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India’s suspension of the Indus Waters Treaty, halting of bilateral trade, and ban on pharmaceutical exports following the heinous Pahalgam terror attack have rattled Pakistan’s already struggling economy. Islamabad, caught off-guard by the swift and sweeping measures, is now facing mounting pressure across critical sectors — agriculture, health, fertiliser supply, and access to vital water resources.

Through the now-suspended IWT, Pakistan gets roughly 80% of the waters of western rivers (Indus, Jhelum and Chenab) that flow through India into Pakistan, whereas India's share from the eastern rivers (Beas, Ravi and Sutlej) is 20%. The suspension of the treaty will hit Pakistan way more than India.

“This is a clever, popular and populistic measure,” said Happymon Jacob, an associate professor of diplomacy and disarmament at Jawaharlal Nehru University, as quoted by New York Times.

Agriculture – Pakistan’s lifeline under threat

Agriculture is the backbone of Pakistan’s economy, contributing around 20% to its GDP and employing over 38% of its labour force. In fact, more than 80% of Pakistan’s agriculture and around a third of its hydropower generation depend on the waters of the Indus basin.

Following the suspension of the IWT, New Delhi has hinted at restricting or diverting waters from the eastern rivers (Ravi, Beas, Sutlej) for exclusive Indian use. While India cannot stop water flows immediately, but even a marginal reduction in river flow could cripple irrigation cycles in key agricultural belts like Punjab and Sindh, which depend heavily on the Indus system for crops such as wheat, rice, cotton and sugarcane.

According to US Department of Agriculture data (2015–2018 averages), the Punjab province alone accounts for 77% of Pakistan’s wheat production. Sindh contributes another 15%, while Khyber Pakhtunkhwa accounts for about 5%, and Balochistan just 3.5%. The heartland of Pakistan’s wheat belt is crisscrossed by rivers like the Chenab, Jhelum, Ravi, and Sutlej, all of which originate in India. This means any reduction or disruption in water flow would severely impact over three-fourths of Pakistan’s wheat output.

Districts along the Indus and its tributaries, including areas around Rawalpindi, Sialkot, Multan, and Bahawalpur, report the highest wheat production levels (ranging between 450 to 1,200 thousand metric tons). Central and Southern Punjab regions, shown in deep green on the map, would be particularly vulnerable if water shortages persist during critical sowing and harvesting windows.

Food prices in Pakistan are already soaring due to internal economic woes. Any shock to agriculture output, especially wheat — the staple food — will further fuel inflation, deepen poverty, and create rural unrest. A shortfall in wheat could also force Pakistan to import grains, straining its fragile foreign exchange reserves.

Medicine shortages: A brewing health crisis

With India suspending trade ties, Pakistan health authorities have initiated emergency measures to secure pharmaceutical supplies. Currently, Islamabad relies on India for 30-40 per cent of its pharmaceutical raw materials, including Active Pharmaceutical Ingredients (APIs) and advanced therapeutic products. Critical life-saving drugs for cancer, cardiovascular diseases, diabetes, and antibiotics were sourced from Indian manufacturers due to their affordability and quality.

India’s department of pharmaceuticals has requested the pharma exports body to prepare a list of medicines and pharmaceutical products exported to Pakistan/

Reports suggest that Drug Regulator Authority of Pakistan (DRAP) is exploring alternative sources in China, Russia and several European countries.

The country could witness shortage of vital medicines if immediate steps are not taken. The shortage of medicines will inevitably lead to a surge in prices, making essential healthcare unaffordable for a large segment of the Pakistani population. This scarcity will also fuel the growth of black markets, where unregistered and potentially substandard medicines, often smuggled from various sources, will be sold at exorbitant prices, further jeopardizing public health.

Fertiliser shortage: Food production at risk

India has historically been a major supplier of DAP (Di-ammonium phosphate) and urea, critical fertilisers for Pakistan’s major crops. The sudden trade suspension means Pakistan must now seek more expensive imports from Gulf countries, China, or Central Asia.

However, this will likely involve higher transportation costs and potential delays in supply, further impacting the agricultural cycle and overall productivity. The reliance on distant suppliers also increases Pakistan's vulnerability to global supply chain disruptions and price volatility.

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