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Business Economy


India withdrawing MFN status will add to Imran's woes, say analysts

New Delhi, Feb 15 (UNI) On a day Prime Minister Narendra Modi cautioned Pakistan that it will have to pay a 'heavy price' for the 'blunder' vis-a-vis Pulwama attack, the government decision on withdrawal of Most Favoured Nation status given to the western neighbour in 1996 is seen as an attempt to mount further economic pressure on Imran Khan regime by squeezing the economy.
Sources in the government say this will also help India ensure that Pakistan gets 'isolated' in the comity of nations.
The decision to withdraw MFN status was taken at the Cabinet Committee on Security meeting here presided over by Prime Minister Narendra Modi on Friday morning.
The meeting was attended among others by Home Minister Rajnath Singh, Defence Minister Nirmala Sitharaman and External Affairs Minister Sushma Swaraj besides Arun Jaitley, who resumed as Finance Minister in the morning.
In terms of technicalities, removal of MFN status means India can enhance customs duties on goods from Pakistan and harm its trading interest.
In accordance with the MFN principle and its obligations under the WTO, India had accorded MFN status in 1996 but Pakistan had not done it.
Ironically, the government decision to withdraw MFN status to Pakistan was taken on Friday even as in January this year the government had told Parliament during winter session in a written reply: “Presently, there is no proposal to review the Most Favoured Nation status to Pakistan".
India had accorded Most Favoured Nation Status to all WTO members, including Pakistan, in accordance with provisions of the Article 1 of General Agreement on Tariffs and Trade (GATT) of 1994.
The government had, however, expressed regrets that - "It is unfortunate that Pakistan has not fulfilled its international obligations in this regard, so far.”
Sources said India-Pakistan trade had increased to USD 2.41 billion in 2017-18 as against USD 2.27 billion in the previous fiscal.
"No bilateral trade meeting between India and Pakistan has taken place since May 2014," C R Chaudhary, Union Minister of State for Commerce has said recently.
Pakistan's economy on domestic front is faced with many limitations and none other than Pakistan’s Prime Minister Imran Khan has repeatedly spoken of improving trade with India, pushing the point that “the best way to alleviate poverty and uplift the people of the subcontinent is to resolve our differences through dialogue and start trading”.
At times, some statistics suggest even Bangladesh economy is doing better than Pakistan's.
India-Pakistan relations have plummeted further since September 2016 after the terror attack on Uri military camp in Jammu and Kashmir.
MEA spokesman Raveesh Kumar has said time and again that no dialogue can be held with Pakistan "until and unless Pakistan stops terrorist activities in India".
On 31 January 2019, Foreign Secretary Vijay Gokhale had summoned Pakistani High Commissioner Sohail Mahmood alleging that Islamabad was "brazenly attempting to subvert India's unity and violate sovereignty and territorial integrity".
Earlier this month, sources in the ruling BJP have said that a school of thought believes that a latent competition and internal conflict between Pakistan Prime Minister Imran Khan and his Foreign Minister Shah Mahmood Qureshi has often led two sides in Pakistan take diametrically opposite stance vis-a-vis the relations with India.
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