AS tensions escalate between nuclear-armed neighbours India and Pakistan, beyond the immediate threat of conflict and casualties lies a more profound danger: the devastation of economies, ecosystems and built environments that would leave both nations permanently scarred, regardless of whichever side claims victory. It’s time for both countries to find ways to de-escalate the rhetoric, and the world to help in crisis management.
The Indus Valley, the cradle of one of humanity’s oldest civilisations, once again finds itself at risk of catastrophic disruption. Even a conventional war would lead to unimaginable devastation, undermining decades of development and condemning millions to poverty traps and climate vulnerability.
Historical lessons: History offers sobering lessons regarding the economic toll of India-Pakistan confrontations. The 1999 Kargil conflict, though limited in scope, triggered a steep drop within days in the Indian and Pakistani bourses. Markets recovered, but the economic impact lingered long after hostilities ceased, with Pakistan’s GDP growth falling from 4.2 per cent to 3.1pc in the subsequent fiscal year. The 2019 Pulwama crisis similarly witnessed market capitalisation losses exceeding $12 billion across both economies within a week of escalation.
A full-scale conflict today would be far more devastating. According to Foreign Affairs Forum on the ‘Economic Impacts of a Full-Scale India-Pakistan War’, the daily costs of military operations for India could reach $670 million, with broader economic losses potentially reaching $17.8bn — equivalent to a 20pc GDP contraction over four weeks of conflict. Pakistan’s more fragile economy is already struggling with depleted reserves and IMF dependence. A war is likely to trigger hyperinflation and shortages of essential goods.
Armed conflict could lead to environmental devastation across ecosystems.
Even India’s relatively larger economy would face severe disruption. Financial markets would experience capital flight. Economists have projected potential foreign investment outflows of $10-15bn within the first month of conflict (Moody’s Analytics, 2024). The rupee in both countries would likely depreciate, and inflationary pressures surge from rising oil prices and import costs. Conflict would slow down global economic growth.
For Pakistan, the suspension of the Indus Waters Treaty would threaten its agrarian economy, constitutes 22.7pc of GDP but consumes more than 95pc of available water. This could trigger water shortages in our canals, particularly during non-monsoon periods. Food security would dramatically worsen — some 200m in India and 40m in Pakistan are already suffering from inadequate nutrition.
The two countries’ already meagre progress towards the SDGs would suffer immense setbacks, pushing millions deeper into poverty through economic contraction, inflation and job losses.
Environmental catastrophe: Armed India-Pakistan conflict could lead to environmental devastation across ecosystems already stressed by climate change. Recent conflicts in Ukraine and Gaza provide dispiriting lessons. In Ukraine, over 7m acres of forests and protected areas have been damaged since February 2022, with some 900 instances of industrial pollution from damaged facilities. The destruction of the Nova Kakhovka dam led to flooding that contaminated vast territories, requiring an estimated €50 billion ($57 billion) and decades for restoration.
Agricultural heartlands in both India and Pakistan would likely suffer long-term contamination, threatening food security for hundreds of millions. The climate commitments of both would fall by the wayside. Pakistan’s pledge to increase renewable energy to 60pc of its energy mix by 2030 and India’s emissions reduction targets would become unattainable if resources shift to conflict and recovery.
Both countries face climate vulnerabilities, which conflict would worsen by damaging infrastructure, disrupting disaster response, and diverting resources from adaptation programmes. Conflict would disrupt supply chains, delay renewable projects and shift government priorities to immediate security concerns, slowing climate actions for resilient and low-carbon development. Historical and geopolitical tensions already complicate India-Pakistan collaboration on climate issues. War would further stall or reverse any progress towards joint climate initiatives, reducing the effectiveness of regional climate action.
Beyond numbers: Statistics cannot adequately capture human suffering resulting from conflict. Civilian casualties, displacement and separation of families create wounds that economics cannot measure. Conflict would further marginalise already vulnerable minority populations. Muslims in India and Indian-held Kashmir are already facing intensified persecution under the nationalist fervour and hysteria that war has triggered. The Modi government’s enabling of religious polarisation will find further targets from Gujrat to Bihar to Bengal as war rhetoric normalises extremist positions.
International intervention: Given these potentially catastrophic consequences, the global community must move beyond passive concern to active intervention and exert its diplomatic and economic influence on Islamabad and New Delhi. The US, with its long-standing security ties to both nations, has a unique capacity to engage military establishments. China, as Pakistan’s close ally and an increasingly important economic partner for India, possesses diplomatic channels that could prove crucial in reducing the war rhetoric. Other major powers should also deploy all available diplomatic tools to discourage adventurism. Intelligence-sharing about terrorist threats could help address legitimate security concerns without resorting to confrontation.
Prosperity over destruction: The choice is stark: continued development with potential for shared prosperity, or mutually assured destruction that would set both nations back by decades. Even a limited conflict would dramatically alter development trajectories, redirecting resources from education, healthcare, and infrastructure towards military expenditure and reconstruction.
Lessons from both Ukraine and Gaza demonstrate the grave consequences when international intervention comes too late or remains insufficient. Those who value the ancient Indus civilisation must ensure it survives to continue its contributions to progress, rather than becoming another tragic example of political irrationality triumphing over common interest. The war drums can still be silenced through determined international action and diplomatic engagement based on mutual benefit rather than zero-sum competition.
