Pakistan's inflation remained in double digits due to an increase in energy, food prices and stood at nearly 12 percent in June. The cost of sugar in Pakistan has skyrocketed to Rs 110 per kg. For the first time in the history of the nation, the price of wheat has touched Rs 96 per kg during Ramzan. Before August 2019, inflation was not so unbridled in the country as it imports most its agricultural raw material from India. The trade relationship between both countries has always been linked to politics due to their bitter relationship.
On 5 August 2019, when India scraped the special status accorded to Jammu and Kashmir under Article 370 of the Indian Constitution, the Imran government decided to downgrade diplomatic ties with India and suspended bilateral trade. However, the ban on the import of medicines and raw materials from India was lifted to ensure there is no shortage of essential drugs amid the pandemic.
India exports more than its imports from other countries. In 2018-19, India exported cotton worth $550.33 million and organic chemicals worth $457.75 million. Between April 2020 and January 2021, exports declined by about $2 million. However, pharmaceutical exports increased during this period. Pakistan imported medicines worth $67.26 million. During this time, organic chemicals worth $ 115 million were also imported. In 2018-19, India imported mineral fuels and oils ($131.29 million), fruits and groundnuts ($103.27 million), as well as rock salt, sulphur, stone and plastering materials ($92.84 million) from Pakistan.
Whenever the tension between the two countries increased, it had a direct impact on trade. Even after the Uri, Pathankot and Pulwama attacks, normal businesses such as vegetables, fruits and sugar were severely affected. There is no doubt that in view of inflation, Pakistan had to bear the brunt more.
According to World Bank's database, India's GDP stood at $2,600,818 million with a per capita income of $1,800 in 2017. On the other hand, Pakistan's GDP was $304,952 million (i.e. 752 percent lower than India) and its per capita income was $1,580.
Pakistan decided to lift the ban on cotton imports due to a shortage in raw material for the country's textile sector, which has reportedly suffered due to low domestic yields of cotton. Also, imports from countries like the US and Brazil are costlier and take longer to arrive.
