Modi’s Economic War: How India Is Choking Pakistan Into An Abyss After Pahalgam Attack
Pakistan is in no position to survive India’s economic offensive. Currently, India's forex reserves exceed $688 billion, while Pakistan’s have barely crossed $15 billion
A LONG ROPE, NOT A SUDDEN STRIKE
Amrullah Saleh, former Vice-President of Afghanistan, says “India has placed a very long rope around its enemy’s neck instead of using an electric chair for execution."
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In the immediate line of fire are about $500 million worth of goods that Pakistan imported from India in FY 2025. In fact, this figure stood at a whopping $1 billion in FY 2024. For India, these sums of money are peanuts. On the other hand, for a bankrupt country like Pakistan, such sums are often what differentiates life from indignant death.
These are just official figures. Some estimates even suggest Pakistan exports goods worth $10 billion every year via third countries. All of that is now going to stop, as India mounts an unprecedented economic offensive against the terror state. Part of this offensive is suspending the Indus Waters Treaty, banning all direct and indirect trade, shutting Indian ports for Pakistani ships and lobbying multilateral institutions like the IMF and World Bank to stop funding Pakistan.
Imagine a scenario: Western Punjab’s fertile lands turning into barren deserts that are incapable of producing any food. Also associated with such desertification is an almost immediate famine. Why should you imagine such a scenario? Well, it is going to be a reality a few years down the line. Pakistan is an agriculture-intensive country, and 80% of its farming depends on water supplied by the Indus, Jhelum and Chenab. India has begun disrupting the flow of all these rivers. While India does not have the necessary infrastructure to completely shut the taps on Pakistan presently, in a few years, it will.
Until then, India remains in a position to disrupt the flow of water at will – which will have a devastating impact on crops being cultivated in Pakistan, especially cotton and wheat yields. This will first lead to a food security crisis and unprecedented inflation, followed by water scarcity when India develops the necessary infrastructure to completely stop the flow of water. According to Reuters, India has already begun work to boost reservoir holding capacity at two hydroelectric projects in Kashmir.
THE DEBT TRAP: PAKISTAN’S FINANCIAL CLIFF-EDGE
Pakistan is in no position to survive India’s economic offensive. Currently, India’s forex reserves exceed $688 billion, while Pakistan’s have barely crossed $15 billion. Today, Pakistan is caught in a vicious debt-cycle. As of December 2024, Pakistan’s external debt stood at $131.1 billion. Over the next four years, Pakistan has to cough up over $100 billion in debt repayments. In fact, just this year, Pakistan has to make over $22 billion worth of repayments. The obvious question now is, how does Pakistan intend to make such repayments while also fighting a war with India?
The simple answer is, it cannot. Pakistan today is the fifth-largest debtor to the IMF, which recently extended a $7 billion loan to the rogue state. The World Bank continues to provide targeted support, most recently approving $108 million for programmes in Khyber Pakhtunkhwa. Then there is China, which is Pakistan’s biggest external lender. Pakistan owes its “all-weather ally" approximately $30 billion. China’s Export-Import (Exim) Bank has been hesitant to offer additional concessional loans, pointing to concerns over repayment risks. Pakistan’s request in February 2025 to restructure $3.4 billion in debt, along with its appeal to increase the current 30-billion-yuan currency swap line by an extra 10 billion, is yet to receive a response. Evidently, China is realising that Pakistan will not be in a position to repay these large sums of money in the foreseeable future.
Essentially, Pakistan relies on foreign doles to survive as a country. Without these funds, Pakistan will crumble under the weight of its own indebted economy. India has now begun taking steps to ensure that Pakistan is starved of such IMF and World Bank funds, and if successful, this will ring the death-knell for the Pakistani economy. Meanwhile, New Delhi is also ready to fight Pakistan at the FATF, where it is pushing for Pakistan to be greylisted. This will curb the flows of foreign investments, while also triggering an exodus of investors out of Pakistan.
India is also making it extremely costly for Pakistan to trade with the world. Pakistani ships previously relied on Indian ports for trans-shipment, refuelling, and repairs. The denial of these services now forces longer, costlier routes via Oman or the UAE. Similarly, Pakistan’s airspace ban on Indian carriers has led to reciprocal restrictions, which will force Pakistani flights to Southeast Asia, Sri Lanka, and parts of the Middle East to take inefficient detours through Iran or Afghanistan—raising fuel costs and hurting viability. These disruptions will also prompt global aviation and logistics firms to reassess engagement with Pakistan amid growing uncertainties.
The idea of instituting a naval blockade of Pakistan is also on the table. Even a partial Indian naval blockade could severely cripple Pakistan’s economy by disrupting its critical maritime trade routes. Over 90% of Pakistan’s trade, including essential oil and gas imports, passes through the Arabian Sea via Karachi and Gwadar ports. Blocking or even delaying shipments would choke energy supplies, triggering a fuel crisis, power outages, and economic paralysis. The impact on industrial production, transport, and daily life would be immediate and severe. As Pakistan lacks strategic fuel reserves and alternate maritime access, such a blockade could destabilise the country’s economy within days and put immense pressure on its already fragile energy infrastructure.
India isn’t rushing into war—it’s choosing the longer, surer route: economic asphyxiation. By methodically targeting Pakistan’s trade, water security, access to global finance, and strategic mobility, New Delhi is tightening the screws on an already collapsing neighbour. Unlike a military strike, this strategy delivers lasting damage. Pakistan’s fragile economy cannot withstand sustained pressure on multiple fronts—especially when lifelines like China and the IMF are already pulling back.
To make matters worse for Pakistan, this is just the beginning of its woes. After all, Indian military action is both inevitable and imminent. It will strike Pakistan like a thunderbolt, and no global power can prevent this.
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