After India’s surgical strikes on “terrorist launchpads” across the Line of Control last week, jingoistic voices have grown louder. While some have hailed it a fitting answer to Pakistan for allegedly supporting the September 18 attack on a military camp in Kashmir's Uri town that left 19 soldiers dead, others fear that India’s action has the potential to turn into a full-blown war between the nuclear-armed neighbours.

Even as many participants in the nightly television discussion shows seem to welcome the prospect, the fact remains that conflict is damaging for both countries – politically and economically.

The India-Pakistan conflict already squeezes out 3% of India’s economic potential, according to an analysis done by the Mumbai-based think-tank Strategic Foresight Group in 2004. In a report titled "Cost of Conflict", the group analysed military expenditures of the two countries to conclude that even low-intensity warfare could have “financial costs, [hurt] human lives and policy losses".

Similarly, 3,843 Indian soldiers and close to 8,000 Pakistani soldiers died during the direct military confrontation between the two countries in 1971, which ended with the capture of more than 90,000 Pakistani prisoners of war.

“Though reliable data on disappearances and civilian casualties is not available, it would be safe to assume that at least 100,000 families suffered direct human costs on account of the four wars between India and Pakistan,” the Strategic Foresight Group wrote in its report.

The report sought to chart the impact of relatively mild confrontations along the border and their resulting costs. For instance, after the attack on Parliament in 2001, there was a military standoff at the India-Pakistan border with continued infiltrations and killing of soldiers on either side of the Line of Control. While the countries finally retreated, the conflict led to massive costs for both.

India spent $600 million between December 2001 and January 2002 and Pakistan spent another $400 million. Estimates by the Strategic Foresight Group suggest the two countries ended up spending more than $3 billion in the short period of time due to confrontation and the overarching possibility of a nuclear war.

In 2003, India increased its military spending to Rs 653 billion from Rs 560 billion the previous year while Pakistan’s rose marginally from Rs 158 billion to Rs 160 billion.

However, Pakistan’s military expenditure as a percentage of its gross domestic product is substantially higher than India’s and the same goes for its per capita military spending. Pakistan spends almost twice as much as India per citizen on its military and the amount rose from Rs 1,060 in 2003 to Rs 1,161 in 2007.

“Indian military expenditure shot up by 12% in the post-Kargil Budget of 2000-'01, followed by a 5% escalation in 2001-'02. However, in 2002-'03, the military budget was lowered, only to be increased by 17% in 2003-'04,” the study by the Strategic Foresight Group observed.

The study also said that India spent Rs 14.6 billion per day in 2002-'03 on confrontations with Pakistan while the neighbour spent another Rs 3.7 billion per day during the same period.

While the group noted that a defence budget cut could release 1% of GDP for India and nearly 2.5% for Pakistan, it added that Pakistan spends a humongous sum of money just dealing with international conflicts and internal terror. Pakistan spent Rs 424 billion in visible and invisible payments to terror outfits and its own military in the year 2004, which was about 10.6% of its GDP then, according to estimates by the think-tank.

Meanwhile, the global costs of a potential nuclear war between India and Pakistan could prove immensely high. More than 21 million people would be killed, half the ozone layer destroyed and a “nuclear winter” could affect rains and agriculture across the globe, an analysis by IndiaSpend noted.

Another analysis done by Carnegie Endowment said the cost of not having war was also immense for both countries, especially Pakistan, which has been trying to match India’s nuclear and military stockpiles – an exercise both expensive and unnecessary, given the country’s more pressing concerns.

“This 'stay the course' option would be costly in terms of financial commitments, as it would require funding not just for significant annual growth of warhead and missile material stocks, but also for the growth of a diverse array of delivery systems, command and control, and intelligence support, as well as greater outlays for nuclear safety and security. An alternate future would result from a decision by Pakistan’s leaders to acknowledge their success in accomplishing strategic deterrence against India and to redirect spending to more pressing concerns; in effect, to de-link Pakistan’s nuclear requirements and capabilities from India’s military programmes.”

The Federation of Indian Chambers for Commerce and Industry estimated in a report that there is a huge business cost to the ongoing conflict between India and Pakistan as the trade by value remains small and pales in comparison with trade between India and neighbours such as Bangladesh and Sri Lanka due to continued tensions.

“Although there have been occasional moves toward confidence-building measures and, most recently, toward more open borders for trade, deep mistrust and suspicion mark this sibling rivalry,” said a paper by the US-based Atlantic Council, which analysed the opportunity cost of an India-Pakistan conflict, arguing that a war is the last thing the sub-continent needs. “It is to be pointed out that Pakistan and India are the only two nuclear-armed states who still have unresolved disputes.”