India and Pakistan: Two Nations, Two Paths

By: Shreya Maheshwari Goel

Over the past two decades, India has witnessed steady and substantial economic growth, outperforming not just Pakistan but also exceeding global averages in key indicators like GDP, inflation, and per capita income. Today, India is positioned as the fourth-largest economy in the world.

India and Pakistan, the two largest nations in South Asia, are once again in the global spotlight following the recent Pahalgam attack. This renewed attention and the military escalations between the two also offer an opportunity to reflect on their respective economic trajectories—how both countries began their independent journeys with remarkably similar economic conditions, and how, over time, India has pulled significantly ahead of Pakistan. 

With geopolitical tensions between India and Pakistan running high, the economic divide between them is at its peak. Once ahead of India in certain metrics, Pakistan now lags behind on most key economic indicators. 

Gross Domestic Product (GDP)

India's GDP grew from $468.4 billion in 2000 to $3.91 trillion in 2024, marking an approximate 735% increase over the span of 24 years, while Pakistan's GDP grew from $99.42 billion to $373.08 billion during the same period, reflecting a growth of around 275%. 

GDP Growth Rate

In 2000, India and Pakistan had similar GDP growth rates— 3.8% and 3.9%, respectively. Both peaked around 8% in 2005, but their trajectories diverged thereafter. India reached 8.5% in 2010, while Pakistan dropped to 2.3%. The 2020 pandemic caused contractions in both economies (India: -5.8%, Pakistan: -0.9%). By 2025, India’s GDP growth is projected at 6.2%, significantly higher than Pakistan’s 2.6%. 

Rate of Inflation

In 2000, inflation was 3.8% in India and 3.6% in Pakistan. By 2005 and 2010, Pakistan's inflation rose sharply to 9.3% and 10.1%, respectively, while India's inflation rates were 3.7% and 9.4%. In 2020, Pakistan’s inflation peaked at 10.7%, compared to India’s 6.2%. For 2025, inflation is projected at 4.2% in India and 5.1% in Pakistan.  

GDP per capita

In 2000, Pakistan’s GDP per capita ($2,840) was higher than India’s ($1,890). However, by 2025, India is projected to reach $12,130 while Pakistan is expected to be at $6,950. This reflects a significant shift, with India overtaking Pakistan and widening the gap in per capita income over the past 25 years.  

India and Pakistan began their journey toward development at the same time. However, since Independence, the two economies have followed markedly different paths. While one has focused on sustained economic growth, the other has harboured terrorism—a reality underscored by the recent Pahalgam attack and its ongoing repercussions. These differences have culminated in vastly contrasting economic outcomes between the two South Asian neighbours.