India stand strong!

No major impact on Indian economy if war takes place in future, says experts

Reacting to the reports of ‘Surgical Strikes’ against Pakistan last week, the Sensex plummeted 465.28 points to end at 27,827.53; whereas the Nifty nosedived 153.90 points to 8,591.25. But, does it mean India is not ready for a full-fledged war with Pakistan if they attack us?

When a country goes to a war, it has a direct cost of war plus the cost of damages that the war inflicts. The biggest problem a war creates is that you cannot look into the future, it creates uncertainty in the minds of the investors and other economic agents. To protect their money, these investors postpone their decisions to a later date or to another country, that cause a larger impact of a war if any takes place.

“If a war does take place between India and Pakistan, there would be a no larger impact on the economy,” said Dr. Dipanker Sengupta, Professor of Economics, Jammu University. He further added, “history has shown that the war between these two countries has never exceeded a month, the 1965 war stretched for about a month and the 1971 war was a two weeks war. So, the war might be short and the money spends on the material and other things would be limited.” There will be no impact on India’s trade and economy, the volatility in the financial markets will also be short lived. India’s exports to the neighbouring country worked out to USD 2.17 billion, or 0.83 percent, of the total Indian outward shipments while imports were less than USD 500 million, or 0.13 percent, of the total inward shipments.

Economic policies play an important role in managing the economic situation of a country after a war takes place. We lagged behind after 1965, 67 and 71 war due to bad planning and economic policies, not because of war expenses. So, if the policy makers of Indian government manage to form strong economic policies, to tackle the shortcomings after a war against Pakistan if there’s any. India won’t have to compromise on the grounds of National Security.

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