For a fragile economy like Pakistan, war or no war would be the gap between disaster and absolute disaster. However, the Indian economy stands to lose a lot more; especially considering it is now among the top-5 global economies in terms of nominal GDP, and inching to fourth position. India not only sustained growth in the last 4 years, but has also been taking away a slice of the global manufacturing action from China. India, clearly has a lot more at stake in a war. 

One of the common comparisons is that India emerged much stronger after the 1999 Kargil war. Remember, India was much smaller back then. In 1999, India had a GDP of around $450 million. Even, leaving aside the exchange rate shifts, the current Indian economy is more than ten times that size. In this period, the per capita income of India has also grown by nearly 6 times. But the big shift is that India has emerged as a real power on the global table. Today, India is among the largest manufacturers in the world, does annual trade of $1.74 Trillion, if you add goods and services trade. But there is a much bigger story! 

In the last 3 years, Apple has given a big boost to its India outsourcing. Close to 20% of all iPhones made by Apple are now manufactured in India and this share is set to go up to 35-40% in the next few years. In the next couple of years, the entire US procurement of the iPhones will be made in India only. This is just the beginning, and there is a lot more of global manufacturing coming to India. The only country that gains if India is caught up in a multi-directional war is China. Remember, Bangladesh is also fairly unstable, and they would also look to join in. India must be cautious that it does not get into a growth mess.

That is the problem. India has been following a policy of self-restraint for a long time and Pakistan assumed that India will not react. India has to make a clear statement that it may not initiate a war, but it would not sit back and watch an aggressive act from the neighbor. In a sense, Pakistan is in an economically hopeless situation. The danger with having neighbors who have nothing to lose is that they are bound to act in an irrational manner. Amidst the war cries, India must not lose sight of a basic fact. The only country that benefits from the current war is China, since the war has forced India to focus more on its border and less on its business. The war must end; as fast and decisive as it began!