Indranil Banerjie | If Pakistan implodes, India has to deal with the fallout

Pakistan could be imploding. All the king’s men -- in this case the Americans, the Chinese and the Saudis -- are busy trying to put together Humpty Dumpty again. This routine, enacted many times before, might not work this time.

Ironically, while Pakistan’s best friends could well walk off without a scratch if things go sideways, the one country that is unlikely to remain unscathed is India. Any fallout from the mounting mess in Pakistan will inevitably splatter India.

New Delhi’s presumption that it could remain insulated from its vicious neighbour is only superficially sensible. Given that no one can choose their neighbours, like it or not, India cannot remain aloof from Pakistan or look the other way as crisis after crisis gradually unravels in that country.

India needs to respond, but how it does so will depend on the nature of the crisis currently engulfing Pakistan. If it is only a blip in a long and troubled history, then remaining aloof might still be the best option, but if the crisis is of a systemic nature, then New Delhi’s response needs to be much more proactive.

The economic data suggests that the financial crisis currently engulfing Pakistan is not the result of random external events such as the Ukraine war, a rising American dollar or soaring oil prices. Rather, it is systemic, brought on by years of profligacy at all levels of the economy.

The government – whichever be the party or the Prime Minister in power -- has been spending more than it earns for decades, the rich do not pay taxes and spirit away astronomical sums of money outside the country while the common man finds himself with little left to save. Added to this is the cash-guzzling military machine that needs billions to feed its huge army, terrorist mercenary forces, a modern air force and a growing nuclear arsenal.

Pakistani columnist Ishrat Husain, writing in The News, last year pointed out: “Pakistan has become a laggard in South Asia, facing episodes of boom and bursts. The country had to approach the IMF for meeting its balance of payments crisis 22 times in the last 30 years… Pakistanis consume more than they save -- both the government as well as households. They import more than they export, have low investment rates in private and public sectors but aspire to grow well beyond their means. Unless these recurrent imbalances of fiscal, trade, financial, savings and investment gaps are bridged the situation would remain unchanged.”

Not surprisingly, this has translated into a low and diminishing savings rate, the one economic indicator to watch in any developing economy. In 2021-22, the savings rate was estimated at a pathetic 4.5 per cent down from a peak of 17.4 per cent in 2004. In comparison, India’s savings rate is 28.2 per cent (2021).

Making matters worse is a continuously growing population. While the population growth rate has declined from a high of 2.8 per cent in the mid-1990s to about 1.9 per cent in 2021, this is still among the highest in the world. During 2012-21, Pakistan’s population rose by a whopping 23.6 per cent -- even Bangladesh was way behind at just 12.2 percent, and India at 11.2 per cent.

Given Pakistan’s declining productivity, it is not surprising that Pakistan’s per capita income of $1,505 (2021 World Bank estimates) is lower than the average for South Asia as a whole which is $2,149. At one time not so long ago, Pakistan’s per capita income was the highest in the region.

For the first time in its history, the ordinary Pakistani is facing food shortages and skyrocketing food prices. Food inflation averaged close to nine per cent during the past decade, peaking at an all-time high of 45.1 per cent in February 2023. A recent article in the Guardian reported that the collapsing economy was prompting thousands to flee Pakistan.

The Pakistani rupee has all but collapsed and the country is staring at a huge external debt mountain. Handouts from the International Monetary Fund, China and Saudi Arabia can at best buy it a little time but the rock of profligacy has rolled too far down for Sisyphean efforts to work.

This tinderbox situation is made worse by the nation’s rapidly worsening political climate where the supreme authority of the Pakistan Army is under serious challenge and the maverick cricketer-turned-politician Imran Khan has emerged as a major threat to the establishment after being its one-time pawn.

The terminal nature of Pakistan’s problems demands decisive action.

India’s involvement could be purely charitable but that is unlikely to help given that money is already being pumped in to stem Pakistan’s financial haemorrhage.

Similarly, sweet words, shipments of medicine or food, and so on are unlikely to change anything. A far bigger endeavour is called for.

If and when Pakistan’s state structure begins to crumble, New Delhi must be in a position to influence power centres in that country in order to hoist an alternative in place.

Only India is up to this task given that Pakistan’s supposed friends have never made the slightest effort to replace the malignant forces that have ruled that country since its inception in 1947. This despite being fully aware that by its record of incompetence and malevolence, Pakistan’s military-dominated regime has long forfeited the right to its continued existence.

Towards this end, New Delhi must immediately begin covert and overt communications with various power groups within Pakistan to ascertain how they see events unfolding in their country and how best a democratic, equitable, federal system could be established in their country over the ruins of the defunct regime.

The alternative could be the complete disintegration of Pakistan and a period of great distress that would cause untold suffering in that country and potentially injure India as well.

This is therefore no time to sit back and watch the show. New Delhi must step in and forever extirpate the irredentist forces that have ruled Pakistan and eventually brought it to its knees, impelled by their sole ideological purpose -- the destruction of India.

India has survived and is on an ascending trajectory; so, it simply cannot afford to remain indifferent towards a vast wasteland extending from its western borders all the way to Central Asia and Iran, populated by ineffective state apparatuses, ungoverned ethnic warlords, fragile principalities and terrorist fiefdoms. It is in the interest of both New Delhi and the world at large to engineer a functioning but benign state in Pakistan.