Pakistan crisis: Pakistan is caught up in a vicious circle of debt, reminding the world of the recent Sri Lanka’s financial cum political crisis. Though its economy has been unstable for quite some time now, the steep fall in its rupee recently combined with rising debts, soaring inflation, political crisis among others have pushed the neighbouring country to the brink. The Pakistan conundrum should be a cause for concern for India too.
Prices in Pakistan have skyrocketed, potato, onions, oil and other essential goods have gone out of common people’s reach. Unprecedented power outages have plunged the nation into darkness, shutting down transit networks and forcing hospitals to rely on backup generators.
Foreign reserves shortage
The country is faced with a shortage of US dollars and as of January 27, it had reserves of just $3.09 billion. This can cover hardly two weeks of imports. Shipping containers have piled up at ports long lines can be seen at gas stations.
According to the World Bank, Pakistan’s total external debt stocks increased to $130.433 billion by end-2021 from $115.695 by end-2020. The country’s external debt reached $126.9 billion in September 2022, CEIC data revealed.
Pressure is growing by the day on Prime Minister Shehbaz Sharif to unlock billions of dollars in emergency financing from the International Monetary Fund.
Peshawar terror bombing
The situation is increasing alarming. The recent terror bombing of a mosque in Peshawar killing 150 people has broken the country’s back. The situation is bound to have catastrophic consequences for Pakistani people. But shouldn’t India be concerned too?
Economic chaos in Pakistan has intensified coupled with political upheaval. Ever since Shehbaz Sharif ousted Imran Khan in 2022 to become the prime minister, Imran has been fighting tooth and nail to bring Sharif government down.
India’s security concerns
Total collapse of the Pakistani government would make the entire stretch from the Iran-Afghanistan border to Lahore into an extremist hotbed. This would certainly impact India’s security concerns. Terrorism emanating from territories under Pakistan’s control remains a core concern in bilateral relations, according to Ministry of Commerce in India.
If Pakistan collapses, India will be faced with an influx of refugees into its territories. According to reports, people of POK (Pakistan-Occupied-Kashmir) have been keen to join India for sometime now. And with prices of wheat, flour and rice skyrocketing, they may break free anytime. People are fed up, people are protesting in POK, according to reports coming from across the border. If an influx happens, it can lead to law and order issues in India.
This is not all. Deep economic crisis in Pakistan will certainly increase Chinese influence in the country. This might directly or indirectly affect India, which has been at loggerheads with China at the Line of Actual Control (LAC) lately.
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