India has expressed a deep concern over the possibility of misuse of the $800 million aid package sanctioned by the Asian Development Bank (ADB) for Pakistan, pointing to concerns over Islamabad's increasing defense spending at a time of a deteriorating economic crisis and mounting military control over the government.
India, as per sources, has cautioned that the Pakistani military, which is now a dominant force in setting economic policy through its chairmanship of the Special Investment Facilitation Council, will undermine reform and roll back important policy actions. This military establishment, India feels, not only poses a threat to economic stability but also to the fundamental utilization of international financial support.
Even as Pakistan's tax-to-GDP ratio is on the decline, foreign reserves are dwindling, and inflation has reached new heights, its defence budget keeps rising. New Chinese fighter jet purchases and a big boost in drone deployment — especially after India's Operation Sindoor — reflect Pakistan's greater emphasis on military expansion, said a top Indian official.
India raised alarm bells about the danger of resources from multilateral institutions such as the ADB being channeled into military expenditure rather than needed reforms. Relying on Pakistan's poor track record of implementing necessary structural adjustments attached to past aid programmes, India questioned whether the programme in its present form has prospects of success.
It also arises from Pakistan's ongoing dependency on foreign bailouts — the latest one being a plea to the International Monetary Fund (IMF) for its 24th financial bailout. India sees this as an open sign of poor governance and failed macroeconomic policies.
In addition to economic mismanagement, India highlighted Pakistan's continued sponsorship of cross-border terrorism that continues to undermine regional stability. India has also attacked Pakistan's incomplete implementation of the FATF demands, particularly in investigations into terror funding, prosecution of UN-designated leaders of terror groups, and freezing assets related to criminal activities.
India's alert arrives at the point when global scrutiny of aid transparency and good governance is on the rise, providing another complication to Pakistan's efforts to find economic stability via foreign assistance.
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