According to international ratings firm moody's, India's economy is unlikely to experience significant disruptions amid simmering geopolitical tensions with pakistan, even in the case of a protracted flare-up.
 
Moody's stated in a note on monday that the nation's macroeconomic stability is still intact because of its strong domestic fundamentals and low economic exposure to Pakistan.
 
The broader macro picture is stable, according to moody's, even though a protracted battle would result in increased defense spending and perhaps slower fiscal consolidation. India's growth trajectory is still being supported by robust consumer demand and strong governmental investment, even as the pace slows down from earlier highs.

On the other hand, pakistan can suffer much greater harm from the same situation.  "Sustained escalation in tensions with india would likely weigh on Pakistan's growth and hamper the government's ongoing fiscal consolidation, setting back Pakistan's progress in achieving macroeconomic stability," according to Moody's. 

"Comparatively, the macroeconomic conditions in india would be stable, bolstered by moderating but still high levels of growth amid strong public investment and healthy private consumption," the analysts at the rating agency stated in a note.
 
According to estimates, India's economy grew by 6.5% in FY2024–2025. The government is aiming for a fiscal deficit of 4.4% of GDP in the current fiscal year.  Additionally, it wants to reduce its debt-to-GDP ratio from 57.1% in FY25 to 50% by FY31. Starting in FY27, it will use an annual debt target framework.
 
Pakistan is still in junk territory at Caa2, although having a positive outlook, while india is currently rated at Baa3 with a stable outlook by Moody's.  

A deadly attack on tourists in kashmir - SRINAGAR/JAMMU' target='_blank' title='jammu and kashmir-Latest Updates, Photos, Videos are a click away, CLICK NOW'>jammu and kashmir on april 22 sparked the most recent round of diplomatic tension between the nuclear-armed neighbors.  In response to India's suspension of the 1960 Indus Waters Treaty, in which pakistan has denied involvement, pakistan declared the 1972 Simla Agreement in abeyance and closed its airspace to indian commercial carriers.
 
Given the minimal trade and financial ties between the two countries, moody's maintains that the consequences of the dramatic decline in diplomatic ties are unlikely to translate into wider economic instability for India.
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SIBY JEYYA

06/05/2025 08:58 AM