The choice of Pakistan, in reaction to the reversal of Article 370 in Jammu and Kashmir, to decrease its bilateral trade and diplomatic connections with India does not dent the Indian economy. Instead, Pakistan’s crumbling economy will be harmed. The reason is easy: Pakistan is very much included in the list of trade partners in India: 48th precisely. Indeed, in Pakistan’s economic study FY19, India is ranked 6th in the list of its main importing nations.
In 2018-19, the trade of Indo-Pak was barely 0.1 pcs of the complete trade of India. India’s exports to Pakistan amounted to 2,06 billion dollars in 2018-19, and its imports stood at only 0,49 billion dollars. India imports from Pakistan products such as mineral oil, fruits, salt, sulfur, calcareous, golds, slags, rawhides, leather, etc.; exports cotton, organic chemical materials, plastics, paints, and equipment.
This is insignificant in comparison to India’s trade with nations such as the United States and China. India’s trade with the United States was the lowest at $87.96 billion in 2018-19, while China’s neighboring trade was $87.07 billion. India is highly dependent on both export and import nations. In 2018-19 India exported 52.41 billion dollars in products to the US, while imports amounted to 35.55 billion dollars. The trade equilibrium between India and China is also immense-it exported $16.75 billion worth of products and its China import amounted to $70.32 billion in 2018-19.
With the US and China, 49.62% of the trade of India was in nations such as the UAE, Saudi Arabia, Hong Kong, Singapore, Iraq, Germany, South Korea, and Indonesia (45.47% exports, 52.29% imports).
In the last four years, despite increasing diplomatic tensions between India and Pakistan, the level of export development-with the exception of FY17 (when exports decreased by 16%)-has been positive. Imports were up 3.05% in the FY17 (0.45 billion dollars), 7.5% in FY 18 (0.49 billion dollars), and 1.29% (0.495 billion dollars) in FY 19.
India’s trade with Pakistan accounted for only 0.6% of total exports by $330.08 billion in 2018-19. India’s 2018-19 imports of 514.08 billion dollars represented 0.1% of complete trade in the year. In the previous four years, these figures have changed marginally.
The Pakistan embargo on trade with India arises at a moment in which Pakistan’s economy is being lifestyle by China, Saudi Arabia, the United Arab Emirates and bodies such as the IMF. In Pakistan’s hopeless 2018 effort to sell buffaloes and luxury vehicles, PM Imran Khan is now the least that Pakistan can afford.
To those who are curious–yes, Pakistan sold buffalos for government coffers. The government of Imran Khan purchased eight buffalos held at the Prime Minister’s house by his predecessor Nawaz Sharif as part of the austerity measures following his arrival at power.
Pakistan’s foreign reserves are only $7.76 billion, which is even smaller than Bangladesh’s $32 billion forex reserves. The GDP prediction in Pakistan has also been revised down to 4 percent. In June 2019, Pakistan’s inflation stood at 8.9 percent.
This year Standard & Poor’s reduced its loan score to B-(speculative), six steps lower than the asset score of AAA. This makes raising capital on the foreign bond market prohibitively costly for Pakistan.
India, meanwhile, continues unfazed as Pakistan decreases its ties on Wednesday. India will retain the status quo on the suspension of trade with Pakistan that came into effect in February following the terrorist attack by Pulwama that killed 44 jawans of CRPF. India also withdrew Pakistan’s Most Favoured Nation (MFN) status, increasing import responsibilities by 200%.