Brookings & Madan, however, said that the fact that Modi is considered a "strong man" can give him some leeway to honor Pakistan's goodwill in releasing the pilot in his care. While Modi is pressured to give a strong response, Madan said India is well aware of what would happen if the situation gets out of control.
"The Indian government will be well aware that this may well be the kind of thing that is hurting the economy and sentiment of investors, and they are very focused on keeping economic growth and development going," added she added, adding that maintaining the country's stability is likely to be a focus for New Delhi.
Pervaiz added that both countries decide to de-escalate the situation ̵
The Indian economy is likely already losing momentum, but this news was overshadowed by Pakistan's confrontation this week.
According to a Reuters survey, economists forecast that the country's economic growth in October-De is expected to decline to 6.9 percent annually December quarter – the slowest expansion in five quarters.
Realizing these numbers could affect Modi's position as a successful business reformer.
Clarification: This article has been updated to reflect the slowdown in GDP growth that could undermine the reputation of Indian Prime Minister Narendra Modi as a successful economic reformer.