By all accounts, India is scripting one of the most remarkable economic growth stories of the 21st century. According to the International Monetary Fund’s (IMF) April data, India is on the verge of overtaking Japan to become the world’s fourth-largest economy by 2025, with a nominal GDP of $4.187 trillion—just a hair’s breadth ahead of Japan’s $4.186 trillion. By 2028, India is expected to leapfrog Germany to become the third-largest economy globally. And by 2030, it could outstrip Germany by a whopping 20%. Yet, even as India climbs the global economic leaderboard, an old adversary looms again on the horizon. With hostilities flaring on the Pakistan border and full-scale military engagement underway, a question naturally arises: Can India afford a war right now? India’s economic resilience is no accident. Structural reforms like the Goods and Services Tax (GST), digital infrastructure expansion, startup ecosystem growth, and massive capital expenditure on roads, railways, and renewable energy have created a fertile ground for sustained growth. Foreign direct investment is pouring in. Manufacturing under PLI (Production-Linked Incentive) schemes is finally taking off. And crucially, the Indian consumer is optimistic, unlike their counterparts in many advanced economies. But war—even when morally or strategically justified—is a brutal economic detour. If the conflict with Pakistan ends swiftly, say within a week or ten days, the economic impact may be marginal. Global markets may flinch, the rupee might wobble, and oil prices could momentarily spike—but India’s fundamentals are strong enough to absorb the shock. It’s a storm we can weather.
However, if this conflict drags on—weeks turning into months—it will begin to erode the very foundation of our economic momentum. History offers sobering examples. The Russia-Ukraine war has left both economies bruised and global food and energy markets disrupted. The Israel-Hamas war has turned the Gaza economy to rubble while draining Israel’s resources in a conflict without a clear exit strategy. For India, a prolonged war means a diversion of budgetary allocations from infrastructure and development to defence and relief. It means inflationary pressures as oil prices surge and insurance costs rise. It may delay foreign investments as geopolitical risk premiums shoot up. The stock market, now a pillar of middle-class wealth creation, could see deep corrections. The rupee might slide further, making imports costlier and pushing inflation higher. Unlike in previous decades, India today is economically and militarily stronger. Pakistan, on the other hand, is teetering on economic collapse. With inflation above 25%, foreign exchange reserves barely covering a month’s imports, and an IMF bailout tied to painful reforms, Pakistan can ill afford a drawn-out war. Which is why it may try to internationalize the conflict, playing the victim card to drag in global powers. India must avoid that trap. We cannot allow a cornered neighbour to dictate our economic future. Surgical, swift, and strategically decisive military action is the need of the hour—precise enough to neutralize threats, but restrained enough to avoid getting bogged down in a war of attrition. India’s policymakers are now walking a tightrope between geopolitical compulsion and economic aspiration. The government’s challenge will be to sustain growth amid volatility and reassure markets, investors, and citizens that India is not veering off its economic course. Already, global firms looking to exit China are eyeing India. The ‘China+1’ strategy is a golden opportunity that cannot be squandered. Every week lost to conflict is a week gained by our competitors. War may test India’s mettle, but it must not derail our mission. The world’s eyes are on us—not just as a rising power, but as a responsible one. The battlefield must not become a graveyard for our economic dreams.