Forget India, how Pakistan can't even beat the economies of these two Indian states

What was as soon as a regional contest between two South Asian neighbours has now develop into a stark mismatch — not simply between India and Pakistan — however even between Pakistan and some Indian states.

Pakistan’s financial place, as soon as forward of key Indian states like Maharashtra and Tamil Nadu, has deteriorated to the purpose the place its nationwide economic system is now smaller than some particular person Indian state economies.

Newest figures compiled from worldwide monetary establishments, together with the Worldwide Financial Fund (IMF), the World Financial institution and India’s central banking knowledge, level to a dramatic shift.

Pakistan’s GDP, which hovered round $132 billion in 2004–05, is at present estimated between $338 billion and $373.08 billion relying on the information supply and financial timing. Whereas Pakistan’s total economic system has roughly tripled over 20 years, the tempo of development has considerably lagged behind that of Indian states.

In distinction, Maharashtra’s economic system has grown from $92 billion in 2004–05 to a staggering $490 billion in 2023–24, whereas Tamil Nadu has expanded from $48 billion to $329 billion in the identical interval.

These figures replicate a change not solely in scale however within the underlying structural power of India’s subnational economies.

How Maharashtra and Tamil Nadu have outpaced Pakistan

Based on the newest estimates, Maharashtra’s Gross State Home Product (GSDP) stands at Rs 42.67 lakh crore, or roughly $490 billion.

Tamil Nadu, India’s second-largest state economic system, has reached a GSDP of Rs 31.55 lakh crore, translating to about $329 billion.

These numbers point out that Maharashtra’s economic system is now practically 45% bigger than Pakistan’s whole GDP, whereas Tamil Nadu’s GSDP is sort of equal to it.

The distinction turns into much more stark when evaluating development trajectories. In 2004–05, Pakistan’s GDP was virtually 1.5 occasions Maharashtra’s. Tamil Nadu, at the moment, had a GSDP that was simply 37 per cent of Pakistan’s.

At the moment, these figures have flipped, with Tamil Nadu now nearly matching Pakistan and Maharashtra pulling far forward.

Each Indian states have been key beneficiaries of industrialisation, infrastructure growth, and financial liberalisation insurance policies. Maharashtra, India’s most economically superior state, hosts the nation’s monetary capital, Mumbai, and is a hub for companies, manufacturing and overseas funding.

Tamil Nadu, in the meantime, is famend for its sturdy automotive, electronics and textiles sectors. Authorities initiatives like ‘Make in India’ and state-led funding drives have additional propelled these economies.

How Pakistan depends on IMF bailouts

A key function of Pakistan’s financial story is its extended dependence on multilateral monetary help. The IMF
not too long ago permitted a second disbursement of $1.02 billion to Pakistan underneath the Prolonged Fund Facility (EFF).

This was a part of a $3 billion short-term bundle prolonged to the nation to avert a balance-of-payments disaster. The disbursement got here at a vital juncture when Pakistan was on the point of sovereign default.

This bailout marks Pakistan’s twenty fifth association with the IMF since changing into a member of the establishment in 1958. Regardless of repeated interventions, the nation has struggled to implement sustainable reforms to stabilise its fiscal and exterior accounts.

The IMF’s newest situations require Pakistan to take care of a main finances surplus of 1.6 per cent of GDP and lift roughly Rs 2 trillion in fiscal area over and above non-interest expenditures.

The Federal Board of Income (FBR) has been tasked with attaining a tax assortment goal of Rs 14.3 trillion, amounting to 11 per cent of the GDP. The IMF has acknowledged that Pakistan met a number of efficiency benchmarks in latest months, together with reporting a federal main surplus of Rs 3.5 trillion, surpassing the goal of Rs 2.7 trillion.

Nonetheless, these changes have come at the price of extreme fiscal tightening and elevated public hardship, amid already excessive inflation and foreign money devaluation.

How Pakistan economic system continues to face headwinds

Pakistan’s macroeconomic surroundings continues to face severe stress. The most recent IMF knowledge reveals that Pakistan’s economic system grew by simply 2.6 per cent within the fiscal yr, properly beneath the degrees required to generate jobs and enhance dwelling requirements for its inhabitants.

Compounding the issue are power points like political instability, spiralling inflation, declining funding, and a precarious balance-of-payments place.

Gross overseas trade reserves stood at $10.3 billion on the finish of April 2025, up modestly from $9.4 billion in August 2024.

The IMF initiatives reserves to achieve $13.9 billion by June 2025, however even this would go away Pakistan extremely weak to exterior shocks or commodity worth fluctuations.

The dimensions of Pakistan’s federal finances additionally stays unsure. Authorities plans counsel a ceiling of lower than Rs 18 trillion, factoring in revised defence necessities. This determine displays each fiscal constraints and the growing burden of debt servicing.

How Pakistan is prioritising defence over its individuals

In a transfer that raised eyebrows amongst economists, Pakistan
elevated its defence spending by 16.4 per cent for FY25, allocating $7.37 billion (roughly Rs 60,655 crore). This rise comes even because the nation’s exterior debt stands at practically 42 per cent of GDP.

Between 2019 and 2023, roughly
82 per cent of Pakistan’s navy imports got here from China . Nonetheless, heavy navy spending amid financial turmoil has raised questions on fiscal priorities and long-term sustainability.

For context, India’s defence allocation for FY26 is $81.72 billion (Rs 6.72 lakh crore), reflecting a 4.7 per cent enhance from the earlier yr. China, too, has upped its navy finances by 7.2 per cent, bringing it to over $245 billion (round Rs 20.16 trillion).

Nonetheless, each India and China fund these budgets from considerably bigger and extra steady economies.

How India is pipping Pakistan amongst buyers as properly

The notion amongst international buyers has additionally shifted. Based on a latest Financial institution of America (BofA) survey, India has emerged as essentially the most most well-liked funding vacation spot in Asia, overtaking Japan.

This displays rising worldwide confidence in India’s reform trajectory, demographic benefit and consumption-driven development mannequin.

In distinction, Pakistan’s standing within the international investor group stays fragile. Political turbulence, financial mismanagement, and safety considerations have made it a much less engaging vacation spot for capital.

A latest diplomatic incident, during which Kyrgyzstan recalled its envoy from Pakistan following disputes associated to an India-linked enterprise discussion board, has highlighted the broader worldwide problems Pakistan faces.

Pakistan’s present financial measurement is not even near competing with India. The truth is starker: it’s struggling to match the size of a few of India’s most affluent states.

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With inputs from companies