ISLAMABAD: Consequent to military exchanges earlier this month between South Asia’s nuclear-armed neighbours, India has incurred significantly higher economic and military losses compared to Pakistan, according to early economic assessments by leading global financial outlets.
Independent economic journalists and analysts at the global financial houses suggest India has sustained far greater economic impact and much higher military cost in terms of operational expense and equipment as well as installation losses in both magnitude and scale.
According to an analysis by the Financial Times, India’s equity markets alone lost $83 billion in market capitalization over just two trading sessions.
The report further highlights that India’s GDP growth may decline by up to 3%, a sharp downturn blamed on investor panic and military over-extension.
By contrast, Pakistan’s stock market also dipped — the KSE-100 plunged 2,000 points — but its economic contraction is estimated at just over 1%, a relatively contained impact, according to FT’s South Asia correspondent.
Pakistan’s GDP forecast was revised from 4.2% to 3.1%, while India’s steeper decline reflects deeper exposure to foreign investment and larger fiscal burdens.
“This level of regional volatility is extremely damaging for India’s foreign investment outlook,” Bloomberg reported, noting nearly $11 billion worth of investment deals face potential delay or cancellation amid geopolitical instability.
Military spending tilts balance further
India’s military mobilisation appears to have inflicted even greater economic cost. Reuters reported India executed 100+ air sorties daily during the height of the tension.
With each day of operations costing upward of $300 million, the total estimate for four weeks stands at a staggering $6–7 billion.
By contrast, Pakistan’s response was more restrained and cost-effective. AFP reported that Pakistan’s daily operational military spending was approximately $25 million, totalling around $1 billion over the same four-week period.
In terms of advanced weapon usage, Bloomberg estimates India’s missile and drone operations alone incurred an additional $4.5 billion in costs, with the Indian Air Force deploying expensive systems such as BrahMos missiles and Israeli-made Harop drones.
“India’s aggressive posture, while politically popular domestically, has imposed an unsustainable economic load,” said Peter Lavoy, a former US intelligence official specialising in South Asian security, in a comment to Bloomberg.
Macroeconomic shock
The cost of war has also shown up in India’s macroeconomic indicators. The Financial Times projects that India’s fiscal deficit could widen by over 50%, reaching Rs 8 lakh crore (approximately $96.4b), as wartime spending collides with revenue shortfalls.
Additionally, the Indian rupee has seen downward pressure, possibly depreciating to Rs 90–100 against the US dollar, worsening inflationary concerns.
Pakistan’s economy, though vulnerable, is insulated by the smaller scale of its engagement and tighter fiscal controls. Its central bank has remained cautious, and no major currency volatility has been reported to date.
Global calls for de-escalation
Global powers have taken note. The United States, China, and Gulf states have reportedly urged both nations to de-escalate, with back-channel diplomacy underway.
Analysts warn that prolonged hostilities would derail not only national economies but also broader regional recovery post-COVID, with ripple effects in trade, aviation, and energy corridors.
“India’s economy is not built to absorb long, high-cost conflicts — especially not with one foot already in a slowdown,” said Dr. Michael Kugelman of the Wilson Centre.
Last but not the least, both India and Pakistan have absorbed shocks from their latest military confrontation but India’s heavier reliance on global markets, higher military expenditure, and greater exposure to investor sentiment have made its losses deeper and more systemic.
With international markets watching nervously, and regional economies teetering on the edge, the real question is: how long can either side afford this silent economic war?
