Two neighbours, two futures: India's rise amid Pakistan's mounting woes

India and Pakistan are charting opposite courses, with New Delhi rising in global influence while Islamabad battles economic turmoil and diplomatic isolation, according to World Bank

India has recorded a significant decline in poverty over the past decade, sharply contrasting with the worsening economic conditions in neighbouring Pakistan. According to the recent World Bank report, India’s extreme poverty rate dropped to just 5.3 per cent in 2022–23 from 27.1 per cent in 2011–12. This comes even after the global poverty line was revised upwards from $2.15 to $3 per day.

 

Over the same period, India succeeded in pulling nearly 171 million people out of extreme poverty. The gains have been attributed to a combination of sustained economic growth, targeted welfare programmes, and rural development schemes. The narrowing urban–rural divide and rising real incomes have also contributed to reducing economic disparity across states and demographics.

 

 

In stark contrast, Pakistan’s poverty levels have worsened. The World Bank now estimates that around 45 per cent of Pakistan's population lives in poverty, with 16.5 per cent classified as "extremely poor". Worse, the country is projected to add 1.9 million more people to the poverty count in 2024–25, largely due to sluggish economic growth and population pressures.

 

Pakistan’s gross domestic product (GDP) growth is expected to be just 2.6 per cent, which the World Bank says is insufficient to reduce poverty. With population growth at nearly 2 per cent, the country continues to struggle with rising inequality, limited job creation, and economic stagnation.

Agriculture under pressure in Pakistan

A key concern in Pakistan’s economic distress is the agriculture sector, which employs nearly half of its poor. The World Bank highlighted that climate-related challenges have severely impacted productivity. In 2025, the country recorded a 40 per cent drop in rainfall, along with pest attacks and shifts in cropping patterns.

 

As a result, crop yields are projected to fall — by 29.6 per cent for cotton and 1.2 per cent for rice — capping agricultural growth at under 2 per cent. The effects of India’s move to put the Indus Waters Treaty in abeyance have also begun to show, with a 15 per cent decline in water flow in Pakistan’s Punjab province. Dam levels are reported to be nearing dead storage levels, raising concerns over irrigation shortages during key farming seasons.

Rising food insecurity and inequality

Food security in Pakistan is a growing concern. The World Bank warns that 10 million people in rural areas are at risk of acute food insecurity. Moreover, consumption-based inequality has risen by nearly two percentage points since FY21. However, the actual inequality may be higher, as household surveys often underrepresent wealthier households.

 

Real incomes in rural areas are forecast to decline by 0.7 per cent in FY25, worsening living conditions for low-income communities.

 

Significantly, the diverging poverty trends come amid renewed scrutiny over Pakistan’s use of international aid. India has raised concerns before the International Monetary Fund (IMF) and World Bank, alleging that Pakistan has misused global financial assistance for sponsoring terrorism rather than development.

 

Pakistan has received over $38.8 billion in aid from international institutions, including 25 IMF bailout packages, along with support from China, Gulf nations, and the Paris Club. Despite this, economic indicators remain weak, prompting questions over transparency and spending priorities.

Pakistan’s economic survey: Mixed signals

Pakistan’s recently released Economic Survey for 2024–25 also painted a mixed picture. While the Finance Minister Muhammad Aurangzeb said the country was on a recovery path, macroeconomic indicators remain fragile.

Key highlights include:

Public debt reaching PKR 76,000 billion, with PKR 24,500 billion owed to external lenders

GDP growth projected at 2.7 per cent for FY25, up from 2.5 per cent in 2024

Current account surplus of $1.9 billion due to stronger IT exports

Remittances expected to grow to $37–38 billion, up from $27 billion two years ago

Foreign exchange reserves climbing to $16.64 billion, with the State Bank holding $11.5 billion

Fitch upgrading Pakistan’s credit rating to B– from CCC+

 

Despite these signs of stabilisation, core issues remain unresolved. The country still runs a large trade deficit, with $27.3 billion in exports against $48.6 billion in imports. Literacy rates also remain uneven, with Balochistan trailing at just 42 per cent.

Contrasting paths, diverging futures

India’s transformation, driven by governance reforms, economic diversification, and social programmes, stands in sharp contrast to Pakistan’s structural woes and aid dependency. The World Bank’s data reveals not only a growing poverty gap but also a deeper divergence in how the two countries are shaping their futures.

 

While India consolidates its position as the world’s fourth-largest economy, Pakistan continues to wrestle with rising debt, fragile institutions, and political instability. As both nations command regional influence and global attention, the data reinforces a simple truth: poverty outcomes are shaped not just by economics, but by leadership, choices, and national priorities.