There is actually a simple way to teach Pakistan a lesson that has possibly been overlooked and its a win-win for India. The way in fact has been shown to us by Pakistan itself. Its a simple question – how do you weaken an economy that is somehow growing at 5% (possibly lower than its inflation rate) . As we all know Pakistan is in a usual debt death-spiral and without grants from the US or the Chinese – it would default.
Some recent news articles on this subject :
So how do you make a bad economy worse ? For a country that is so heavily dependent on imports – from armaments from China to luxury cars for its politicians and including hawala (buying Pakistani rupees into US dollars), the exchange rate is crucial.
So the Pakistani Rupee is around 100 to 1 USD. What if it depreciates to 150 or 200 to 1 Dollar ? Buying arms from China or the US will almost become impossible. The Oil bill will balloon. There is no local manufacturing industry as such , nor is there any IT or biotech industry – to counter the fall in the currency by an increase in exports. They will most likely default on their debts, the economy will head into further chaos – given their Kashmir and India fixation, they are forced to spend huge amounts on the army – they are unlikely to stop that even after a drastic currency depreciation – this will take them into a further downfall / downward spiral.
So how does one depreciate the Pakistani Rupee ?
The first is the slow way – India can continue the pressure, rope in Afghanistan and Iran to add pressure via proxy (create a threat perception) from their western borders and hope that Pakistan keeps spending on non-productive activities like buying armaments from overseas, OR
India can print fake Pakistani notes !!!
Think about it – Pakistan has been systematically doing it to us for decades now and funding terrorism. What if India does the same ? The forged Pakistani rupees can be
- disseminated to Balochistan rebels, rebels in Sind, SWAT
- to Iranian and Afghanistan secret polices for proxy operations in Pakistan
- Sell these forged notes against gold – and possibly use this income to further fund chaos and insurgency in Balochistan and Sind
If India can print around a billion dollars worth of these fakes notes and pass them inside Pakistan’s economy – imagine the devaluation of the Pakistani rupee – this will send Pakistan down the death spiral and will surely cause a breakup. Corruption is rampant in Pakistan and nationalism is non-existent (unless it comes to Kashmir or competing with India). India will find it easy to pump these forged notes into the Pakistani economy and there will be many willing participants .
The best part of this is that it cannot do the same to India. The new Indian notes and the ability of India to change designs every three/four years and the fact that the economy of India is far larger to have any effect from a few fakes notes. Add to this the digital economy in India – whereas Pakistan is still mostly cash only.
Given Pakistan’s fragile economy and given that it is existent on dole – it will never be able to survive a huge devaluation. This is the proxy war that India should focus on !
p.s. We did not start this proxy war – but will surely end it !!