India demands ADB stop funds to Pakistan as fallout of Pahalgam terror attack deepens #ItalyFinance

India has formally urged the Asian Development Bank (ADB) to stop funding Pakistan. This demand was raised by Finance Minister Nirmala Sitharaman during her meeting with ADB President Masato Kanda in Milan. The two met on the sidelines of the 58th Annual Meeting of the ADB Board of Governors.“Union Minister for Finance and Corporate Affairs Nirmala Sitharaman is received by Ambassador Vani Rao and Consul General Lavanya Kumar after her arrival at the Milan Malpensa Airport, Italy. The Union Finance Minister will participate in the 58th ADB Annual Meeting in Milan,” the Ministry of Finance said in a post on X.

Sources confirmed to ANI that the funding freeze was a key item on the meeting agenda. In a separate meeting, Sitharaman conveyed the same demand to Italian Finance Minister Giancarlo Giorgetti.

This push comes days after the April 22 terror attack in Pahalgam, Jammu and Kashmir, which killed 26 individuals, most of them tourists.

Pahalgam attack triggers economic retaliation

The Pahalgam terror attack is believed to have been carried out by militants backed by Pakistan. The incident has triggered a series of retaliatory steps from New Delhi. Among the first actions was the suspension of the 1960 Indus Waters Treaty. This move could over time severely impact Pakistan’s water supply.

India has also downgraded diplomatic ties, cancelled visas, banned Pakistani carriers from Indian airspace, and suspended bilateral trade and cargo movement at the Attari border.In a significant military development, Prime Minister Narendra Modi has granted the Indian Armed Forces full autonomy to decide the nature, timing, and targets of India’s response.

India rallies global partners to rein in Pakistan

India is now seeking to build international pressure on Pakistan. According to sources cited by NDTV and India Today, the government plans to lobby the Financial Action Task Force (FATF) to include Pakistan on its grey list. This could further isolate Islamabad economically.

Additionally, New Delhi is expected to raise concerns at the International Monetary Fund (IMF) about Pakistan’s $7 billion bailout package. The IMF board is scheduled to review the arrangement on 9 May.

India is also working with European nations to ensure stricter oversight of international funding to Pakistan. The push includes demands for greater transparency and tighter controls to ensure that financial aid does not inadvertently support activities that threaten regional stability.

Moody’s flags Pakistan’s worsening economic outlook

The economic fallout is already visible in Pakistan. The benchmark KSE-100 index dropped by over 7,100 points—almost 6 per cent—between 23 and 30 April. The market volatility reflects growing investor anxiety over rising India-Pakistan tensions.

Global credit ratings agency Moody’s issued a warning on Monday: “A persistent increase in tensions could impair Pakistan’s access to external financing and pressure its foreign-exchange reserves, which remain well below what is required to meet its external debt payment needs.”

Sitharaman pushes India’s growth vision at ADB

Alongside calls for stricter financial measures against Pakistan, Finance Minister Sitharaman also used her time in Milan to showcase India’s economic reforms.

She reiterated India’s focus on private sector-led growth. “India focuses on private sector-led economic growth and has been consistently creating a conducive policy and regulatory ecosystem through bold initiatives such as the Insolvency and Bankruptcy Code, Corporate Tax Rate Reduction and GST implementation, Production-Linked Incentives, National Infrastructure Pipeline, GatiShakti National Master Plan, and StartupIndia,” the Ministry of Finance said in a post on X.

The Minister also invited ADB to explore innovative financing models in India. Responding to this, ADB President Masato Kanda said, “ADB fully supports India’s development priorities, guided by Prime Minister Narendra Modi’s vision of a Viksit Bharat by 2047.”

Packed schedule in Milan for Finance Minister

Sitharaman is leading the Indian delegation from the Department of Economic Affairs to the ADB Annual Meeting, which runs from 4 to 7 May.

The Indian Finance Minister is taking part in key sessions, including the Governors’ Business Session, the Plenary Session, and the seminar on “Cross-Border Collaboration for Future Resilience.”

Her Milan schedule also includes bilateral meetings with finance ministers from Japan and Bhutan, as well as heads of international financial institutions such as the International Fund for Agricultural Development (IFAD) and the Japan Bank for International Cooperation (JBIC). She is also set to meet the Indian diaspora and speak at Bocconi University’s NEXT Milan Forum on balancing economic and climate resilience.

(With inputs from ANI)