Look at it this way, even if your misgivings are correct, and your suspicions true, economic relations will not really have a downside. Increased Indian investment and product penetration into Pakistan will mean that the Pakistani middle class will be able to tangibly see and feel the benefit of normalized relations with India, and that in turn will allow the development of a strong lobby inside Pakistan in favor of good relations with India (provided there are no more coups of any kind).
It would be hara-kiri for an Indian govt to push for economic trade with Pakistan considering the current situation.
India, unfortunately, doesn't have a stick to beat Pakistan but we do have carrots, and not handing out those carrots to Pak are a form of punishment.
Trade, which will have a huge multiplier effect on Pak economy, and ought to be doled out only if Pakistan is serious about normalizing relations and abandoning its mil-jihad complex.
Opening up of trade will allow India to have access to a 20million strong Pakistani middle class, whereas Pakistanis will have access to a 300million strong middle class.
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Even if you believe that attacks like Mumbai were sponsored, financially, by the Pakistani State, you should understand that the amount of money needed to finance such attacks is negligible and will not be impacted by increased economic growth in Pakistan. The TTP after all have been able to finance their reign of terror in Pakistan over several years now, and if you believe that the Afghans and/or US and/or India are not financing the TTP, then they are a very good example of how terrorist groups can obtain the necessary resources regardless of the economic conditions in Pakistan.
Increased economic growth in Pakistan will embolden and bolster the Pakistani military-jihadi complex. Indian state wouldn't want to feed the mouth that bites it.
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