Consider this, If there is a war only 5 to 6 states in northern India will be affected while the rest of the country will function as usual that means only 20-30% economic loss at the best. While for pakistan even if war affects 2 states on the border it will end up costing 50% of the economy.
India has a huge hinterland which can support war efforts without much sweat. Even worse is that naval warfare will completely block all the trade routes for pakistan while peninsular India will continue trading without any issue.
Pakistan's idea is to inflict casualties on India , India also thinks in the same manner. We dont need to win the war , we simply need to cause greater damage. At the worst if it becomes a full scale war damage on pakistan will be greater and will take more time to recover. While for India it will take less time to recover.
All in all it is foolhardy to fight a war. Hence the reason why pakistan has resorted to proxies knowing very well it doesnt have resources and power to fight India.