The largest number of people in other South Asian nations are also employed in the agriculture sector, followed by textile manufacturing as the second largest employer.
About 60% of India's workforce is engaged in agriculture, contributing about 16% of GDP, according to published data. Textile manufacturing claims the second largest employment and comprises 26% of manufacturing output. It accounts for a fifth of India’s exports, and employs almost 10 percent of India’s workforce, or some 35 million people, and has the potential to add another 12 million new jobs --dwarfing the 1-2 million jobs created by the much-heralded IT and BPO sector, according to a World Bank report. Even the most optimistic estimates by NASSCOM put the total direct and indirect employment in IT and ITES sectors at 10 million jobs.
The textile sector is crucial to India's economy. The textile industry contributed 4% of India's gross domestic product in the year that ended March 31, and accounted for 13.5% of Indian exports, bringing in $17.6 billion, according to the Wall Street Journal.
With the Indian rupee soaring — up 9 percent against the dollar in the last 16 months, textile exports are down 6.4 percent from a year earlier in the $10 billion Indian clothing industry, according to a recent report in the New York Times.
About 23% of the India's workforce is part of the services sector which accounted for 55% of the GDP in 2007. Within the service sector, the fastest growing segment is business services, contributing about 7% of GDP. It includes information technology enabled services (ITES), information technology (IT), business process outsourcing (BPO) etc. In 2000, it was one third of the total output of services.
Agriculture in Pakistan accounts for 19.4% of GDP and 42% of labor force, followed by services providing 53.4% of GDP and 38% employment, with the remainder 27.2% of GDP and 20% workers in manufacturing sector. Over half of Pakistan's manufacturing jobs are in the textile sector, making it the second biggest employer after agriculture.
The dire situation in India's agriculture sector has been epitomized by over 200,000 farmers' suicides in the last decade. And the rising Indian rupee is now hurting India's textile sector by making its exports more expensive in the world market.
Pakistan's agriculture and textile sectors have also suffered in the last two years. Reduced water flows from India followed by recent floods have adversely affected large swathes of Pakistan's farmland. And the current energy crisis combined with the economic slowdown have hit the textile industry particularly hard. The European Commission, the EU's executive, has recently approved tariff waivers on 75 categories of imports from Pakistan for up to three years, according to a report in the Wall Street Journal. The gesture followed an order by EU leaders wanting to demonstrate they're helping some 10 million Pakistanis left without shelter in the wake of floods.
Pakistan shipped about $4.2 billion of exports to EU last year. About 75% of Pakistani exports to EU are textiles, clothing, leather or related products, and those goods will make up a majority of the roughly $140 million in total extra trade the EU says the deal will generate from eliminating the EU tariffs.
Here is a quick comparison of different sectors of the economy in India and Pakistan in terms of employment and GDP contribution:
Country....Agri(emp/GDP)..Textiles..Other Mfg..Service(incl IT)
Assuming India's PPP GDP of $3.75 trillion (population 1.2 billion, nominal gdp $1.3 trillion) and Pakistan's $450 billion (population 175 million, nominal gdp $167 billion)), here is what I calculated in terms of per capita GDP in different sectors of the economy:
India vs. Pakistan: Per Capita GDP $3,125 PPP ($1,083 nom) vs. $2,570 ($955 nom)
Agriculture: $833 PPP ($288 nom) vs. $1,225 PPP ($454 nom)
Textiles: $1,242 ($433) vs. $1,714 ($636)
Non-Textile Mfg: $11,155 ($3,870) vs $5,785 ($2,142)
Services $7,246 ($2,590) vs $3,654 ($1356)
Data shows that the majority of Indians who work in agriculture and textiles are on average 50% poorer than their Pakistani counterparts, as also reflected in the under-$2 a day per capita income figures for 60% of Pakistanis and 76% of Indians.
|Agriculture Value Added Per Worker in Constant 2000 US$ (Source: World Bank)|
It also shows that Indians in manufacturing and services sectors add almost twice as much value as Pakistanis, and produce significantly higher value goods and services than their Pakistani counterparts.
The income range in India is much wider from $883 to $11,155 accounting for the much bigger rich-poor gap relative to Pakistan's relatively narrower range from $1225 to $5,785.
The challenge for India is to improve its farmers' productivity and move some of them into higher value added sectors of the economy.
The challenge for Pakistan is to have its manufacturing and services sectors produce more goods and services of higher value, and continue to migrate more of its farmers into other sectors of the economy.
It's clear that farming and textiles continue to be the most important economic sectors with the biggest impact on the lives of the majority of ordinary citizens of India and Pakistan. And just as the US and EU look after their farmers, it is very important for South Asian governments to protect their farming and textile sectors even as they promote diversification of their economies.
Pakistan Textile Industry Report
Pakistan's Farmland Controversy
Peepli Live and India's Farmers' Suicides
Floods in Pakistan
Pakistan's Textile Woes
Agricultural Growth in India, Pakistan and Bangladesh
KPMG Report on Pakistan Economy 2010
India and Pakistan Contrasted
Pakistan's Major Business Sectors
Labor Laws: To Create Good Jobs, Reform Labor Regulations
Foreign Investors Buying Pakistani Farm Land
Is Leasing Agricultural Land to Foreigners a Good Idea?
Pakistan's Sugar Crisis and Dietary Habits
Wheat Research and Development in Pakistan
Pakistan's Water Crisis
Wheat Productivity, Efficiency and Sustainability
Agrarian Reform in Pakistan
Urbanization in Pakistan
Water Scarcity in Pakistan
Pakistan Agribusiness Report 2009
Pakistan to Lease 700,000 Acres to Arab States
Pakistan's Total Arable Land