Pakistans economy is in dire straits. Will Pakistan opt for stringent IMF bailout package or additional loans from China under which it is already trapped? At the time of major financial crisis where Pakistan needs USD 12 billion within a month, can India extend monetary support to its neighbour?
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Pakistan’s economy is in a dire state now that the US military has decided to cancel $300 million in aid. Such is the terrible situation that the country urgently needs $12 billion in a month’s time to avoid a major financial disaster.
According to latest figures, Pakistan’s current account deficit stands at $18 billion, while its foreign currency reserves are just over $10 billion. The country had to borrow $439.17 million in the first month of the current fiscal year to keep its foreign reserves above the two months import bill.
As per some experts, much of this debt crisis is the outcome of reckless Chinese lending under the Belt and Road Initiative, which has added to the weight of the long-standing problems. For India, a financial crisis in the neighbourhood, that too in a country with whom it shares a fragile relationship, is a matter of grave importance.
A destabilised Pakistan will be a bigger threat to New Delhi. The Indian government should lend a helping hand to its neighbour in these tough times. Prime Minister of Pakistan, Imran Khan, had already expressed a strong desire to restore fences with India and boost bilateral trade, which had suffered because of Pakistan-sponsored terrorism.
Even then in the last financial year, bilateral trade worth more than $2.4 billion was carried out between the countries in select sectors. However, this figure hardly does justice to the enormous trade potential. According to the Indian Council of Research on International Economic Relations (Icrier), bilateral trade can be jacked up to about $12 billion.
In sectors like textile and clothing, sports goods and surgical equipment, there are tremendous trade opportunities that benefit both countries. Despite continuous needling from terrorists and shelling along the LoC, India continues to give Pakistan the Most Favoured Nation status.
However, despite attempts by civilian governments to bury the hatchet, the deep state in Pakistan and the hawks in India’s foreign policy establishment do not want peace to prevail. Imagine the disappointment in India when the euphoria over the Lahore bus ride was replaced with the Kargil war.
India’s surgical strikes underscored how, despite, international censure, Pakistan continues with terror peddling. This is a good time to make a fresh start. PM Khan must know that terror and friendship cannot go hand in hand. New Delhi is willing to help, but the ISI and the military must step back.