Foreword

The Partition of British India created India, Pakistan, and later Bangladesh from a violent, religion-based territorial rupture that continues to shape regional instability. Colonial extraction under the British Empire produced deep structural economic distortions, with estimates such as the Oxfam 2025 report highlighting a massive wealth drain of nearly $65 trillion in today’s value. Post-independence trajectories diverged, with India adopting a secular democratic framework while Pakistan pursued a Muslim homeland model that initially included East Pakistan. The region remains burdened by unresolved disputes, most notably over Kashmir, fueling recurring geopolitical crises. India and Pakistan have since pursued divergent geopolitical strategies anchored in distinct alliance systems: India has aligned closely with Israel and the UAE in defense, technology, and trade, while Pakistan has sustained deep security ties with KSA and Turkey within a broader Islamic strategic framework. Notably, the World Bank has reclassified Pakistan and Afghanistan into MENAAP, aligning them with the Middle East to reflect shared economic structures, security challenges, and deep regional ties in conflict, migration, and trade. The United States has adopted a dual-track policy, treating India as a long-term strategic counterweight to China while engaging Pakistan in a more transactional, security-focused partnership centered on counterterrorism and regional stability. However, recent trade barriers—particularly U.S. tariffs linked to India’s Russian energy ties—have exposed vulnerabilities in the India–U.S. relationship and signaled a tilt toward economic nationalism. Russia maintains a calibrated balance, preserving its deep defense and energy partnership with India while expanding limited, functional cooperation with Pakistan in security and energy domains.

Meanwhile, China’s expanding strategic footprint in Pakistan and Bangladesh has intensified India’s security concerns, producing a “two-front” strategic dilemma; its efforts to mitigate vulnerability at the Malacca Strait have driven major infrastructure investments across the region. Beijing’s territorial claims in Arunachal Pradesh and control over areas such as Aksai Chin further deepen tensions with India, while projects like the China-Pakistan Economic Corridor have made China a direct stakeholder in contested territories, reinforcing a triadic India–Pakistan–China dynamic. Geoeconomically, Pakistan leverages Gwadar Port and CPEC to position itself as a gateway for Central Asia’s access to the Arabian Sea, whereas India advances connectivity through Iran via Chabahar Port and the International North-South Transport Corridor to bypass Pakistan. Diplomatically, Pakistan has elevated its role as a mediator between Washington and Tehran amid tensions surrounding the Strait of Hormuz, while India’s closer alignment with the U.S.–Israel axis has constrained its flexibility as a neutral intermediary despite its broader global strategic weight. Meanwhile, India–Bangladesh relations remain complex, shaped by historical cooperation during the Bangladesh Liberation War as well as by subsequent asymmetries and political sensitivities. Bangladesh, for its part, anchors its geopolitical strategy in the Bay of Bengal, leveraging its coastline to advance blue economy growth, regional connectivity, and strategic balancing among China, India, and the United States.

India, the world’s largest democracy and most populous country, has about 80% literacy and ranks among the leading global powers, with one of the largest oil refining systems, the second-largest military, the third-largest economy by purchasing power parity, the fourth-largest renewable energy capacity, and the sixth-largest overall economy as of 2025–26. It is also emerging as a major global food supplier and a leading agricultural producer. Yet this rise is tempered by deep structural stress, including high unemployment, rising living costs, and extreme inequality, with the top 1% capturing 40% of national income, no income gains for the bottom half, and female labor force participation at just 15% compared to the global 49%. Poverty estimates remain politically contested and highly sensitive to methodology, ranging from about 75 million to 342 million people—a gap of over a quarter billion—fueling persistent debate over measurement standards and transparency. India is also confronting a severe climate crisis marked by intensifying heatwaves, erratic monsoons, droughts, and floods, making it one of the world’s most climate-vulnerable countries and driving major agricultural losses and rising food insecurity, with droughts alone cutting crop incomes by over 50% for small and medium farmers; temperature extremes have also been associated with higher odds of multiple forms of violence against women. Geopolitically, India has leveraged the Ukraine war by importing over 2 million barrels per day of discounted Russian crude by 2024, boosting refined exports to Europe and maintaining strategic neutrality with Moscow, helping to curb inflation and secure energy supplies, though inflationary pressures, subsidy-driven fiscal strain, and financial market volatility persist. The 2023–24 Red Sea crisis disrupted a key trade route handling about 50% of India’s exports and 30% of imports, forcing rerouting via the Cape of Good Hope, adding 15–20 days of transit, raising freight and insurance costs, and causing an estimated $30 billion in losses; exports fell 6.7% from $451 billion, petroleum shipments to Europe declined from 425,000 to 250,000–300,000 barrels per day, port bunkering surged 65% by September 2024, and the electronics sector lost more than $600 million in under a year, while volatility also strained fuel- and fertilizer-dependent agriculture, increasing subsidy burdens. Further pressure arose from the 2026 Strait of Hormuz disruption linked to the Iran conflict, which cut growth forecasts to 6%, weakened the currency, intensified inflation through nearly 90% oil import dependence, and put $51 billion in Gulf remittances at risk while raising trade, fertilizer, and aviation costs. India’s economy also reflects mixed effects from U.S.–China tensions, with some export gains and manufacturing opportunities alongside short-term supply chain disruptions. Despite the decade’s sharpest currency depreciation, a severe fuel crisis, and one of New Delhi’s gravest diplomatic crises by 2026, major institutions and rating agencies, including the World Bank, projected that India would sustain GDP growth above 6% by 2027; however, Morgan Stanley’s 2022 projection of India becoming the world’s third-largest economy by 2027 and possessing the third-largest stock market by 2030 appeared increasingly subject to geopolitical revision. The analysis on India highlights how overlapping shocks from COVID-19, climate stress, and geopolitical tensions triggered a historic 24.4% GDP contraction in Q2 2020, alongside massive job and income losses and millions of excess deaths, while ongoing climate impacts continue to reduce crop yields, erode labor productivity, and could cut long-term GDP by nearly a quarter, even as conflicts and global disruptions—from border tensions to the Ukraine war and diplomatic rifts—drive inflation, raise energy costs, widen trade imbalances, and intensify poverty, inequality, and systemic strain.

Pakistan is a pivotal geopolitical player, strategically located at the crossroads of South Asia, Central Asia, and the Middle East, enabling it to function as a vital bridge among major global powers. It is the world’s second-largest Muslim-majority country and the fifth most populous nation, carrying significant strategic weight with nuclear capabilities and a military ranked 12th globally. Yet the country faces severe internal challenges, ranking as the most air-polluted nation in 2025 and first on the Global Terrorism Index 2026. Climate change and corruption remain among the most significant drivers of poverty, reversing development gains and deepening economic inequality. It is among the ten most climate-vulnerable countries, experiencing frequent and severe disasters, including the 2022 floods that affected 33 million people and caused over $30 billion in damage. Corruption is widespread and deeply embedded across public services, legal institutions, and economic systems. The country’s government debt stands at 83% of GDP in 2025, with a significant $4.8 billion repayment due in July 2026. Amid widespread poverty, with roughly one in two Pakistanis living below the poverty line and one in six in extreme poverty as of 2025, the country—long marked since 1947 by repeated wars and ongoing Kashmir-related border conflicts with India—continues to face frequent armed engagements, including 2026 airstrikes against Taliban-linked networks, while its military, deeply involved in both governance and conflict, has faced persistent allegations of corruption and financial interests linked to conflict financing and external support from foreign actors. While direct trade ties are relatively small, global commodity price shocks stemming from the onset of the Ukraine war led to a decline in real GDP of approximately 1% and contributed about 9% to inflation within a year, worsening existing vulnerabilities in energy and food security. The 2023–2024 Red Sea shipping crisis significantly strained Pakistan’s fragile economy by raising shipping costs, delaying key textile exports, and increasing import costs for energy and raw materials, thereby worsening already high inflation and foreign exchange shortages and further constraining economic growth, as noted in the Pakistan Economic Survey 2023–24. The 2026 Iran conflict has triggered a severe fuel crisis in Pakistan, which is highly dependent on Gulf energy supplies (about 80%), as disruptions in the Strait of Hormuz pushed fuel prices sharply higher and forced the government to impose emergency austerity measures, including reduced workweeks, school closures, and strict fuel rationing to prevent economic instability. The chapter on Pakistan details how the COVID-19 pandemic, climate disasters, and ongoing conflicts have collectively deepened severe socioeconomic instability across the country. It highlights how economic shocks, widespread poverty, and weak public health and governance systems were further intensified by catastrophic flooding, rising insecurity, and persistent cross-border tensions. It further shows how global disruptions such as the Ukraine war, alongside internal conflict and political instability, have compounded food and energy insecurity, accelerated poverty, and driven a growing loss of skilled professionals.

Bangladesh, with a population exceeding 175 million and roughly 1 in 6 people living in the capital Dhaka—the second most populous city globally as recognized by the UN—is situated in the Ganges–Brahmaputra–Meghna Delta, the world’s largest river delta system, historically recorded as having over 700 rivers, among the highest concentrations worldwide, and is defined by an extensive river network, predominantly low-lying alluvial terrain, and over 60% arable land. The Gen-Z revolution toppled a fascist-leaning government but could not break the country out of the vicious cycle of dynastic politics, extortion, drug trafficking, bribery, and corruption, whereas neighboring Nepal has been able to bring about more substantive political change. Widespread educational underperformance persists, with over half of adolescents classified by the World Bank as “learning poor” in 2024 despite official literacy claims exceeding 70%. In such conditions, optimistic macroeconomic projections, including claims of a $470 billion GDP and a trillion-dollar economy target by 2034, are often viewed by critics as politically inflated narratives that periodically collapse when confronted with weak institutional and electoral accountability. The country is experiencing rising fiscal and external financial pressure, with public debt around 42% of GDP and foreign debt exceeding $113 billion by late 2025. These pressures are worsened by illicit financial outflows of over $8 billion annually through trade mis-invoicing and informal channels, raising concerns over debt sustainability, financial governance, and long-term stability. Climate change imposes a major economic burden on Bangladesh, with annual losses from tropical cyclones estimated at $1 billion, extreme heat costing an additional $1.78 billion per year, rural households spending $2 billion on adaptation, and the country facing a per capita climate debt of nearly $80, bringing total climate-related debt to $12.78 billion between 2009 and 2022. The Russia–Ukraine war triggered severe economic disruption in Bangladesh, driving food inflation and fuel shortages by disrupting imports of wheat, edible oil, and fertilizer—whose prices rose by 105%—and contributing to record commodity prices, higher transport costs, and sustained inflation throughout FY 2022–23. During the political transition in Bangladesh in early August 2024, unrest was largely driven by youth unemployment and inequality; the economy was under severe strain, with weakening external stability and widespread dissatisfaction, foreign exchange reserves falling to nearly half over roughly three years (by some estimates more), and the banking sector deteriorating sharply, including a nearly 96% rise in non-performing loans in less than a year. Bangladesh’s ready-made garment (RMG) sector, the backbone of its economy, contributes roughly 85% of export earnings, over 13% of GDP, employs more than 4 million workers (mostly women), and generated about $48 billion in FY2023–24, but was significantly disrupted by the 2023–24 Red Sea crisis through higher shipping costs and delayed apparel exports. The 2026 Middle East escalations further compound these pressures through rising energy costs, disrupted supply chains, and inflationary pressures that could potentially slow GDP growth to 3.9%, along with higher fuel and LNG import costs of $7–8 billion annually, reduced remittance inflows, and additional risks to apparel exports. The chapter on Bangladesh discusses how COVID-19, climate change, and global shocks have severely weakened exports, employment, and poverty outcomes, including a major collapse in the RMG sector and widespread job losses. It highlights rising climate risks with large-scale displacement and potential GDP losses from sea-level rise and flooding. It further notes that Red Sea crisis, political turmoil, refugee pressures, inflation, currency depreciation, and falling reserves—have deepened economic fragility, food insecurity, and structural vulnerabilities.

Therefore, India, Pakistan, and Bangladesh all experience overlapping socioeconomic pressures from COVID-19, climate change, and global geopolitical shocks that disrupt trade, energy security, inflation, and livelihoods. India shows relative resilience due to its economic scale and diversification, though inequality and climate stress remain severe structural constraints. Pakistan faces the deepest fragility, with debt, governance issues, security instability, and climate disasters reinforcing chronic economic instability. Bangladesh remains highly exposed due to export dependence, climate vulnerability, and external financial pressures, making it sensitive to global shocks. Such comparative understanding helps readers grasp how global crises shape countries differently, enabling more informed analysis of development, policy, and regional risk.