India’s 7 May, 2025, missile strikes into Pakistani territory signal a troubling escalation in South Asia, but rising beneath the jingoistic slogans and political posturing is one of unsound decision making that runs against India’s own economic and strategic interests. The way in which the Modi government turned to military force to support its campaign, victories celebrated by both the government’s political rivals and the general public, is indicative of leadership for the sake of optics and electioneering rather than consider the longer term wellbeing of its citizens or regional stability. For its part, India asserts that its actions were a measured response to terrorism, but the facts show India’s costly and ultimately self defeating approach to fighting the scourge.
Before the recent escalation, analysts had warned that India’s military spending was eating up money that is needed for the building of the $1.4 trillion of infrastructure
First, it costs India an inordinate amount in economic terms. India’s 2025–2026 defense budget rose by 9.5 percent to a record $78.8 billion, but only a small part of that is dedicated to modernization and procurement of weapons. Most of the money goes to paying salaries, pensions, and maintenance. Not only is this bloated defense spending wasteful, but it is at the direct expense of investment in infrastructure, education and healthcare. Before the recent escalation, analysts had warned that India’s military spending was eating up money that is needed for the building of the $1.4 trillion of infrastructure India set as goals and also for Sustainable Development Goals. The opportunity cost is immense: For every rupee spent on fighter jets and missiles, it is a rupee not spent on schools, hospitals or clean water for India’s hundreds of millions of poor.
During the 2001–2002 standoff, India lost $1.8 billion, and a prolonged conflict would be more costly now with the level of weaponry and scale of operation
Another dimension related to India’s macro-economy and the war economy are its acute risks to the country’s financial stability. Nevertheless, the Nifty50 index seemed to hold up well at first, however, history shows that even a limited conflict leads capital flight, currency depreciation and investor panic. During the 2001–2002 standoff, India lost $1.8 billion, and a prolonged conflict would be more costly now with the level of weaponry and scale of operation. Further down, private investment, already stagnating at 19.5 % of GDP, will retreat, as corporations hedge their supply chain risk and potential sanctions. Now it is the government’s own growth targets that are in jeopardy: Earlier this year, S&P Global revised India’s growth forecast to 6.3% for 2025–26 on account of global headwinds further heightened by instability in the region. In other words, while Modi’s sabre rattling will receive applause immediately, it is selling the economic future of India.
India has claimed that it used advanced technology to reduce civilian casualties to a bare minimum, a claim which is not vindicated by reports of dozens of deaths, children and civilian infrastructure such as mosques being destroyed
India’s diplomatically and strategically speaking, India’s actions have also backfired. These strikes are far from isolating Pakistan, and have instead invited condemnation from across the world and increased the chances of broader war. Maximum restraint has been called for by the United Nations, which said the world simply cannot afford a military confrontation between two nuclear armed states. However, India has claimed that it used advanced technology to reduce civilian casualties to a bare minimum, a claim which is not vindicated by reports of dozens of deaths, children and civilian infrastructure such as mosques being destroyed. Such incidents not just tarnish India’s moral standing internationally but also serve as meal ticket for extremist recruitment and destabilize Kashmir further-the precise end for which India has claimed to be fighting.
Another example of such short sighted policy is the suspension of the Indus Waters Treaty which was meant to put economic pressure on Pakistan. It may make nice soundbites for nationalists, but threatens the development of a humanitarian crisis and contravene international norms, all while undermining India’s image as a responsible regional power. On the other hand, closure of trade routes and collapse of bilateral trade worth $1.2bn annually will have far-reaching effects on both economies and especially on the border communities and small businesses that depend on trans border trade.
The truth is that militarization drives poverty, bogs down development, and preserves a feedback loop of violence that enriches only the brass of defense contractors and political elites
The most damning is perhaps the Modi government’s preparedness to play on national security for political benefits. Because opposition parties near unanimously supported the strikes, and public opinion is viewing the strikes as a question of national pride, this has created a toxic, harmful consensus that substitutes military spectacle for real security or even economic progress. The truth is that militarization drives poverty, bogs down development, and preserves a feedback loop of violence that enriches only the brass of defense contractors and political elites. For ordinary Indians, meanwhile, there is the pain of high inflation, disrupted supply chains and unbridled fear of escalation.
Taken together, India’s May 7 strikes and India’s turn toward a war economy constitute a failure of leadership and vision of mind boggling proportions
Taken together, India’s May 7 strikes and India’s turn toward a war economy constitute a failure of leadership and vision of mind boggling proportions. The government has decided to tackle the problem, through militarism and escalation, instead dealing with the root problems of insecurity – poverty, unemployment, and regional grievances. The costs, in terms of lives lost, resources wasted and lost opportunities, will remain with India for years to come. Security and prosperity can only be genuine if India walks away from the illusions of military glory and commit itself to the peaceful development of its country and its region.
