PM Khan Defers Trade With India Decision Over Kashmir

Pakistan’s Prime Minister Imran Khan this week chaired a meeting of his cabinet on the spectrum of relations with India.

Foreign Minister, Minister for Planning, Human Rights Minister and other stakeholders attended the meet.

The country’s ministry of foreign affairs officials briefed the attendees on ties and trade ties with its eastern neighbor.

The meet decided not to restore trade with India.

Earlier, a ‘consensus’ move came after Pakistan’s top economic decision-making body gave green light for imports of cotton and sugar from India.

In an effort to cool local demand and prices, the country’s Economic Coordination Committee (ECC) on Wednesday gave the go-ahead for the imports, which was to have ended nearly two years of trade suspension between the neighbors.

On Thursday, the Cabinet meeting had to endorse the ECC’s decision to start trade – but instead, it decided to cancel it.

Inflation in Pakistan peaked out in 2020 at 10.74%. Current rate is 8.84%

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The meet decided that until the constitutional position of the illegally Occupied Jammu and Kashmir (J&K) pre-5th Aug (a 2019 move by India to revoke the special status of Indian-administered Kashmir) is restored, no trade can take place.

“Our principled stance is that without resolving the issue of Kashmir, we cannot go ahead with trade”, PM Khan said.

“This will give a wrong impression that we are neglecting Kashmir and going ahead with trade with India”.

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“Until the right to self-determination is given to Kashmiris, ties can not be normalized with India,” he said.

The decision to import cotton and sugar has now been deferred, for the time being, not overturned completely.

“There was a debate [in the Cabinet], and I tell you, a majority isn’t in favor that we start trade with India without talking about the Kashmir issue,” a source told the Reuters news agency on condition of anonymity.


PM Khan’s government has been battling rising prices –particularly in commodities, in recent months, and the opening of trade with the eastern neighbor was seen likely to help ease the pressure on some of the basic ones such as wheat, sugar, etc.

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Sources (on condition of anonymity) blame it on “price manipulation by mafias”, and point out to the latest Commission reports on wheat, petroleum and sugar.

“Pakistan has a dysfunctional price control and regulatory affairs administration bottom up,” says a professional who has been studying the matter. “There’s a nexus,” he claims.

According to a market observer, “inflation has evolved and become somewhat synchronized among emerging or low-income economies but not much though; what drives inflation globally and domestically remains different; where inflation expectations have become better-anchored and how exchange rate fluctuations can pass through to inflation may not be the same domestically as they are globally.”

A former think tank head blames it on “misgovernance” by the Khan-led team.