Back in 1965, after 17 days of war, we lacked the knock-out punch. We lacked the resources to continue fighting for very long. India had suffered a lot more losses in man and material but they had a lot more left to spare, both in terms of munitions, spares and fuel. Ours were dwindling fast.
The embargo imposed by the US and the French had also hurt us big time back then.
Same would have been the case now (might be even worse) as our economy is in a much worse shape than it was back then.
If we had done more damage to them than what we already had, then India could not have lied about it and would have been forced to escalate the encounter to a longer duration and broader scoped and extended conventional conflict.
Such a conflict will always suit India, which has a lot more man power, equipment, munition, fuel and money to engage in a long drawn conflict.
So we had two choices ...
- Either continue and then later be forced to resort to nukes (due to dwindling stockpile of fuel, spares and conventional munitions) and ensure mutually assured destruction
Or
- Create a favorable situation where the deescalation with the upper hand would provide a strategic timeout to restructure/rejuvenate the economy and prepare for an eventually imminent war in the future.
We chose the latter, quite wisely.