India is trying to restrict the flow of foreign funds to Islamabad
NEW DELHI: As world leaders proactively engage with India and Pakistan in a bid to defuse military tensions along the border and the Line of Control, generated in the wake of the Pahalgam terror attack, the Indian side on Monday launched a financial strike on Pakistan by seeking to cut its finances from international bodies. Sources said, India has urged the Asian Development Bank (ADB) “go slow” on the financial support to Pakistan as part of New Delhi's broader push to disrupt terror financing and international economic support to Pakistan.
India is trying to restrict the flow of foreign funds to Islamabad and has also urged the World Bank to put Pakistan back in the FATF “grey list” for failing to do enough to contain terrorism and money laundering. The Indian side is also making efforts for diplomatic isolation of Pakistan on the issue of terrorism.
At home, India closed gates of the Salal and Baglihar Dams, for the first time since 1960, to stop water flow towards Pakistan, depriving it of water for agriculture, power generation etc. Official data from Pakistan’s Indus River System Authority (IRSA) reveals a sharp decline in the water flow of the Chenab river at Marala Headworks in Pak following India’s closure of upstream dams. On April 20, 2025, before the terror attack, the upstream discharge was recorded at 23,980 cubic seconds and downstream discharge at 17,480 cubic seconds by Pak. By April 25 these figures had dropped to 16,087 cs and 8,087 cs indicating 33% reduction in upstream and 54% in downstream. The IRSA, which held a meeting on Monday in Islamabad, noted that sudden decrease in Chenab flow at Marala due to short supply would result in shortages in early Kharif season. This could lead to overall shortage of 21% for the remaining early Kharif season and impacting its agriculture sector and disruptions to food supply chains and agro industries and overall impacting its economy. For the time being Pak plans to use reservoirs “pragmatically” to ensure supplies to its provinces.
Amid tensions, the Pakistan air space is increasingly getting isolated with a majority of international airlines avoiding overflights, creating a further hole in Pak’s pocket.
Ratings agency Moody's issued a warning for Pakistan, saying that war escalation could severely damage its economy, derail progress, threaten external funding, and strain foreign exchange reserves. In contrast, India's economy is expected to remain resilient, though heightened defence spending could have notable economic impacts.
As Pakistan upped the ante on the war hysteria by pushing videos of military movement on social media, India’s defence secretary Rajesh Kumar Singh and NSA Ajit Doval met Prime Minister Narendra Modi on Monday. These meetings come a day after Ferozepur Cantonment area in Punjab witnessed a rehearsal for a blackout situation, often taking place during wars. The home ministry has asked all states, particularly along the Pakistan border, to conduct war-time drills and activate standard operating procedures in the “event of a hostile attack”. All vital installations and plants have been asked to be camouflaged.
The Pakistan Army has actively launched ceasefire violations, particularly during nights, to keep Indian troops engaged even as it pushes more terrorists to India from its launch pads in PoK. There have been 37 ceasefire violations in the last 12 days.
“During the night of May 4 and 5, Pakistan Army posts resorted to unprovoked small arms fire across the LoC in areas opposite Kupwara, Baramulla, Poonch, Rajouri, Mendhar, Naushera, Sunderbani, and Akhnoor in J&K. The Indian Army responded promptly and proportionately,” a defence spokesperson in Jammu said.
The Pakistani Army has also started nesting its guns among its civilian populations along the LoC. Military experts said the Pakistan Army as a policy occupies civil areas along the LoC and mounts guns near populated areas so when there is a retaliation from the Indian side, they can claim civilian casualties.
