India has strongly red-flagged the Asian Development Bank’s (ADB) recent approval of an $800 million aid package to Pakistan, citing deep concerns over the potential misuse of these funds amid Pakistan’s increasing defence expenditure and deteriorating fiscal health.

Despite being in the midst of a severe economic crisis—marked by a declining tax-to-GDP ratio, depleted foreign exchange reserves, and soaring double-digit inflation—Pakistan’s military-dominated government has continued to prioritise defence spending over much-needed economic reforms and social development.

A key point of contention for India is the growing control of Pakistan’s army over the country’s economic policy. The Special Investment Facilitation Council (SIFC), now led by the army’s top brass, wields significant influence over economic decisions, further sidelining civilian oversight and increasing the risk of policy reversals and ineffective reform implementation. This entrenched military role is seen as undermining the transparency and accountability necessary for the effective use of international aid.

India’s apprehensions are compounded by Pakistan’s poor track record in implementing economic reforms mandated by multilateral institutions such as the ADB and IMF. The country’s repeated recourse to international bailouts—having recently approached the IMF for its 24th rescue package—underscores the ineffectiveness of previous reform efforts and the failure to achieve sustainable macroeconomic stability.

Indian officials have specifically warned that the ADB funds could be diverted towards defence, citing recent purchases of fighter jets from China and a surge in drone acquisitions following Operation Sindoor as evidence of increased military spending.

Additionally, India has expressed alarm over Pakistan’s continued policy of promoting cross-border terrorism, which has exacerbated regional security concerns. New Delhi has highlighted Islamabad’s unsatisfactory record in implementing Financial Action Task Force (FATF) action points, particularly those related to terrorist financing investigations, prosecution of leaders of UN-designated terrorist groups, and the freezing and confiscation of criminal assets.

India’s opposition to the ADB’s aid package is rooted in concerns about the Pakistani military’s dominant role in economic policymaking, the risk of aid diversion to defence rather than development, the country’s chronic failure to implement meaningful reforms, and the broader implications for regional security and stability.

Based On A IANS Report