Cash-Strapped Pakistan Turns to India for Help Amid Economic Crisis – News18

Written By: Sanbeer Singh Ranhotra
Last Updated: March 27, 2024, 10:58 IST
New Delhi, India
There are several reasons why Pakistan would want to interact more with India in the present geopolitical climate. (PTI Photo)
Trade between India and Pakistan has been at a near-complete standstill since 2019. That year, Pakistan-linked terrorists attacked India in Pulwama, leading to the death of 40 CRPF personnel. Consequently, India stripped Pakistan of its “most favoured nation” status, effectively placing a 200 per cent duty on Pakistani imports. Then, in August 2019, India revoked Jammu and Kashmir’s special status by abrogating Article 370. Islamabad was outraged and downgraded diplomatic ties with India and suspended bilateral trade. Five years later, a cash-strapped Pakistan has realised it punched way above its weight and is hoping against hope to revive bilateral trade with India.
Pakistan’s Foreign Affairs Minister Ishaq Dar on Saturday said that the country will “seriously examine” the question of resuming trade with India. “Pakistani businessmen want trade to resume with India,” declared Ishaq Dar at a press conference in London. Importantly, the Government of Pakistan is under increasing pressure from traders and business owners in Punjab to resume trade with India. This is a powerful lobby which Shehbaz Sharif’s government wants to keep on its side.
Also important to note is that Ishaq Dar is broadly viewed as a dove in Pakistan who generally wants good ties with neighbours. However, he yields no power in the face of the all-pervasive military establishment, which has just installed a new government in Pakistan that does not reflect the will of the people. Therefore, it remains to be seen whether Dar’s olive branch for India has the backing of Rawalpindi. If not, his overture is dead on arrival.
There are several reasons why Pakistan would want to interact more with India in the present geopolitical climate. For starters, India is now broadly recognised as a global power in ascendance. It remains the fastest-growing economy in the world and is poised to become the country with the third-largest GDP in the world by 2027. India’s diplomatic heft and influence have risen considerably over the past five years. This has all been marked by Pakistan slipping into decline on several fronts.
Economically, Pakistan faces an existential crisis. In fact, the economic misery that abounds Pakistan has a lot to do with why its businesses want to resume trade with India. Diplomatically, Pakistan is facing global isolation. A conscious campaign by India to expose Islamabad’s patronage of terrorism has cost Pakistan dearly.
Consider the numbers: In Pakistan’s financial year that ended in June 2023, more than 12 million people fell into poverty, according to the World Bank. Pakistan is a nation struggling to survive under a mountain of debt. Inflation has neared a whopping 33 per cent in the latest estimates, while prices of at least 18 essential items have increased. Electricity bills soared last summer, even as bills for natural gas were up by more than 900 per cent in February from a year earlier. This made winters in Pakistan this year excruciatingly painful for the populace, which also recently got handed a government it did not choose.
Meanwhile, Pakistan’s debt crisis is simply refusing to relent. The Islamic Republic has $8 billion in foreign currency reserves, while it is required to cobble up $22 billion for debt payments and maintaining its current account deficit for the coming fiscal year. This has led to Pakistan seeking its 24th bailout from the International Monetary Fund. However, IMF bailouts are tough to come by. If and when they come, a host of strings are attached, which neither the public nor the establishment in Pakistan is fond of. The IMF has so far forced Pakistan to raise tax revenues and slash subsidies doled out for utilities and fuel.
Essentially, Pakistan is hurting. Given the constant attacks by Baloch rebels and Pashto militants against both Chinese and Pakistani nationals, it would be safe to say that Pakistan is also bleeding. With so much going wrong for the country, Islamabad is desperate for wins wherever it can get them. The resumption of trade with India is one such shot in the dark. It will bring significant relief to businesses and traders in Pakistan, especially in the Punjab province. However, India is not very keen to oblige Pakistan just yet.
One must remember that Pakistan is not extending an olive branch to India out of the magnanimity of its heart. The fact of the matter is that Pakistan is now more desperate than ever. It knows survival in its current state is not possible. If Pakistan is to survive as a globally relevant entity, it must immediately fix ties with India and clear all the roadblocks that it finds placed on its path. However, India’s core issues with Pakistan remain unresolved. For starters, the bilateral relationship remains downgraded in the absence of a Pakistani high commissioner in India. If Islamabad earnestly wants a rapprochement, it must begin with reinstating its high commissioner in New Delhi.
Second, Pakistan’s terror infrastructure remains intact. In fact, it is alive and kicking. In the absence of concrete action to dismantle its terror networks, Pakistan will find it impossible to convince India to resume bilateral trade.
Third, Pakistan must make peace with the fact that the reality in Jammu and Kashmir has been permanently altered for the better by the Modi government. Ties between both countries went downhill after India abrogated Article 370, and until Pakistan realises that it has no say or stake in Kashmir, it will continue getting the cold shoulder from New Delhi.
Finally, the onus of creating a conducive environment for repairment of bilateral ties rests solely on the shoulders of Pakistan. Remember, Pakistan is a country facing an economic crisis and global isolation. India, on the other hand, is powering ahead with robust economic growth and its standing in the world has improved manifold in recent years. If anything, Pakistan will stand to gain a lot from being in the good books of India in the present geopolitical climate. However, history is a testament to the fact that Pakistan entering the good books of India is nearly impossible, almost entirely for faults of its own.
Pakistan needs India. On the other hand, India is flourishing even without Pakistan. For Islamabad, it will take much more than a comment by its foreign affairs minister to bring a sense of normalcy to ties with India. Pakistan must act on India’s core demands. Until Islamabad delivers on them, there is little to no scope for bilateral ties improving, let alone for trade resuming in all its might.
Views expressed in the above piece are personal and solely those of the author. They do not necessarily reflect News18’s views.


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