India and Pakistan have
a long and tense history. Many wars and conflicts have happened between them.
In such a situation, some agreements have helped maintain some peace. Two major
agreements are the Indus Waters Treaty and the Shimla Agreement. These were
meant to manage water sharing and maintain peace after war.
Recently, relations
between India and Pakistan became worse again. A deadly terrorist attack
happened in Pahalgam. India blamed Pakistan for supporting such attacks. In
response, India suspended the Indus Waters Treaty and downgraded diplomatic
ties. This has made the situation more serious.
This article will
explain the history, rules, and present crisis around the Indus Waters Treaty
and Shimla Agreement. We will also see what it means for both countries,
especially from a water and economic point of view.
The Indus Waters Treaty:
A History of Water Sharing
After the partition of
India in 1947, both countries needed to divide many things. One major issue was
rivers. The Indus River system flows from India into Pakistan. Pakistan’s farms
and people depend heavily on this water.
In 1960, India and
Pakistan signed the Indus Waters Treaty with the help of the World Bank. The
treaty divided the rivers into two groups. The Eastern Rivers – Ravi, Beas, and
Sutlej – were given to India. The Western Rivers – Indus, Jhelum, and Chenab –
were given to Pakistan.
India can use water from
Western Rivers only in limited ways. For example, India can use it for
drinking, limited farming, and producing electricity (but without storing too
much water).
To make sure rules are
followed, a group called the Permanent Indus Commission was created. If a
problem arises, the treaty has a step-by-step method to solve it – first by
talks, then World Bank help, and finally, international court if needed.
Even during wars, this
treaty remained active. It is often called one of the most successful
water-sharing deals in the world. It shows how countries can still cooperate
even when they don’t get along in other areas.
The Shimla Agreement:
After War, a Hope for Peace
In 1971, India and
Pakistan fought a major war. That war led to the creation of Bangladesh. After
the war ended, both sides met in Shimla in 1972 to talk peace.
The Shimla Agreement was
signed after these talks. Its goal was to prevent more wars and improve
relations. Both countries agreed to solve problems through talks only. They
also promised to respect each other’s borders.
One key point was the
Line of Control (LoC). This is the military control line in Kashmir. Both sides
agreed to respect it. The agreement also promoted better communication, trade,
and travel between the two.
But peace did not come
easily. Despite this agreement, many more conflicts and terror attacks happened
in the coming decades. Still, this agreement remained important as a symbol of
hope and rules for peaceful talks.
What Happened Recently –
The Crisis
In April 2025, a deadly
terror attack happened in Pahalgam, Kashmir. Indian soldiers and civilians lost
their lives. India said the attackers came from Pakistan and were supported by
groups there.
After this, India took
strong steps. First, India suspended the Indus Waters Treaty. It said that
Pakistan broke the trust of the treaty by allowing terror. India said water is
for peace, not for supporting bloodshed.
If India stops water or
changes the flow, Pakistan’s farms may suffer. Crops like wheat and rice depend
on that water. This can increase food prices and cause big problems for farmers
and economy in Pakistan. Even in India, if rivers are blocked or mismanaged,
states like Punjab and Jammu could also face trouble.
India also downgraded
diplomatic ties. This means fewer staff in embassies and no important talks
between the countries. India also cancelled many visas and closed border
movement. This affects traders, students, and families on both sides.
Pakistan also reacted
strongly. It suspended the Shimla Agreement. This is a big step. It means
Pakistan no longer wants to follow peace rules signed after the 1971 war.
Pakistan said if India
tries to stop the flow of rivers, it will treat it as an “act of war.” This
shows how serious the issue has become. Pakistan also closed airspace for
Indian flights, stopped trade, and tested a missile.
This cycle of action and
reaction has increased tensions. Both countries are now not following the old
agreements. This is risky. Both are nuclear powers. One wrong step can lead to
a big disaster.
“President Donald Trump... strongly condemned the terror attack and expressed full support to India to bring to justice the perpetrators of this heinous attack,” India’s foreign ministry said after Trump’s call to PM Modi." The Economic Times
Why This Matters –
Water, Peace, and Economy
Water is life. Without
it, no farming or industry can run. The Indus River system feeds millions of
people in both countries. If water flow becomes uncertain, both countries will
face economic damage.
Markets don’t like
conflict. When India-Pakistan tensions rise, stock markets often fall.
Investors become fearful. Insurance premiums rise. Trade slows down. Border
areas face job losses. Tourism drops. Local businesses suffer.
This also affects
foreign investment. No one wants to invest in a region where a war could start.
Economic growth slows. Government spending increases on defense instead of
education, health, or infrastructure.
Peace and trade go
together. Agreements like the Indus Treaty and Shimla Agreement helped to keep
some order. Their end could bring more conflict, loss, and economic pain.
The Price of Broken
Agreements
The Indus Waters Treaty
and Shimla Agreement were not perfect. But they gave both countries a platform
to talk and solve problems. Now both are suspended. This is a dangerous sign.
People have died.
Families are broken. Anger is high. But this anger must not lead to more death.
Peace does not mean weakness. It means saving lives and futures.
India must protect its
people. Pakistan must stop supporting terror. But both sides must also
understand – war is easy to start, but hard to stop.
We need dialogue, not
missiles. We need justice, but also peace. Agreements can be updated, but not
ignored. Because behind every river, border, or bullet – there are human lives.
Innocent farmers, traders, children. Their lives must matter most.
The Pakistani statement also said that its "armed forces remain fully capable and prepared to defend its sovereignty and territorial integrity," adding that it will "never allow anyone to transgress its sovereignty, security, dignity and their inalienable rights" - NDTV
Why
the Recent Crisis Matters
1.
Water
Security
o
Pakistan’s agriculture (wheat, rice)
is 90 % Indus-fed.
o
Any flow disruption can devastate
harvests, spike food prices, and hurt millions of farmers.
2.
Economic
Fallout
o
Market instability: South Asia
indices often tumble on fresh tensions.
o
Trade slump: Border closures hit
small traders and daily commuters.
o
Defence spending grows, diverting
funds from health and education.
3.
Human Impact
o
Border-community livelihoods
suffer—tour guides in Kashmir, traders in Punjab.
o
Families split by curbs on visas and
train/ferry links.
“If you stop our water, it is an act
of war,” said Pakistan’s Foreign Ministry on May 3, 2025.
What This Means for You
- Farmers & Consumers: Watch local crop and food-price news closely.
- Investors:
Expect higher volatility in Nifty, KSE-100 and regional currencies.
- Policymakers:
Renew dialogue channels—hydrology and diplomacy go hand in hand.
How to Restore Trust
- Re-open Indus talks
under neutral oversight (e.g., World Bank).
- Activate Shimla dispute-resolution clauses to de-escalate border tensions.
- Invest in joint flood-management projects, benefiting both sides during monsoons.
Sources
The Simla Agreement Suspended- Hindustan Times
