Debt and deception: India’s mockery meets fiscal reality

For decades, India has wielded the narrative of economic superiority over Pakistan as a strategic and political tool. From podiums in New Delhi to nightly TV panel rants, Indian political discourse has consistently depicted Pakistan as a “beggar state”-perpetually in crisis, perpetually in need. But as global economic institutions and cold fiscal facts come under scrutiny, this narrative seems less like a truth and more like a diversion.

A recent turn of events at the International Monetary Fund (IMF) has amplified this contradiction. India, despite its posturing as a regional economic powerhouse, failed to convince the IMF to reconsider its support for Pakistan during loan negotiations. The message was clear: economic diplomacy is not about power plays; it’s about numbers, need, and reform. In this equation, India’s grandstanding was found wanting-according to The Hindu, India attempted to dissuade IMF assistance but was unsuccessful, as the Fund judged Pakistan’s eligibility on institutional criteria, not geopolitical pressure.

As of March 2024, India’s total public debt stood at a towering $2.18 trillion. The IMF projects India’s debt-to-GDP ratio to peak at 82.3% in 2024-25, a level that rivals China’s, which hovers around 83%, according to reports in Business Standard and The Hindu. To put this into perspective, India’s debt burden is now significantly higher than that of many developing nations.

The IMF has tempered its warnings by noting that most of India’s debt is domestic and long-term, yet it also flagged an urgent need for fiscal consolidation and improved public financial management to avoid systemic risks-issues raised in Economic Times and Financial Times. More concerning is the parallel rise of household debt, an often overlooked facet of financial vulnerability. As of June 2024, Indian household debt had reached $617.3 billion, or 42.9% of GDP-a dramatic increase from 37.6% in 2023-driven largely by middle-class credit consumption and retail lending expansion, as reported by Financial Express and CEIC Data.

In contrast, Pakistan’s total public debt stood at Rs74 trillion ($265 billion) as of December 2024, translating into a debt-to-GDP ratio of 71.4%, lower than India’s, according to Economy.pk and The Nation. While Pakistan’s economic struggles are real-marked by low reserves, revenue constraints, and global commodity shocks-its household debt remains contained at around 2% of GDP, based on figures reported in The Nation.

The IMF has acknowledged Pakistan’s economic vulnerabilities but also commended the country for adhering to reform commitments under its Extended Fund Facility. These include rationalizing energy subsidies, expanding the tax net, and digitizing tax administration-steps recognized by both Dawn and The News International.

What’s particularly notable is the contrast in IMF perception. Despite India’s overtures to block or reduce aid, the IMF declined to heed its recommendations. This rebuff underscores that international financial institutions are increasingly immune to nationalist lobbying and instead operate based on empirical assessments, as emphasized by The Hindu.

The image of Pakistan as a perennial defaulter serves a convenient purpose-fuelling political narratives within India-but falters under empirical scrutiny. India’s claims of financial exceptionalism ring hollow when juxtaposed with its ballooning debt, rising household credit dependency, and widening fiscal deficits. Its rejection at the IMF table highlights that performance, not posture, dictates credibility in global finance.

Conversely, Pakistan, often dismissed as economically undisciplined, has engaged constructively with multilateral lenders, undertaking politically painful reforms and resisting consumer debt expansion. This less glamorous approach earns little media praise but accumulates trust where it matters-among institutions that assess sustainability over sentiment.

If the India-Pakistan economic narrative were a courtroom drama, the evidence would present a case of shared vulnerabilities rather than one villain. India may boast significant foreign exchange reserves and a large GDP, but its economic model is increasingly weighed down by consumer borrowing, fiscal populism, and widening inequality. Pakistan, though economically smaller, has demonstrated surprising resilience and willingness to adjust its course, even amid geopolitical pressure and domestic hardship.

The IMF’s rejection of India’s lobbying effort is a potent reminder that credibility in the global financial system is earned through disciplined policy and reform, not through regional rivalry or political jibes. As reported in The Nation, the Fund’s treatment of Pakistan as a serious reforming partner rebukes the narrative that only size determines credibility.

India’s economic mockery of Pakistan may make for popular soundbites and political theatrics, but it falls short as serious economic analysis. Both nations face daunting fiscal futures, and both must navigate them with humility, not hubris. Instead of treating debt as a scoreboard for regional one-upmanship, South Asia would be better served by fostering mutual economic respect and cooperation. But for that to happen, India must first drop the megaphone and pick up the mirror.

George Orwell once observed, “The arrogance of assumed superiority is the surest way to blind oneself to the truth.” In the case of India’s debt denial and its scorn for Pakistan’s reforms, this blindness may soon prove costly-not just in terms of regional credibility, but in real economic resilience.