India and Pakistan on Wednesday exchanged military strikes for the sixth time since 1947, when Britain withdrew from the subcontinent and both countries gained independence.

In that time, both countries have acquired nuclear weapons, simultaneously raising the stakes of any conflict while limiting how far tensions can escalate. That dynamic appeared to be playing out in the latest clashes over the disputed region of Kashmir, with both governments on Wednesday stressing the non-escalatory nature of their actions even as Pakistan warned that more was likely to come.

But while militarily both countries have the capacity to inflict untold damage, economically India has increasingly more at stake. India's booming gross domestic product is now more than eight times the size of Pakistan's, according to the World Bank, a gap that has roughly doubled since the turn of the century. India is also moving rapidly up the technology ladder — becoming a global hub for manufacturing smartphones, solar panels and cars, while expanding its role as a headquarters for the world.

"At this point, we don't know how Pakistan will react," said Bhashyam Kasturi, a former director of India's National Security Council Secretariat. "But India still has a lot at stake." (Newsmaker23)

Source: Bloomberg