India-Pakistan Conflict: Estimated Financial Losses of 4 Day War
Chandigarh May 14, 2025 – The four-day conflict between India and Pakistan from May 6 to 10, 2025, triggered severe economic repercussions for both nations, with India facing significant financial losses due to military operations, market disruptions, and halted commercial activities. The conflict, sparked by India’s Operation Sindoor on May 7 in response to the April 22 Pahalgam attack, led to widespread economic fallout, including airport closures, flight cancellations, and the suspension of the Indian Premier League (IPL). An analysis by the UAE-based Foreign Affairs Forum (FAF) and other sources provides insight into the staggering costs incurred.
India’s Financial Toll
India’s military expenditure during the first three days of the assault (May 7-9) is estimated to have ranged between Rs 1,460 crore and Rs 5,000 crore per day, according to the FAF. Over three days, this translates to approximately Rs 4,380 crore to Rs 15,000 crore (roughly $519 million to $1.78 billion). These costs include deployment of BrahMos missiles, priced at $2.5 million to $5.6 million each, kamikaze drones at $500 per unit, and precision strikes using high-tech drones, which cost around $350,000 per target based on comparable Russian operations. Additional expenses stem from sorties, logistics, troop movements, and manning.
The Bombay Stock Exchange (BSE) suffered massive losses, with investors losing Rs 13 lakh crore ($154 billion) over the four days. The BSE Sensex dropped 156 points on May 6 (Rs 6 lakh crore), gained 106 points on May 7, lost 412 points on May 8 (Rs 5 lakh crore), and plummeted 880 points on May 9 (Rs 2 lakh crore) as tensions escalated. The Indian rupee faced pressure, declining nearly 0.5% to 84.8250 against the U.S. dollar, marking its worst performance since April 9.
The closure of 32 airports in northern and western India until May 10 led to the cancellation of over 430 flights, severely disrupting air travel. Major airlines like Air India, IndiGo, and SpiceJet suspended operations, while international carriers rerouted flights, increasing travel times and costs. The suspension of the IPL, with 16 matches remaining, further strained the economy, given its significant commercial value.
Pakistan’s Economic Strain
Pakistan’s financial losses are harder to quantify but are equally significant. The FAF estimates daily military costs for a conventional war at $11.8 million to $83.2 million, totaling $35.4 million to $249.6 million over three days. Pakistan’s Operation Bunyan al-Marsus on May 10 targeted Indian military bases, escalating costs. The closure of key airports like Karachi, Lahore, and Sialkot disrupted air travel, and the suspension of trade through the Attari-Wagah border, worth $451 million in 2023-24, hit Pakistan’s access to Indian pharmaceuticals and agricultural goods.
Pakistan’s currency also faced pressure, with its fragile economy—reliant on IMF bailouts and Chinese debt rollovers—teetering under the strain. The KSE index likely saw declines, though specific figures are unavailable. Historical data from the 2019 Pulwama crisis, when Pakistan’s exports to India fell from $550 million to $480,000, suggests a similar collapse in trade.
Comparative Context: Kargil and Historical Conflicts
The low-intensity Kargil conflict in 1999 cost India Rs 14.6 billion per day and Pakistan Rs 3.7 billion per day. The 2025 conflict, though shorter, was more intense, with advanced weaponry and broader economic disruptions. The 1971 war, which saw 3,843 Indian and 8,000 Pakistani soldiers killed, and the 2001-02 Parliament attack standoff, costing India $600 million and Pakistan $400 million, underscore the escalating financial burden of India-Pakistan conflicts. The Strategic Foresight Group’s 2004 report, “Cost of Conflict,” estimated that even low-intensity warfare squeezes 3% of India’s economic potential, a trend evident in 2025.
Policy Responses and Economic Recovery
To offset the financial burden, the Indian government is reportedly considering doubling the excise duty on petrol and diesel from Rs 2 to Rs 4, aiming to raise Rs 64,000 crore. This comes atop India’s 2025-26 defense budget of Rs 6.81 trillion ($78.3 billion), a 9.5% increase from 2024-25, with only 26.4% allocated for new acquisitions. Pakistan, meanwhile, increased its 2025-26 military budget by 18% to Rs 6.8 lakh crore ($80 billion), with 22% for new weapons.
Long-Term Implications
The conflict has strained bilateral trade, already minimal at $1.2 billion annually for India’s exports to Pakistan. The suspension of the Indus Waters Treaty threatens Pakistan’s agrarian economy, which contributes 22.7% to its GDP, while India risks international backlash. Both nations face inflationary pressures, with India’s retail inflation at 3.34% in March 2025 vulnerable to war-induced spikes.
As the ceasefire holds uneasily, the financial scars of the four-day war underscore the high cost of conflict. The Strategic Foresight Group’s words ring true: wars divide not just land but minds, leaving both sides to question whether victory is worth the price of lost peace.
Sources: Nagaland Post, UAE Foreign Affairs Forum, Strategic Foresight Group, Reuters, Wikipedia, Times of India