Stressed Neighbourhood Relations: Obstacle Growth Author :  CA  A. K. Jain Economic growth in the modern world is closely linked to regional stability, cooperation, and integration. Countries that maintain peaceful and productive relations with their neighbors benefit from expanded trade, shared infrastructure, cross-border investment, and reduced security costs. In India’s case, however, stressed neighbourhood relations have emerged as a persistent and often underestimated obstacle to economic growth. Geopolitical tensions in South Asia have imposed significant economic, strategic, and developmental costs. India occupies a central geographic position in South Asia, sharing borders with multiple countries. Ideally, this location should have enabled the country to function as a regional economic hub, facilitating trade and connectivity between South Asia, Central Asia, Southeast Asia, and the Middle East. Instead, political mistrust, unresolved disputes, and security concerns have limited regional integration, depriving India of the full economic benefits of its geography. One of the most direct economic consequences of strained neighbourhood relations is restricted trade. South Asia remains one of the least economically integrated regions in the world. Intra-regional trade accounts for a very small share of total trade, despite geographic proximity and cultural ties. Political tensions, border disputes, and restrictive trade policies have prevented the emergence of efficient regional supply chains. As a result, Indian businesses miss opportunities to access nearby markets at lower cost, while consumers face higher prices and limited choice. Security challenges arising from hostile relations also impose a heavy economic burden. Sustained military preparedness, border management, and internal security operations require substantial public expenditure. Resources that could otherwise be invested in infrastructure, education, healthcare, and innovation are diverted toward defense and security. While national security is non-negotiable, prolonged tensions raise opportunity costs that directly affect development outcomes. Stressed relations also disrupt connectivity and infrastructure development. Cross-border transport corridors, energy pipelines, and digital networks require cooperation and trust. Political instability and mutual suspicion delay or derail such projects, reducing regional efficiency. Poor connectivity increases logistics costs, weakens competitiveness, and limits the potential for regional value chains that could support industrial growth and employment. Foreign investment decisions are influenced by regional stability. Investors assess geopolitical risk when committing capital, particularly to long-term projects. Persistent tensions in the neighborhood elevate perceived risk, raising financing costs or discouraging investment altogether. This is especially relevant for sectors such as manufacturing, infrastructure, and energy, which rely on stable regional supply chains and predictable operating environments. India’s neighbourhood challenges also affect its global economic positioning. Diplomatic frictions can limit participation in regional economic blocs and trade arrangements. Weak regional cooperation reduces bargaining power in global negotiations and constrains India’s ability to shape economic norms and standards. In contrast, regions that demonstrate internal cohesion are better positioned to attract investment and influence global economic governance. The impact on border regions is particularly severe. States located along international borders often suffer from underdevelopment due to security restrictions, limited trade access, and inadequate infrastructure. These regions miss opportunities for cross-border commerce, tourism, and cultural exchange that could stimulate local economies. Persistent underdevelopment in border areas can also exacerbate social and economic inequalities. Despite these challenges, neighbourhood relations need not remain a permanent constraint. Economic engagement itself can serve as a tool for stability and confidence-building. Trade, investment, and people-to-people exchanges create shared interests that reduce conflict incentives over time. However, such engagement requires a clear strategic vision and consistent diplomatic effort. Improving neighbourhood relations demands a pragmatic and economically informed approach. Separating economic cooperation from political disputes, where possible, can allow progress in mutually beneficial areas. Regional trade facilitation, infrastructure connectivity, and energy cooperation offer tangible gains. Multilateral platforms and regional institutions can help manage disputes and promote collaboration. Strengthening border infrastructure and trade facilitation can integrate peripheral regions into national and regional markets. Cultural, educational, and business exchanges can foster trust and reduce misperceptions. At the same time, robust security mechanisms must coexist with economic outreach to ensure national interests are protected. In conclusion, stressed neighbourhood relations represent a significant but often underappreciated obstacle to India’s economic growth. The costs are not limited to defense spending or lost trade; they extend to reduced investment, weaker connectivity, and missed regional leadership opportunities. Sustainable economic growth requires a stable external environment. By pursuing balanced diplomacy that integrates security concerns with economic engagement, India can transform its neighbourhood from a constraint into a catalyst for long-term development. ---------------------------------------------------- Author of this article, C.A. Anil K. Jain( caindia@hotmail.com ) is a highly acclaimed Chartered Accountant with over four decades of professional experience. He is widely recognized for his expertise in financial and asset planning, taxation, international investments, and business growth strategies. Beyond advisory work. He actively contributes to national economic discourse through policy representations to the Government of India, frequent appearances on television and radio, and extensive writing. He is also the author of the acclaimed books Bharat: The Development Dilemma and River Water Recharge Wells, reflecting his commitment to India’s economic development and sustainable water solutions.