Race
Post-independence, both nations, lacking industrial strength, spent limited funds on military build-ups. The 1965 Indo-Pak war over Kashmir and Rann of Kutch saw massive arms imports while poverty persisted. Britain’s colonial legacy had left the subcontinent with no economic cushion for sustained development.

Where Are They Now? India vs Pakistan – A Tale of Two Economies in 2025

India and Pakistan started from similar economic baselines post-independence, but in 2025, their growth stories are moving in very different directions. Let’s break it down.

India: Full Speed Ahead
Still the Fastest-Growing Major Economy
As per the IMF’s April 2025 World Economic Outlook, India is expected to grow by 6.2% in 2025 and 6.3% in 2026. That keeps it ahead of global peers like China (4.0%) and the US (1.8%).

Outpacing the World
With global growth forecasted at just 2.8%, India’s numbers look even stronger. Despite a slight dip from earlier projections (thanks to global trade tensions), the IMF still calls India resilient and macroeconomically sound.
 

On Track for 'Viksit Bharat'
India aims to become a developed nation by 2047. Backed by infrastructure push, financial inclusion, and digital innovation, it’s building momentum toward that goal—even as the global economy hits bumps.

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Pakistan Says Its Account Was Hacked After Embarrassing Public Appeal Tweet Went Viral
 

Pakistan: Slow but Stabilising
Growth Holding at 2.5%
According to the Asian Development Bank’s April 2025 report, Pakistan’s economy is set to grow by 2.5% in FY2025—the same as last year. A slight improvement to 3.0% is expected in FY2026.

IMF Program at Work
Pakistan’s current growth is tied to an IMF-backed reform plan started in October 2024. It’s brought some stability:
Foreign exchange markets are calmer
Private investment is picking up
Inflation is easing, expected to drop to 6.0%

Missed Opportunity: Women in the Workforce
A major concern: low female labour participation. ADB says empowering women through education, skills training, and safe transport could unlock much-needed productivity and economic growth.

Diverging Destinies
India is surging forward with strong fundamentals and global confidence. Pakistan is slowly finding its footing, but still faces deep structural challenges.
One is leading the global growth conversation.

The other is working to stay in it.

History Repeats, But the Stakes Are Higher
Today’s India is better equipped—militarily and economically—to handle conflict. It can engage in targeted operations like Operation Sindoor without destabilizing its markets. Investor confidence, while shaken, remains relatively intact.

Pakistan, however, cannot afford prolonged escalation. Its economy is already under strain, and war could devastate sectors like textiles and agriculture, especially with global isolation growing.

The Takeaway: From Partition’s Pain to Present-Day Power Plays
India and Pakistan started their journeys from the same historical wound—colonial devastation. But while India has largely succeeded in transforming its economy, Pakistan is still battling legacy issues compounded by governance failures.

What remains constant is the fragile peace between them, shaped not just by ideology or borders, but by economic capacity and colonial scars that never fully healed.