Kashmir, a region locked between India and Pakistan, where troubles were ignited after the momentous partition and the Indo-Pakistani war of 1947, has stayed the primary focus in national conflict. Being an ethnic Indian, the recent news on Modi removing what little autonomy was help by Kashmir through revoking Article 370 seemed short-sighted. Shashi Tharoor, Congress party MP said in the Low Sabha, ‘this is an assault on the constitution of India, an assault on the spirit of co-operative federalism, an assault on our democratic practices, and an assault on the individual liberties of each and every one of our citizens.‘ This short paper will fetch to analyse why conflict has continued, what this impacts, and what I see happening in the near future.
Background, why have conflicts sustained so long?
The region’s GDP of £14 billion(2017-18), matched only 5.57% of Pakistan and only 0.654% of India’s. Solely under the simplest of economic measures, there shouldn’t be any economic drive to have Kashmir. The economics behind this conflict, therefore, goes beyond economic theory, and lands in political and national sentiment. Pakistani support is rallied on the lines that the state naturally falls into the ethnic dimension of their country, Kashmir hosts a 96.4% muslim population. On the other side of the LoC, India require Kashmir to herald a multi-ethnic crowd within India. Since the clash was never resolved, despite promises and treaties being thrown around, a Line of Control(LoC) was formed across the division of areas dedicated to Pakistan and India. With several hundred thousand soldiers arming the borders, shellings and skirmished are often and simple add to tensions, they have since fought three wars over Kashmir.
The feasibility in finding rationale and commonplace between the two nations is lost in their politics.On the one hand, Pakistan is held in a political deadlock. The leading centrist party, ‘Pakistan Tehreek-e-Insaf (PTI), can be seen clamouring to get the votes of several independent candidates that not only have active corruption cases on going, or have been involved in corrupt practices in the past.’ No real national political party has existed in Pakistan where the citizen will be guided to act as one nation. There are numerous regional parties whom propagate and spread the venom of authenticity and isolation. Similarly, India’s political industry is simply confused. Modi over-domineering domestic enterprise, encourages nothing more than a growth-mirage.’Corruption’ best reflects for example how the election campaign of India is one of the most non-transparent when it comes to funding.
How does this struggle impact the two nations?
From an economics point of view, we can argue such growing tensions affects the certainty and stability of the economy for an investor. The pressing threat of an outbreak between the two nuclear powers hinders confidence and so may lead to a plethora of consequence, the most obvious being falls in FDI and depreciation due to less hot money inflows. Nevertheless, Indian growth, for example seen via FDI which has increased 35.03% since 2014, has not faltered. Although such data suggest no evident impact from the conflicts arising, there is certainly an aforementioned blanket of doubt cast over the promising stability of the economy.
To assess this ‘impact’ we ought to ask as well, what could a fully liberalised Kashmir provide for. Beyond an obvious boost in government revenue via tax and tourism, the area would serve as a platform for new business investment and opportunity, expanding the territorial reach of the economy and so add to their growth stimulus. Currently and preceding the shutdown following the revocation of Article 370, the interlocked region repeatedly fails to output near maximum capacity due to the innumerable number of restrictions; it serves only as a hole for Indian and Pakistani governmental resources to be poured into their army to maintain security. A breakthrough for Kashmir would remove huge fiscal pressure of the nation, particularly Pakistan with a debt 68.5% of GDP and a predominant reliance of World Bank funds.
What can we forecast in the future?
As highlighted before, the political system of both nations place unofficial barriers to the liberalising of Kashmir, despite the several agreements how it should be run, they fail to stand. Beyond economics, geographical reasons prevail as well, on the lines that it opens up India to terrorism and open attacks that are bred in their counterpart. A potential solution has been to hold plebiscites in Kashmir for the Muslim-majority to decide where they belong, but is also predictably disputed. In sum, it again rests in the ability of India and Pakistan to reach an agreement on how the region is utilised. Adhering to their proposed lines of action mean resources can be used to their maximum efficacy and resources, as discussed previously, are not thrown at indisputably unnecessary causes. Going beyond theory shows why conflict have sustained, but economics shown us how this conflict theoretically hinders each nation’s capabilities, and so stimulates an incentive to climb out of the struggle.
Economics Relate 