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Swaminathan Aiyar Warns of Market Impact if Tensions Continue

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Swaminathan Aiyar, Consulting Editor at ET Now, highlighted that Pakistan might be inclined to strike deep into Indian territory. The potential targets and extent of damage remain unknown, posing a risk of escalation depending on India’s response.

Reflecting on recent events, Aiyar noted that India had attacked Pakistan terrorist camps, following past actions like the 2016 surgical strikes and the 2019 Balakot bombings. He suggested that Pakistan’s retaliation is expected, and both nations might attempt to declare victory to avoid further conflict.

The current situation is tense with many uncertainties, and there is international pressure to prevent escalation. Past diplomatic skills could help in de-escalating the situation. Although a prolonged conflict is unlikely, minor escalations could occur without leading to a full-scale war.

India’s recent action was more extensive than previous strikes, and according to Aiyar, it involved the use of drones and loitering munitions. This method, proven effective in Ukraine, allows for precision without risking personnel. It is expected that Pakistan might also employ drones, and both nations may lack anti-drone measures, raising military concerns.

Aiyar explained that geopolitical tensions generate uncertainty, affecting business decisions and economic growth. If the situation resolves within two weeks, the annual economic impact should be minimal. He emphasized that neither country desires a war, but both aim to claim victory.

He also mentioned that Pakistan is not isolated; it has allies such as China, which may provide support to maintain balance against India. China views Pakistan as essential for regional strategy. The focus should be on avoiding a decisive victory language to prevent escalation. India has portrayed the recent attack as non-escalatory, urging Pakistan not to retaliate further. The situation remains delicate, with risks ahead.

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