Rama Krishna Sangem
Many in India were recently surprised to hear from Prime Minister Shebaz Sharif led new government in Pakistan that it wants to resume trade relations with India, suspended five years ago. Currently, Pakistan is in a financial distress and wants to have cash in hand – to tide over its pressing economic problems. Having trade with India will be a big relief to the beleaguered country.
In fact, it is Pakistan which cut off trade relations with India in 2019, after PM Narendra Modi abrogated Article 370, grating special status for Kashmir. Since then, Pakistan has been facing troubles on the foreign trade front with India. So, Pakistan finance minister Ishaq Dar’s proposal to restore trade and commerce with India is a sort of climb down to the country. But is it a sign of big changes to happen soon? Maybe not.
Dar’s statement should not come as a complete surprise. His party, the Pakistan Muslim League-N, has a very particular class basis: It’s an alliance between the semi-urban petty bourgeoisie and large industrialists such as its leader, former Prime Minister Nawaz Sharif. These constituencies have always seen the benefits — for themselves and for Pakistan — of normalising trade ties with a large and growing India.
25 billion US dollars trade
Those gains are potentially substantial, especially for a country as desperate for hard currency as Pakistan is today. The World Bank estimated in 2018 that Pakistan’s exports could increase by as much as 80 per cent — about $25 billion at that point — if trade with India reached its potential, according to an assessment in Bloomberg media.
At this point, Pakistan simply can’t afford to forego billions of dollars. Its economy is on life support, stumbling from handout to handout. It just managed to secure the last tranche of a $3 billion bailout from the International Monetary Fund, and Prime Minister Shehbaz Sharif — Nawaz’s brother — indicated that more money would soon be needed. Without further cash, he said, restoring macroeconomic stability would be impossible.
The problem is that Pakistan needs India far more than India needs Pakistan. The Indian economy is stable and India remains deeply reluctant to open its markets to other developing countries who might put local producers out of business.
If anything, Indians seem to have collectively decided that we can afford to ignore the nuclear-armed nation of 230 million people on our western border. India’s economy is more than 10 times the size of Pakistan’s. In the 1970s, Pakistan’s per capita income was about twice India’s; today India’s is 50 per cent higher. Moreover, India now may insist on ending all forms of terror against Kashmir, from bases out of Pakistan.
When Pakistan does intrude into India’s insular politics, it generally isn’t for good reasons. Modi won re-election in 2019 after he sent fighter jets across the Line of Control in Kashmir following an attack on an Indian army camp. Naturally, Modi government is not in a hurry to respond to the wishes of Pakistan to resume trade and commerce. This maybe considered after the Lok Sabha elections in June 2024.
