The High Cost of Living on the Edge: Another terror flashpoint, same economic toll

Defence spending rises while development spending stretches thinner.

India has never had the privilege of a peaceful neighbourhood. Our borders have rarely been just lines on a map. They have been frontlines. Of conflict. Of politics. Of people fleeing danger with nothing but a name, a memory, and the hope of finding safety on this side.

In 1983, as civil war tore through Sri Lanka, Tamil families began arriving by boat on the shores of Tamil Nadu. They were terrified, exhausted, and carrying more grief than belongings. We took them in. Just as we did in 1971, when millions crossed over from East Pakistan. Just as we have done for decades. From Myanmar. From Tibet. From Bangladesh. The subcontinent’s wars have never stayed confined to other lands. India has absorbed the ripple effects — human, social, and economic — time and again.

Today, the pressure cooker simmers once more. Terror strikes traceable to Pakistan create the familiar demand for response. Retaliation is expected. Yet so is restraint. Both sides face international pressure to de-escalate. But at home, there is a different pressure — to act. To show resolve. To prove we will not tolerate provocation. That proof often takes the shape of escalation.

A choice that’s not a choice

This is the tightrope India walks. Every time. A conflict that is unwelcome. A response that is necessary. A choice that is not really a choice at all.

And it is not only Pakistan. The northern border brings its own kind of anxiety. Chinese salami-slicing has slowly changed facts on the ground. Road by road. Post by post. Year after year. A shove here, a stand-off there — all under a fog of ambiguity. It is not a war. But it is not peace either.

Look east, and the borders with Bangladesh and Nepal are open in ways that make life easier for families, but harder for the state. Porous borders bring trade, but also trafficking. They enable migration, but also deep political discomfort. The question of who belongs and who doesn’t never fully leaves these states.

Even the sea has not been still. Our southern flank has seen tensions with Sri Lanka and a history of ethnic conflict that landed on our doorstep. Long before ‘neighbourhood first’ became a slogan, we were absorbing its consequences.

Conflicts squeeze options

Conflict doesn’t just take lives. It takes away options. Defence spending rises while development spending stretches thinner. Inward foreign capital hesitates. Investors do not queue up for uncertainty. In states along borders, highways get built for the army before they are built for the people. Airports are lit up for surveillance before they are ready for tourism. Children grow up seeing soldiers before they see schools.

The real price of our geography isn’t just what we spend on security. It’s the opportunities that never arrive. The businesses that never get off the ground. The towns that stay two steps behind because the state must always be two steps ahead on security.

We are living in what economists might call a permanent low-grade war economy. It does not show up in the form of large-scale mobilisations or daily missile exchanges. But it is deeply present — in defence allocations that climb steadily, in paramilitary deployments across states, and in the strategic priority given to hard infrastructure near our borders. India is not at war. But it is never fully at peace. This in-between state demands readiness without relief, expenditure without the decisive resolution of conflict.

This structural posture has a hidden inflationary effect on national decision-making. Security considerations override economic logic. Industrial corridors, ports, highways and digital infrastructure in border regions are first vetted for their defence utility before their developmental impact. Bureaucratic energy that could focus on competitiveness is redirected to contingency planning. The cost of capital rises in regions seen as volatile. Insurance premiums, logistics inefficiencies, and opportunity losses mount quietly, year after year, war or no war.

Even more corrosive is what this low-grade war economy does to long-term strategic vision. Governments that must always be election-ready and border-alert often default to tactical signalling rather than structural reform. Grand strategy becomes event-driven. Budgets lean on defence procurement, while deeper reforms in agriculture, education and health are postponed. Fiscal space narrows.

And yet, there is no easy alternative. In a neighbourhood that tests resolve as much as it tests patience, signalling strength is not cosmetic — it is existential. But strength must serve a purpose larger than mere reaction. The real test is whether we can convert this burden into a strategic advantage. Whether our investments in defence also enable dual-use civilian spillovers. Whether our readiness can coexist with restraint. And whether our economic choices can be driven not by fear of provocation, but by the pursuit of long-term national power.

So, where do we go from here?

Let’s not allow geography to imprison our creativity

We cannot change our geography. But we can stop being trapped by it. We can invest in border economies like they are frontiers of growth, not just guard posts. We can treat diplomacy not as weakness, but as strategy. And we can accept that national interest is not just about muscle. It is also about imagination.

India will always have a difficult neighbourhood. But that doesn’t mean we must keep living in a defensive crouch. Peace is not a soft goal. It is a hard ask in a hard region. But if we do not ask it — if we do not demand more from our future than survival — then we are only managing our decline.

And that is not the India we have built.