In April 2025, a devastating terrorist attack in Pahalgam, Jammu and Kashmir, claimed the lives of 26 tourists, predominantly Hindus. The Resistance Front (TRF), believed to be linked to the Pakistan-based Lashkar-e-Taiba, claimed responsibility. India accused Pakistan of harboring these militants, leading to a series of retaliatory actions, including “Operation Sindoor,” where India targeted alleged terrorist infrastructure within Pakistan.
Pakistan responded with drone and missile attacks, some targeting Indian cities like Amritsar. India’s S-400 missile defense system intercepted these threats, marking its first combat use. Both nations have since engaged in artillery exchanges, airspace violations, and diplomatic expulsions, raising fears of a full-scale war.
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A full-scale war would impose a massive financial burden. Estimates suggest that a fortnight-long conflict could cost India at least ₹2.5 lakh crore, potentially increasing the fiscal deficit by 50% to around ₹8 lakh crore. Such expenditure would divert funds from critical sectors like healthcare, education, and infrastructure, hindering India’s post-pandemic recovery.
India’s economy, the world’s fifth-largest, has been attracting significant foreign investment. However, escalating tensions have led investors to hedge against volatility, affecting the rupee’s stability and bond markets. A prolonged conflict could deter foreign direct investment, disrupt supply chains, and stall infrastructure projects, undermining economic growth.
India’s burgeoning tech industry thrives on stability. A war could lead to delays in investments, relocation of operations, and a decline in expansion plans. This would not only affect domestic employment but also India’s position in the global tech landscape.
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The closure of borders and airspace has already disrupted trade routes, affecting the movement of goods and services. This disruption can lead to supply shortages, driving up prices and contributing to inflation. Essential commodities, including food and fuel, could become scarce, disproportionately affecting the economically vulnerable.
International actors, including the UN, U.S., China, and Russia, have urged both nations to exercise restraint. India should leverage diplomatic channels to address security concerns, seeking global support to pressure Pakistan into dismantling terrorist networks.
India’s “Operation Sindoor” was described as “focused, measured, and non-escalatory,” targeting terrorist infrastructure without entering Pakistani airspace. Maintaining such precision in military responses can address security threats while minimizing the risk of broader conflict.
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Transparent communication about the government’s actions and intentions can foster public trust and unity. Putting focus on the importance of national security alongside economic stability can help garner public support for de-escalation efforts.
Investing in intelligence and counter-terrorism capabilities can help prevent future attacks without resorting to cross-border military action. Enhancing internal security measures ensures a proactive approach to national defense.
While the security threats posed by terrorism are undeniable, a full-scale war with Pakistan would have catastrophic economic consequences for India. Prioritizing diplomatic solutions and measured military responses can safeguard both national security and the economic gains achieved post-COVID-19. India must navigate this crisis with strategic foresight, ensuring that immediate reactions do not compromise long-term prosperity.
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