When India and Pakistan gained independence in 1947, both nations stood at similar crossroads, inheriting colonial legacies and facing the challenges of nation building. In fact, Pakistan even had some initial advantages: fertile Punjab farmlands, a smaller population burden, mineral resources, and a strategic seaport in Karachi.
However, over the decades, their paths have diverged significantly. While India has emerged as a global economic powerhouse, Pakistan finds itself reeling under internal strife, economic instability, and military entanglements. This stark contrast can be attributed to a combination of misplaced priorities, military dominance, external dependencies and misplaced priorities.
As Pakistan marks its 78th Independence Day – Yaum-e-Azadi – we examine the nation’s journey since 1947 and assess where it stands today in terms of development, growth, and overall prosperity.”
Economic trajectories: Growth vs stagnation
India's economic ascent is evident in its robust growth metrics. The International Monetary Fund (IMF) projects India's real GDP growth at 6.4 per cent for both 2025 and 2026, underscoring its position as the fastest-growing major economy. In contrast, Pakistan's economy is projected to grow by a modest 2.7 per cent in 2025. This disparity is further highlighted by India's manufacturing sector, which, despite challenges, continues to show resilience. For instance, India's manufacturing Purchasing Managers' Index (PMI) remained strong at 57.6 in May 2025, indicating sustained growth in the sector.
Pakistan's manufacturing output, on the other hand, has witnessed a decline. In 2023, the country's manufacturing output was $45.95 billion, marking a 10.92 per cent decrease from the previous year. This downturn reflects broader economic challenges, including inflation and energy shortages.
In fact, Pakistan trails Bangladesh in terms of real GDP growth, which the IMF has forecasted at 3.8 per cent for 2025.
Military prioritisation: A double-edged sword
One of the most glaring differences between India and Pakistan is their allocation of resources. India’s defence budget for the fiscal year 2025-26 is Rs 6.81 lakh crore (approx. USD 7.87 billion), which is a 9.5 per cent increase from the previous year. Despite the increase, a significant portion of the budget – Rs 4.7 trillion (about USD 54 billion – is allocated to manpower costs, including wages and pensions. This allocation limits the funds available for modernisation and procurement of new weapons, which stands at Rs 1.8 trillion (approximately $21 billion).
In the meanwhile, Pakistan’s budget for 2025-26 reveals a disturbing reality: the Shehbaz Sharif government raised defence spending to a staggering Rs 2.55 trillion ($9.04 billion) from Rs 2.1 trillion rupees in the previous year - a monumental 20 percent surge. This massive hike in defence budget is seen as a direct consequence of the embarrassment faced by Pakistan at the hands of India during the military confrontation in May.
The defence budget hike comes at a time when Pakistan teeters on the edge of economic collapse. Its inflation stands at over 38 per cent, its foreign exchange reserves are barely enough to cover two months of imports, and the country continues to survive on International Monetary Fund (IMF) bailouts to avoid default.
The military absorbs a substantial portion of the GDP – for FY2025, it stood at 2.3 per cent of the GDP, exceeding equivalent figures for India, China, and the European Union.
Data suggests that Pakistan’s defence budget experienced annual growth of 12.6 per cent between FY17 and FY25, compared to India’s 8 per cent. In contrast, education and healthcare were allocated merely 2 per cent and 1.3 per cent of the GDP, respectively.
The most damning indictment of Pakistan's warped priorities lies in its abysmal social spending, particularly on healthcare. While billions are poured into tanks, jets, and missiles, the health budget for the upcoming fiscal year stands at less than 1 per cent of the GDP.
Debt and financial dependence: A growing burden
Pakistan's financial situation is precarious. As of December 2024, the country's external debt stood at $131.1 billion. To manage this debt, Pakistan has turned to international lenders. In September 2024, the International Monetary Fund (IMF) approved a $7 billion loan under the Extended Fund Facility to support Pakistan's economic stabilization efforts. Additionally, Pakistan has secured loans from China, including a $2 billion rollover loan in March 2025.
The country’s worsening economic instability is also underscored by its increasing dependence on IMF bailouts - 25 loans since 1950, including four in last five years.
These loans come with stringent conditions, often requiring fiscal austerity measures and structural reforms. While such financial assistance provides short-term relief, it exacerbates the long-term debt burden and limits the government's ability to invest in essential public services.
Civil-military relations: The military's overbearing influence
A significant factor hindering Pakistan's progress is the pervasive influence of its military in political affairs. The military has historically played a dominant role in governance, often sidelining civilian institutions. Recent developments have further entrenched this imbalance. In May 2025, General Asim Munir was promoted to the rank of field marshal, consolidating military power and signaling a shift towards increased militarisation of the state.
This concentration of power within the military establishment has led to a lack of accountability and transparency in governance. Civilian governments often find themselves constrained, unable to implement reforms or address pressing issues effectively. This dynamic has perpetuated a cycle of political instability and underdevelopment.
Security concerns and regional tensions
Pakistan's security landscape is fraught with challenges. The country's involvement in regional conflicts, particularly with India, has strained resources and diverted attention from internal development. In May 2025, following the Pahalgam terror attack in Jammu & Kashmir, India conducted a series of precision strikes on terror infrastructure in Pakistan, which dealt a huge blow to the safe havens of outfits like Lashkar-e-Taiba and Jaish-e-Mohammed and also to the military infrastructure across the country.
State-sponsored terrorism: A strategic misstep
Pakistan's involvement in supporting terror groups such as Lashkar-e-Taiba (LeT) and Jaish-e-Mohammed (JeM) has been well-documented. These organisations have been implicated in numerous attacks, including the 2008 Mumbai attacks and the 2019 Pulwama bombing, other than the recent Pahalgam terror attack.
Despite international condemnation and sanctions, elements within Pakistan's military and intelligence agencies have continued to provide support to these groups, viewing them as strategic assets in their rivalry with India.
The United Nations has reported that these groups operate training camps in Taliban-controlled areas of Afghanistan, further complicating regional security dynamics. This sponsorship not only isolates Pakistan diplomatically but also diverts resources from critical development sectors, exacerbating its economic challenges.
Pakistan's current trajectory is a result of deliberate choices that have prioritised military dominance and support for terrorism over economic development and human welfare. The military's grip on power, coupled with state-sponsored terrorism, has isolated Pakistan internationally and diverted resources from critical development sectors.
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