Pakistan economic crisis: I feel PM Modi will bail out Pakistan, says former RAW chief AS Dulat

Former Research and Analysis Wing (RAW) chief Amarjit Singh Dulat has said that PM Narendra Modi may at some stage bail out Pakistan from the economic crisis it is facing right now. Pakistan has been reeling under severe financial challenges for the last few months and is in dire need of funds. Pakistan’s weekly inflation went beyond 40 per cent for the first time due to the high retail prices of many household items. The items that saw a massive jump in prices were onions, chicken, eggs, rice, cigarettes, and fuel. 

Dulat in an interview to PTI said that he feels PM Modi may at some stage later this year hold out the olive branch towards Pakistan, and added that it was imperative to keep talks open with “a little more public engagement”. “Every time is the best time to talk to Pakistan. We need to keep our neighbours engaged,” he said in an interview. 

“In this year, my hunch is Modi ji will bail out Pakistan. No inside information, but it is my hunch,” Dulat said. 

Dulat also warned against a developing "formidable" axis between Iran, Russia and China, and suggested that India needed to engage in more open diplomacy with China to reassure them that India meant well. While India has improved relations with the US, its neighbours are more important given their proximity, Dulat added. 

“Needs to be more open diplomacy… (where the Chinese) feel satisfied that India means well by them.” Dulat pointed out that despite meetings between PM  Modi and Chinese President Xi Jinping, India has also been engaging with the US. 

“You turn your back and welcome Trump, that doesn't go down well with the Chinese,” he said, though he added that maintaining good equations with all sides was part of India's tradition of non-alignment. 

India’s tough stand on Pakistan 

Earlier India hinted that it may not extend financial support to cash-strapped Pakistan. External Affairs Minister Dr S Jaishankar said that India will look at local public sentiment before taking a call on whether to help Pakistan.  

"...if I were to look at any big decision I am making, I will also look at what is the public sentiment. I would have a pulse on what do my people feel about it. And I think you know the answer," Jaishankar said at the Asia Economic Dialogue in the national capital organised by the External Affairs Ministry. 

He slammed Pakistan over its economic predicament and said no country is going to come out of a difficult situation and become prosperous power if its basic industry is “terrorism”. 

Pakistan’s high inflation 

According to the Pakistan Bureau of Statistics (PBS), bananas, chicken, sugar, cooking oil, gas, and cigarettes have also become costlier. Short-term inflation, measured by Sensitive Price Indicator (SPI), jumped to 41.54 per cent on a year-on-year basis for the week ended on Feb 23, rising from 38.42 per cent in the previous week, the report said. 

The rise in prices is the highest since the week ending September 8, 2022, when the SPI inflation was 42.7 per cent. And it was above 40 per cent for the first time since September 15, when the reading was 40.58 per cent, Pakistan daily said. 

Pakistan’s foreign exchange reserves have been depleting since 2022. According to the State Bank of Pakistan, the total foreign liquid reserves during the third week of February stood at a mere eight billion dollars, which is not sufficient to cover three weeks of imports. Pakistan is expected to finalise a deal with International Monetary Fund by end of this month. Before this, the Sharif government adopted many austerity steps and passed a mini-budget in a bid to increase taxes in the country.  

(With PTI inputs)

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