Harsh Goenka: 'If Indo-Pak tensions escalate, brace for economic tremors. Rupee may wobble'

Chairman of $3.6 billion RPG Enterprises, Harsh Goenka.

Amid escalating tensions between India and Pakistan, industrialist and RPG Group chairperson Harsh Goenka has shared how further escalation could hurt the Indian economy. Taking to X, he urged others to be careful as war weakens economies "even for the winner".

"Let’s be careful," Goenka wrote. "If Indo-Pak tensions escalate, brace for economic tremors: Rupee may wobble, foreign investors flee to safer shores, oil prices could spike, defence spending shoots up, infra takes a backseat, markets dive."

His post drew a mixed reaction from online commentators. While a section of them slammed and trolled Goenka, others lauded his effort to discourage people from warmongering.

"We need to stop shivering in our pants after so many terrorist attacks just because we made a good living when others died. Sacrifices are needed," wrote surgeon and X user @shiv_cybersurg. Photographer and producer Atul Kasbekar (@atulkasbekar) disagreed. "While we definitely need to respond to an attack within our borders; I sincerely hope that wiser counsel has more sway than bruised egos do. Neither country needs a battle."

Escalation would slow fiscal consolidation of India, Pakistan: Moody's Ratings

According to Moody's Ratings, sustained escalation in tensions with India would likely weigh on Pakistan’s growth and hamper its ongoing fiscal consolidation, setting back Pakistan’s progress in achieving macroeconomic stability. It also highlighted that an increase in tensions could also impair Pakistan’s access to external financing and pressure its already low foreign-exchange reserves.

For India too, the escalation would result in higher defence spending and would potentially weigh on the country's fiscal strength and slow its fiscal consolidation, the rating agency said. It, however, added: "We do not expect major disruptions to India's economic activity because it has minimal economic relations with Pakistan (less than 0.5% of India's total exports in 2024)."

Hostilities between India and Pakistan heighten credit risks for both nations: S&P

On Thurdsay, S&P Global Ratings said the hostilities between India and Pakistan heighten risks to the credit metrics of both countries, and any escalation in clashes would put downward pressure on sovereign credit support. S&P, which rates India and Pakistan at 'BBB-' with a positive outlook and a 'CCC+' (outlook stable), said that in the current scenario, it does not see any immediate impact on sovereign credit rating and expects the tensions to remain high over the next two to three weeks, with significant further military actions on both sides possible.

"The outbreak of hostilities between India and Pakistan has increased regional credit risks, especially for the two sovereigns involved. Our base case is for the intense military actions to be temporary, which will give way to a longer period of contained and sporadic confrontations," S&P Global Ratings said in a statement.

In a strong retaliation to the Pahalgam massacre, India's armed forces early on Wednesday destroyed nine terror sites including that of Jaish-e-Mohammad and Lashkar-e-Taiba in Pakistan and Pakistan-occupied Kashmir (PoK).

Fifteen days after the Pahalgam carnage in which terrorists killed 26 civilians, mostly tourists, in Pahalgam, India launched its military response codenamed 'Operation Sindoor' using deep strike missiles.

(With inputs from PTI)