What Are the Impacts of the India-Pakistan War in the Short and Long Term?

Published by CMA Knowledge | Updated on May 9, 2025

The escalating conflict between India and Pakistan in 2025 has reignited global concerns about peace, security, and economic stability in South Asia. From cross-border strikes to diplomatic breakdowns, this confrontation has far-reaching effects that extend beyond the battlefield. In this article, CMA Knowledge explores the short- and long-term impacts of the India-Pakistan war on people, economy, politics, and the broader global community.

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Introduction

India and Pakistan have faced decades of strained relations, mostly centered around the disputed territory of Jammu & Kashmir. However, in 2025, a deadly terror attack in Pahalgam and India's swift military response led to a dramatic escalation. This is no longer just a border dispute—it’s a clash with real-time humanitarian, economic, and geopolitical consequences.

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Short-Term Impacts of the India-Pakistan Conflict

1. Humanitarian Crisis

Civilians are the worst affected in any war. In the current conflict:

• Over 26 civilians died in the initial terror attack.
• Cross-border shelling and airstrikes have displaced hundreds of families in Jammu, Kashmir, and border towns in Pakistan.
• Hospitals are overwhelmed, and food and medical supply chains are disrupted.

CMA Insight: A prolonged conflict could trigger a refugee crisis, affecting neighboring states and even Gulf countries.

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2. Economic Shocks and Market Volatility

• Pakistan's economy, already fragile, faces the collapse of its $7 billion IMF program.
• India has seen a dip in stock markets and increased defense spending, impacting infrastructure and public welfare budgets.
• Trade between the two countries is at a standstill, affecting textile, agriculture, and pharmaceutical sectors.

CMA Insight: Investors are moving toward safer markets, reducing FDI in South Asia.

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3. Diplomatic Fallout

• India suspended the Indus Waters Treaty, threatening Pakistan’s water security.
• Pakistan withdrew from the Shimla Agreement, a key peace pact signed in 1972.
• Both countries are recalling diplomats and intensifying global lobbying efforts.

CMA Insight: Diplomacy has taken a back seat to nationalism. Gulf countries and China are attempting mediation to avoid nuclear escalation.

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4. Military Escalation and Technology Warfare

• India launched “Operation Sindoor”, striking camps in Pakistan-occupied Kashmir and parts of Sindh.
• Pakistan responded with missile strikes and drone attacks on Indian army posts in Jammu and Rajasthan.
• Cyberattacks and misinformation campaigns are on the rise.

CMA Insight: The increasing role of technology and drones marks a shift in how modern wars are fought.

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Long-Term Impacts of the India-Pakistan War

1. Economic Backwardness and Poverty

• Pakistan could face long-term debt default, food insecurity, and job losses if the conflict continues.
• India may divert funds from infrastructure and education to defense, delaying development projects.

CMA Insight: The longer the war drags on, the higher the inflation, unemployment, and GDP losses on both sides.

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2. Regional and Global Diplomatic Isolation

• Both nations risk losing allies and trade deals due to their aggressive stance.
• South Asian regional forums like SAARC may dissolve due to India-Pakistan hostility.

CMA Insight: China, the U.S., and Middle Eastern nations may shift their strategic focus away from South Asia if peace is not restored.

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3. Human Rights and Civil Liberties Suppression

• Militarization in Kashmir has increased curfews, shutdowns, and surveillance.
• Journalists and human rights defenders are facing threats, arrests, and censorship.

CMA Insight: Suppression leads to long-term resentment and radicalization, threatening future peace prospects.

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4. Water and Environmental Wars

• India's move to restrict river flows through the Indus Waters Treaty could lead to drought in Pakistan’s Punjab region.
• Dam construction and river diversion may cause ecological disasters on both sides.

CMA Insight: Future wars might be fought not over land, but over water and natural resources.

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5. Nuclear Shadow and Global Security Risks

• With both nations being nuclear powers, even small miscalculations could lead to a global catastrophe.
• The fear of a nuclear war has already prompted UN emergency meetings and military monitoring from NATO.

CMA Insight: This conflict is not just regional—it is a global security concern.

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The Role of CMAs and Financial Experts

As professionals in cost and management accounting, CMAs can contribute to:

• Disaster budgeting and crisis financial planning
• Calculating economic war costs and advising governments on efficient defense spending
• Analyzing the financial impact of disrupted trade routes and inflation trends

CMA Knowledge encourages CMAs to stay informed and involved in policy advisory, especially during turbulent times.

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Conclusion

The 2025 India-Pakistan war is a stark reminder that unresolved conflicts can quickly spiral into economic crises, humanitarian tragedies, and global instability. Short-term effects are visible in civilian suffering and financial disruption, but the long-term consequences—if not addressed—may include generational poverty, geopolitical realignment, and regional collapse.

It’s time for both nations to return to the table of diplomacy, backed by economic reasoning and human compassion.

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