How Long Can Pakistan Survive A War With India?

Nervi belli, pecunia infinita — "The sinews of war are infinite money".

A pithy quote that summarises the conduct of war. With money comes the wherewithal to sustain the military and thus triumph over the enemy.

World War 2 is a telling example of this. The German Wehrmacht was doctrinally superior, had well-trained soldiers across all ranks and in the period 1939 to 1941 June, simply steamrolled the allied states. Even in the initial stages of Operation Barbarossa, it killed or captured a staggering numbers of Soviet troops. Yet, by August 1941, the war was lost. Simply because Soviet Russia, even without lend-lease, could outproduce the German Reich.

With the entry of the sole manufacturing hegemon of the war, the United States, defeat for Germany just became a question of when, and not if.

Kautilya in the Arthashastra asks for the wise ruler to first safeguard his treasury as from the treasury flowed power and armies. “Pisuna says that of the troubles due to the absence of forts and to want of finance, troubles due to want of finance are more serious; the repair of fortifications and their maintenance depend upon finance; by means of wealth, intrigue to capture an enemy's fort may be carried on; by means of wealth, the people, friends, and enemies can be kept under control; by means of it, outsiders can be encouraged and the establishment of the army and its operations conducted. It is possible to remove the treasure in times of danger, but not the fort”. (Arthashastra Book 8, Chapter 1).

Kautilya simply puts it in an earlier chapter, “A king with a depleted treasury will eat into the very vitality of both citizens and country people”

What Kautilya and Cicero said 2000 years ago is still relevant and lessons the Pakistani establishment still hasn’t learnt.

After the dastardly Pahalgam attack and India's retaliatory 'Op Sindoor', India and Pakistan are on the brink of war. In this situation, one thing is clear—while Pakistan might have short term parity in arms (airforce and army mostly), it simply lacks the economic muscle to pull together any war that goes on beyond a month or so.

'Guns vs butter' is a simplified model to study defence vs civilian/social programmes. Here, Pakistan is taking the lead from Germany, as Goebbels said: “Guns will make us powerful; butter will only make us fat."

Overall macro indicators suggest that Pakistan’s economy, already teetering in a precarious state, simply cannot afford to prosecute a war any longer than a few weeks.

Taking data cues from the Ukrainian war, we could extrapolate these to the Pakistani economy to understand the trajectory it could take.

Defence Spending

Before the war, Ukraine’s defence spending was similar to Pakistan’s, but it surged from 4.4 per cent of GDP to 25.9 per cent in the first year of war, and further to 36.7 per cent by 2023. Ukraine however offset this increase as it has received an estimated US$ 430 billion in aid (military and civil).

The Ukrainian government's defence expenditure, pre-war in 2019, was around $40 billion, so it has received in aid an estimated 10 years worth of funding. Pakistan will not have access to this level of aid (if at all) to offset a drastic increase in military funding, which means it would have to fund it via deficit financing.

Pakistani fiscal deficit which was at around 4.8 per cent last year has been reduced but still remains significantly high. Again a comparision with Ukraine here is telling. Ukraine’s own revenues have been propped up by foreign aid and donations, yet its fiscal deficit has still tripled in real terms. Pakistan, lacking that cushion of external support, faces a grimmer outlook — its deficit is likely to rise even faster.

Printing more currency could offer temporary relief, but would almost certainly fuel further inflation — something Pakistan, already hit by soaring prices in 2022, 2023, and 2024, simply cannot afford.

Ukranian inflation surged two-fold after the war started, and went upto a peak of 20 per cent. A similar surge in Pakistan would put it in hyper-inflationary levels (50 per cent or more) or just short of it. Either way, this would prove deeply unpopular in a country already wrecked with unrest.

Which would leave it with one recourse to funding this war, loans. But here too, Pakistan is short of options. Its external debt is already at $100 billion and it spends 50 per cent of its government expenditure on servicing external debt. Its bond yields are already high to begin with and a wartime scenario would only drive paper prices up further.

--For Pakistan Investment Bonds (PIBs), the yields can range from 10 per cent to 14 per cent depending on the maturity and market conditions.

--The short-term Treasury bills (T-bills) often offer yields of around 15 per cent to 17 per cent, reflecting Pakistan's higher risk and inflationary pressures.

Pakistan also lacks the forex reserves to prosecute a war any longer than few weeks at best.

Pakistan’s foreign reserves hit a decadal low in 2023 and are only now showing signs of recovery — still barely enough to cover just two months of normal peacetime imports. The country spends around $400 million monthly on Petroleum, Oil, and Lubricants (POL), and another $200 million on palm oil, amounting to approximately $8.5 billion in total annual import costs.

Pakistan’s $10 billion in reserves would barely cover a year’s worth of oil imports alone. But the country also imports machinery, automobiles, medicines, food, and military equipment — averaging $5.3 billion in total monthly imports. Cutting off this flow would cripple the broader economy.

While Pakistan continues to sabre-rattle and project an image of confidence, it simply lacks the financial muscle to back it. The only viable path forward lies in large-scale infrastructure development, investment in education, and a genuine pursuit of peace with India — but that would mean challenging its very raison d'être. So, it marches steadily towards self-inflicted ruin.