Pakistan's economic implosion - Interesting implication for Kashmir

In the summer of 2020, India faced the biggest threat to its national security in decades, though that’s little known, let alone understood.  

The background to this goes back to Aug 19, when India abrogated article 370. It was a bold decision by the govt of India, because the feeling in political circles was that the Kashmir insurgency, which was largely under control, after a flare up in 2016, would increase sharply, with the support of the local population angered by the abrogation of article 370. For Pakistan it was almost tantamount to an act of war by India. Not reacting to it would expose the Pak establishment (the army and by extension the militant groups they control) as toothless.  

A very heavy presence of paramilitary forces and an increased army presence along the LOC, prevented any increase in the insurgency in the first few months.
In the beginning of 2020, incidents of firing across the LOC, by Pakistan increased to over double the 2018 figure. 2020 recorded 5133 instances of firing across the LOC by Pakistan, compared to 3479 in 2019 and 2140 in 2018. There was no month in 2020 when incidents of firing by Pakistan across the LOC was less than 400. 

This is significant because firing by the Pak army is a precursor to pushing terrorists across the LOC fence into India. Hence, firing in winter, when snow greatly reduces infiltration attempts, comes down. This was not the case in the winter of 2019-20 and 2020-21. Moreover, infiltration attempts in 2020 (99) were actually lower than in 2018. This pointed to the other reason for firing across the LOC – to maintain a `hot border’ and ensure Indian army units could not be redeployed.

The reason this is important, was that in May 2020, a large Chinese force (their 4^th and 6^th divisions, backed up by supporting units) – a total of between 50 and 60,000 men moved into the Eastern Ladakh region and occupied areas across the LAC that had hitherto been under Indian control. They were backed up by the PLA’s 8^th and 11^th Division.

As is well known, this led to the clash in Galwan, a tense stand-off and later a defusing of tensions, when both sides retreated from their eyeball to eyeball positions and the Indian territory that had been occupied, was vacated – barring territory in the Depsang plain, where Indian patrolling rights (that were restricted before the May 20 action) were not restored.   
Defusing of tensions began in July 2020 and the process was complete in Feb 21, though both sides continue to maintain around 50,000 troops in the East Ladakh/ Aksai Chin area.

Had China not vacated the territory they occupied, the Indian army would not have been able to dislodge them, particularly, if Pakistan had created trouble in Kashmir, through heavier cross border firing and assisting more terrorists to cross over to Kashmir.
If India was unable to act against Chinese occupation of its territory and if there was a surge of terrorism in Kashmir in the summer of 2020, the govt may not have survived the fallout.

While the govt has patted itself on the back because it did not happen and has rightly got credit for the peace that Kashmir has had in the 4 years since Article 370 was abrogated, I do not think we have appreciated why this happened. The answer, to my mind, lies in the Pak army’s actions from 2020.

For every 100 incidents of firing across the LOC, India sustains 2 deaths (civilians and/or soldiers). Pakistan also reports roughly the same no of firing incidents by India. That’s understandable, because the Indian army has a 1 for 1 policy. If anything, Pakistan would overstate the number of incidents of firing by India. Incidents of firing by Pak are directly proportional to infiltration attempts. 

With over 5000 incidents of firing initiated by Pak in 2020, we should have had over 100 deaths.
We had 31. Half of these were on 2 days in Nov ‘20, when there was a sudden escalation in one sector of the LOC. Pakistan reported 2730 incidents of firing by India (Jan-Nov), with an estimated 50 fatalities.
There were 131 successful infiltration attempts by militants in 2019, compared to 55 in 2020, though 2020 had a higher level of firing and more pressure on Pak to push in militants after the abrogation of article 370.

One would have to conclude that half the firing incidents by Pak, were barely noticeable – they did not result in casualties, were not replied to by IA and did not result in infiltration attempts.

In Feb 21, Pakistan and India agreed to a ceasefire across the LOC. This came just after India and China pulled back from their advanced positions on the LAC.
The LOC ceasefire has lasted. It was also accompanied by a reduction in infiltration – 14 in 2022 and 33 incidents in 2021, compared to 55 in 2020 and 131 in 2019. Though these ceasefires have not held in the past and although I am skeptical of Pakistan’s motives, I believe this time its different, for a reason.

The answer lies in Pakistan’s defence budget.
In US$ terms, the Pak defence budget was highest in 2019. 
It has since been reducing in US$ terms. This is something the media misses, because they refer to defence spend in Pak Rupees. There was a reduction each year from 2019 in US$ terms. From 6% of GDP in the 90’s, Pakistan’s defence budget in 2023 is 1.7% of GDP. This does not include pension. Inclusive of pensions, Pakistan’s defence budget is 2.4% of GDP, while India’s is 1.9%

Pakistan has `inflation proofed’ the salary and pensions of its armed forces personnel, so they are constant in US$ terms. Their capital expenditure program has mostly been fixed till 2024 and spending is mostly in hard currency. Pakistan has to spend 10% of its defence budget on nuclear weapons, compared to 4$ for India. Hence, the only thing Pakistan can reduce is operational expenditure ( ammunition, fuel, food). In the 2023 budget, Opex was 16% of the total defence budget. The budget in my view, has unrealistic assumptions of inflation.
  
India’s defence budget has a Opex allocation of 18%. While I believe this to be much lower than ideal, we have lower costs of fuel and food than Pakistan, also lower costs for supplies made by tender – in Pakistan suppliers tend to be cartels controlled by the army leadership.  

A 10% but in budget in US$ terms can mean a cut of upto 50% in operating spends. Pakistan has managed to deal with reduced operational expenditure, by consuming ammunition from their stocks (cutting down on production), reducing spend on maintenance and reducing field exercises, or flying.

A little-known fact is that, Pakistan loses more men than India in counter insurgency and since 2019, the fatalities among Pakistan’s security forces have been increasing, while India’s have been decreasing. Thus in 2023, Pakistan has so far lost 341 of its security forces (it was 137 in 2019), while in India, it was 132 in 2019 and 50 (many of whom were police killed in left wing violence) in India in 2023. This excludes deaths from cross border firing. Assuming a proportionate commitment of resources, the Pakistan army’s operational expenditure on counter insurgency is more than India’s.

In an unprecedented admission, the former Pak army chief, Gen Bajwa, who served as army chief for 6 years and was in the best position to judge the army’s readiness, admitted to journalist Hamid Mir that the army was in no position to fight a war. This was not the first time he had made such a disclosure and Hamid Mir – known to be pro Army, wanted the Army chief tried for treason for saying what he did.

Though it is rare to find any news from Pakistan critical of the army, there are multiple reports, including from insiders on defence forums, that of Pakistan’s most modern fighter aircraft – the JF-17 and the F-16, more than half are grounded for lack of spares. In the armoured corps, Pakistan’s most modern tank the T-80 is affected by availability of spares from Ukraine (or Russia) and because it’s very high fuel consumption precludes its use in routine exercises. Upgrading of older tanks is also being delayed. The armed forces have a `dry day’ once a week, when no fuel is used. No large-scale exercises have been announced for 2 years now, particularly among the armored formations which consume the most fuel – at a time when India has larger and more frequent exercises. There are even reports of shortfalls in food procurement for troops.   

At a strategic level, I believe Pakistan has been disappointed at lack of real Chinese support when it has taken on India. Apart from the 1965 and 71 wars (when we had a real fear of Chinese intervention) China did not intervene in Kargil – when we had left Eastern Ladakh largely unguarded when trying to rush troops to Kargil and did not take advantage of the situation in May 2020, when India was taken by surprise and the govt was busy dealing with Covid. There would also be an increasing realization among the Pak army that the various Chinese projects, under the CEPC (which the Pak army is involved in) have not helped them.

My view is that Pakistan was supposed to tie down a large number of Indian army troops in 2020, both by LOC firing and pushing in terrorists, in order to prevent the Indian army reinforcing Ladakh and thereby enabling the Chinese to squat on newly occupied territory. With a pro-China and anti-India (relative to his predecessors) PM Imran Khan in power, this is a plausible supposition. It would have also given Pakistan a role in any Kashmir ‘settlement’.

The Pak army paid lip service to this plan – double crossing China the way they thought China had behaved with them. A lot of cross border firing was `for show’. Both sides admitted that the volume of Indian return fire was higher – partly because Pak was constrained by ammo shortages. As soon as China pulled back, Pakistan agreed to a ceasefire on the LOC. It suited the Pak army to have a quiet LOC and say they agreed to a ceasefire under US/ Saudi pressure. My view is that after India’s Uri and Balakot asymmetrical responses to Pakistan’s terrorist attacks, there was a fear in the Pak army that cross border firing could escalate to a limited war. It would be a war in which the army might lose ground in Pak occupied Kashmir, due to ammunition shortages, or generals might see their business interests affected by war.  

In May 2020, India had one division (the 3^rd infantry division) in Ladakh. It was able to send 3 more divisions to Ladakh, at a time when the Kashmir valley was most vulnerable to infiltration.

The deployment of the army in response to the Chinese threat involved, as far as I can surmise:

- A division from the Yol based IX corps, moving from Jammu to Himachal to protect the Himachal-China border.
- The 6^th Infantry division (India’s reserve) moving into Uttaranchal.
- The newly raised 59^th mountain division moving into Ladakh.
- The 14^th RAPID division, with tanks, moving to Ladakh.   

Without these formations, India and Pakistani forces would be at parity if they went to war.

In addition, units on the LOC and Rastriya rifles forces involved in counter insurgency were probably reduced by the equivalent of 1 division, to provide a reserve and enable rotation of the newly deployed troops on the LAC (who cannot remain at very high altitude indefinitely).
Though this left gaps in our counter insurgency grid, there has been a significant reduction in the Kashmir insurgency in each of the last 3 years. 

It would, in theory, have suited Pakistan to escalate along the LOC, knowing that if there was a war, it would be a stalemate, as India did not have the numbers to force a victory. Pakistan would have positioned this as a victory, with a narrative of a smaller country fighting a larger opponent to a standstill, over a matter of honour (Kashmir).

In Pakistan’s current situation, my sense is that the Pak army’s focus is on consolidating power within Pakistan and focus on defeating local insurgencies of the TTP or Baluchis rather than precipitate a war with India. Their assessment is probably that there is no upside to a war with India, but plenty of downside, insofar as they can lose their grip on power (much like the Pak army after the 1971 war). Things have only got worse in the last 3 years. Not only has the economy declined more, but the army’s removal of Imran Khan from power and subsequent quashing of popular dissent has turned the people of Punjab province against the army for the first time in its history.   

The recent economic decline of Pakistan has meant the per capita income of Bangladesh has exceeded Pakistan’s, with export earnings double of Pakistan and given the control the army now has over the country, no political party can be blamed for this situation.  

With violence in Kashmir showing a steady decline, from 206 incidents in 2018 to 42 incidents in 2023 and with deaths of 86 civilians, 95 security forces and 271 militants in 2018, vs. 9, 16 & 42 deaths in 2023, once elections are held with a fair turnout and with rail connectivity (Jammu-Srinagar) that can increase tourism manifold (as I explain in my post in this blog on Kashmir after article 370 was abrogated), it can end the Kashmir problem for good, in 2024. For the first time this year the Pakistan press commented (on Kashmir solidarity day) that the budget of Indian Kashmir was approx. 28 times bigger than Pakistani Kashmir (6 times more per capita).  

There is a view that the standoff with China has imposed high costs in India – given the need to permanently station a large force in Eastern Ladakh. While China has to do the same, it is a cost China can afford, while India can’t. I would however argue that this had simply advanced and compressed India’s infrastructure and deployment plans. The pace of border road construction for e.g., has increased and India has gone ahead with infrastructure it might not have otherwise considered. It has also made the military and political leadership more focused on the fact that China, not Pakistan, is our principal adversary.

It would be tempting to suggest that the economic crisis in Pakistan and in its military may be a good opportunity for India to take back Pakistan occupied Kashmir. I do not think that is either possible or desirable. The Pakistan army remains a formidable force – even without nuclear weapons. Their war reserves are intact. The Pak army, which will have parity in numbers with India will fight hard to defend their country and the experience of the Ukraine was has shown the difficulty of attacking prepared defences, even without considering the terrain of Pakistan controlled Kashmir. Any perception that India has initiated a war will re-unite the country behind the army.

 The best option for India would be to ignore the Pak army and let it preside over what is becoming another North Korea. 

figures related to militancy from satp.org 

My other blog posts on Kashmir and Pakistan are:

https://rpdeans.blogspot.com/2023/07/water-wars-revisiting-indus-water-treaty.html

https://rpdeans.blogspot.com/2023/07/kashmir-way-forward-after-370.html