Sunday, October 9, 2011

India and Pakistan Comparison Update 2011

Pakistan has created more jobs, graduated more people from schools and colleges, built a larger middle class and lifted more people out of poverty as percentage of its population than India in the last decade. And Pakistan has done so in spite of the huge challenges posed by the war in Afghanistan and a very violent insurgency at home.

The above summary is based on volumes of recently released reports and data on job creation, education, middle class size, public hygiene, poverty and hunger over the last decade that offer new surprising insights into the lives of ordinary people in two South Asian countries. It adds to my previous post on this blog titled "India and Pakistan Contrasted in 2010".

Pakistan Created More Jobs:

Pakistan's employment growth has been the highest in South Asia region since 2000, followed by Nepal, Bangladesh, India, and Sri Lanka in that order, according to a recent World Bank report titled "More and Better Jobs in South Asia".

Total employment in South Asia (excluding Afghanistan and Bhutan) rose from 473 million in 2000 to 568 million in 2010, creating an average of just under 800,000 new jobs a month. In all countries except Maldives and Sri Lanka, the largest share of the employed are the low‐end self-employed.

Pakistan Graduated More People:

Although India has higher rates of literacy and enrollment than Pakistan, Pakistanis spend more time in schools and colleges and graduate at a higher rate than their Indian counterparts in 15+ age group, according to a report on educational achievement by Harvard University researchers Robert Barro and Jong-Wha Lee.

In a recent Op Ed titled "Preparing the Population for a Modern Economy" published by Pakistan's Express Tribune, Pakistani economist Shahid Burki wrote as follows:

"Pakistan does well in one critical area — the drop-out rate in tertiary education. Those who complete tertiary education in Pakistan account for a larger proportion of persons who enter school at this level. The proportion is much higher for girls, another surprising finding for Pakistan."

Upon closer examination of Barro-Lee data on "Educational Attainment for Total Population, 1950-2010", it is clear that Pakistani students stay in schools and colleges longer to graduate at higher rates than Indian students at all levels--primary, secondary and tertiary. While India's completion rate at all levels is a dismal 22.9%, the comparable completion rate in Pakistan is 45.7%.

Here is a summary of Barro-Lee's 2010 data in percentage of 15+ age group students who have enrolled in and-or completed primary, secondary and tertiary education:

Education Level.......India........Pakistan

Primary (Total)........20.9..........21.8

Primary (Completed)....18.9..........19.3





Pakistan Has Larger Middle Class:

Over the last two decades, Pakistan has continued to offer much greater upward economic and social mobility to its citizens than neighboring India. Since 1990, Pakistan's middle class had expanded by 36.5% and India's by only 12.8%, according to an ADB report on Asia's rising middle class released recently.

Asia's Middle Class Source: ADB

An ADB report on Asia's rising middle class released this month confirms that Pakistan's middle class has grown to 40% of the population, significantly larger than the Indian middle class of about 25% of its population, and it has been growing faster than India's middle class. The other significant news reported by Wall Street Journal says the vast majority of what is defined as India's middle class is perched just above $2 a day, making it vulnerable to various shocks. This is also true of Pakistan.

Pakistan Has Less Hunger and Poverty:

In spite of recent poverty declines with its rapid economic expansion, India still has higher poverty rates than Pakistan, according to a 2011 World Bank report titled "Perspectives on poverty in India : stylized facts from survey data" released in 2011.

Overall, the latest World Bank data shows that India's poverty rate of 27.5%, based on India's current poverty line of $1.03 per person per day, is more than 10 percentage points higher than Pakistan's 17.2%. Assam (urban), Punjab and Himachal Pradesh are the only three Indian states with comparable or slightly lower poverty rates than Pakistan's.

Based on hunger data collected from 2003 to 2008, IFPRI reported that Pakistan's hunger index score improved over the last three consecutive years reported since 2008 from 21.7 (2008) to 21.0 (2009) to 19.1 (2010) and its ranking rose from 61 to 58 to 52. During the same period, India's index score worsened from 23.7 to 23.9 to 24.1 and its ranking moved from 66 to 65 to 67 on a list of 84 nations.

India's Economic Growth Outpaces Pakistan's

Indian economy has been growing faster than Pakistan for several years. The nominal per capita incomes in the two nation are still about the same at just over $1200, according to 2011 data released by Economic Survey of India and Economic Survey of Pakistan.

Nominal per capita incomes in both India and Pakistan stand at just over $1200 a year, according to figures released in May and June of 2011 by the two governments. This translates to about $3100 per capita in terms of PPP (purchasing power parity). Using a more generous PPP correction factor of 2.9 for India as claimed by Economic Survey of India 2011 rather than the 2.5 estimated by IMF for both neighbors, the PPP GDP per capita for Indian and Pakistan work out to $3532 and $3135 respectively.

Nominal per capita income of Indians grew by 17.9 per cent to Rs 54,835, or $1218, in 2010-11 from Rs 46,492 in the year-ago period, according to the revised data released by the government in May, 2011 as reported by Indian media.

Pakistan Has Better Public Hygiene:

India has the worst public sanitation situation in the world today, according to a recent UNICEF survey. In terms of open defecation, India(638m) is followed by Indonesia (58m), China (50m), Ethiopia (49m), Pakistan (48m), Nigeria (33m) and Sudan (17m). In terms of percentage of each country's population resorting to the unhygienic practice, Ethiopia tops the list with 60%, followed by India 54%, Nepal 50%, Pakistan 28%, Indonesia 26%, and China 4%.

18 percent of urban India still defecates in open while the percentage of rural India is as high as 69 percent of the population. It is the key reason why India carries among the highest infectious disease burdens in the world.

To conclude, let me share with you an except from a piece written by Mudassar Mazhar Malik, an MIT (Sloan) and LSE (London) educated Pakistani economist and investment banker,on his assessment of Pakistan today:

"First, despite seven changes in government in the past twenty years, Pakistan has maintained an average growth rate of 5 percent per annum. Until recently, Pakistan was being touted as one of the most dramatic turn-around stories of the last decade. Driven by domestic demand and population growth, GDP growth averaged over 6% a year from 2003-2008. This translated into an investment and infrastructure led growth cycle cycle fueling expansion in the housing, health care, education, food, infrastructure, energy, telecommunications, IT and financial services sector. This has meant that Pakistan's economy has moved progressively from its traditional agricultural base to manufacturing and increasingly to services. In that sense, Pakistan's economic structure is closer to that of India and China, and is unlike many smaller Asian countries, which are more dependent on export growth."

While it still has a very long way to go to improve its ordinary citizens' lives, resilient Pakistan has done reasonably well in terms of economic and social indicators over the last decade in spite of huge challenges. Just imagine how much better Pakistan could have done if it had any semblance of political stability and security.

Related Links:

Haq's Musings

Pakistan Tops Job Growth in South Asia

Pakistan Ahead of India in Graduation Rates

India-Pakistan Compared By Dr. Ishrat Husain

Public Sanitation Worst in India

Pakistan's Middle Class

Per Capita Incomes in India and Pakistan

The Pakistan Story After 64 Years

Resilient Pakistan Defies Doomsayers


Anonymous said...

Well said sir.

Riaz Haq said...

A recent report by a Govt commission in Pakistan found an "Education Emergency" in public education that paints a grim picture.

Here's an excerpt from a Financial Times story on Indian education crisis:

A report on the state of Indian education, the largest study of the country’s rural children, makes for grim reading.

India’s schools are in bad shape, and not getting any better. Maths ability is declining, and reading is way below where it should be.

The Annual Status of Education Report 2010, prepared by Pratham, an education non-governmental organisation supported by many of India’s top companies, has a blunt message. School enrolment is up but quality is unacceptably low. Inadequate state provision is fuelling the expansion of private education, which India’s largely poor people can ill-afford.

Here are some of the report’s key findings:

1. 96.5 per cent of children in the 6 to 14 age group in rural India are enrolled in school. While 71.1 per cent of these children are enrolled in government schools, 24.3 per cent are enrolled in private schools.

2. India’s southern states in particular are moving strongly towards more private sector education provision. The percentage of children in private school increased from 29.7 per cent to 36.1 per cent in Andhra Pradesh, from 19.7 per cent to 25 per cent in Tamil Nadu and from 51.5 per cent to 54.2 per cent in Kerala

3. There has been a decrease in children’s ability to do simple mathematics. The proportion of Standard 1 children who could recognise numbers from 1-9 has declined.

4. After five years of schooling, close to half of children are below a level expected after just two years of formal education. Half of these children cannot read. Only one child in five can recognise numbers up to 100.

5. Toilets were useable in only half the 13,000 schools surveyed. Teacher attendance was 63 per cent, lower than pupil attendance.
Kapil Sibal, the new education minister, has breathed some life into a portfolio left moribund by his elderly predecessor Arjun Singh. But lately, Mr Sibal, a lawyer, has been seconded into the telecommunications ministry to clean up a mess surrounding the controversial award of new 2G licences that may have cost the exchequer as much as $39bn.

There are few more important challenges in India than improving its schools. Not for the first time ineptitude and greed at the top are robbing India’s young of resources.

Anil said...

This is Pak vs India as told by Pak's best intellectual.

See what Dr. Hoodbhoy talks about Indian economy and Indian education.

Don't shoot me Riaz. I am just a messenger.

Sanjay said...

Pls compare sales of cars, IPad and other middle class items. Pak is no where close to India. Latest issue of Economist mentions India has 24 cars per 1000, not too long ago it was less than 10. Pak is still ~12-15 per thousand and already declining.

One look at the advertising industry of Pakistan for 20/20 cricket tells why Pak is rightly called backward economy. No money for cricketers. No wonder they want to shamelessly play in India and make money.

These are real indicators of state of economy. Not fudged up numbers in blogs.

Pakistan economy, like its people, is a joke.

Riaz Haq said...

Anil: "See what Dr. Hoodbhoy talks about Indian economy and Indian education."

Self criticism is a good thing, and every nation needs a few Cassandras to remind them where they are lacking. Pakistan has lots of Cassandras and India has few.

Riaz Haq said...

Sanjay: "Pls compare sales of cars, IPad and other middle class items."

Cars and iPads are not a substitute for better nutrition and more toilets which is what the world's largest population of poor, hungry, illiterate and sick people in India needs.

Besides, Pakistan is also experiencing a consumption boom. Auto sales in Pakistan jumped 61% in July and are continuing to increase by double digits after the crash of 2008.

Nestle Pakistan's chief Ian Donald has summed up the rising demand for his company's products as follows: “It’s a common perception that China and India are much bigger in terms of growth than Pakistan. But for Nestle, the per capita consumption of our products in Pakistan is twice as much as we have in China and India.” It should be noted that Nestle is the world's largest packaged food company, and Pakistanis' per capita consumption of milk and dairy products is about 2.5 times higher than in India. According to the FAO, the average dairy consumption of the developing countries is still very low (45 kg of all dairy products in liquid milk equivalent), compared with the average of 220 kg in the industrial countries. Few developing countries have per capita consumption exceeding 150 kg (Argentina, Uruguay and some pastoral countries in the Sudano-Sahelian zone of Africa). Among the most populous countries, only Pakistan, at 153 kg per capita, has such a level. In South Asia, where milk and dairy products are preferred foods, India has only 64 kg and Bangladesh 14 kg. East Asia has only 10 kg.

Riaz Haq said...

Here's a Bloomberg report on Karachi stocks rally after rate cut by SBP:

The Karachi Stock Exchange 100 Index, which has climbed 0.6 percent this year, rose 2 percent to 12,092.32 at the 3:30 p.m. local time close, its highest since Aug. 2. Oil & Gas Development Co., the biggest fuel explorer, rose 3.7 percent to 141.03 rupees and Fauji Fertilizer Co., the biggest urea maker, rose 4.5 percent, to 178.06 rupees.

The State Bank of Pakistan reduced the discount rate to 12 percent from 13.5 percent, according to a statement in Karachi on Oct. 8. Three of five economists surveyed by Bloomberg News predicted a 1 percentage point cut, and the remainder forecast a 0.5 percent reduction.

Acting Governor Yaseen Anwar had room to act after Pakistan’s inflation rate dropped 2 percentage points in the past three months. A rate cut might support an economy that’s seen growing less than half the pace of fellow South Asian nations India, Bangladesh and Sri Lanka this year.

‘Attractively Priced’

“With the level of the rate cut, today’s jump was expected,” said Habib ur Rahman, who oversees 7 billion rupees ($80 million) in stocks and bonds at Atlas Asset Management Ltd. in Karachi. “I can see the market continuing to gain till December because high-yielding stocks are attractively priced.”

Global funds sold $47.1 million worth of Pakistani stocks in July and August compared with net buying of $95.6 million last year, according to central bank data.

The Karachi Interbank Offered Rate, the benchmark borrowing rate for commercial banks, fell to 11.97 percent from 12.90 percent, according to Bloomberg data. The yields on the 12-month treasury-bill and the 10-year investment bond both declined by 1 percentage point to to 12.85 percent and 12 percent respectively, according to Arif Habib Ltd., in Karachi.

The rupee, which has shed 2 percent this year and dropped to a record low on Sept. 16, declined 0.3 percent to 87.47 to the U.S. dollar. The central bank conducted what it called a “calibrated intervention” last month to stabilize the currency.

Prime Minister Syed Yousuf Raza Gilani’s government is aiming to boost economic growth to 4.2 percent in the fiscal year ending June 30, from 2.4 percent in the previous year, one of the lowest expansions in the past decade, as the country struggled to cope with floods and militant attacks.

Floods in August forced more than one million people from their homes and damaged crops in parts of southern Pakistan still recovering from last year’s worst ever monsoon inundation that devastated the region. Terror attacks in the South Asian nation have killed at least 35,000 people since 2006, according to government estimates.

Stimulating Investment

The central bank decided to slash its policy rate for a second straight meeting because of a “high probability” of meeting the inflation goal for fiscal 2012 and to stimulate investment, according to central bank’s statement. The State Bank is targeting an average inflation of 12 percent in the year ending June 30, 2012.

Consumer prices rose 10.46 percent in September from a year earlier, after climbing 12.43 percent in July, according to the Federal Bureau of Statistics.

“If the rate cut is backed by other positive factors like an ease in inflation and a pickup in growth activity, we can see the index around 14,000 points by June 2012,” said Mohammad Shoaib, who oversees the equivalent of 32 billion rupees in Pakistani stocks and bonds at Al-Meezan Investment Management Ltd. in Karachi.

satwa gunam said...


Let us all accept that pakistan is doing better than india. pls enlighten on following :

how many companies have opened their back office in pakistan

How much is the fdi / fii investment?

How are the capital market infrastructure with regard ot trading and settlement.

satwa gunam said...


India has been and even now is silently working in increasing its own strength.

It has its own weakness, which it is aware of like population, poverty, corruption but the most important factor in india which is missing in pakistan is peace. Peace is the basic fact on which development happens. Why will an investor put his funds in a place where the place could be blown off by people who call themself as true muslims

satwa gunam said...

India Pakistan


gdp growth 9.1 3.6
Capital formation 36.82 18.96


fdi /fii 34.57 2.38

There are more statistics available in google explorer but the moot point for the both the country is that both has to go long way in creating basic infrastructure.

Sure india has a better environment for investment compared to that what is perceived for pakistan.

Riaz Haq said...

satwa: "how many companies have opened their back office in pakistan"

Here are a couple of excepts from a piece written for Maleeha Lodhi's compendium "Pakistan Beyond The Crisis State" by Mudassar Mazhar Malik, an MIT (Sloan) and LSE (London) educated Pakistani economist and investment banker on his assessment of Pakistan today:

"Today, over 300 foreign multinationals have well established business operations in Pakistan. The US, European Union and Japan remain the largest three foreign direct investors with new inflows emanating from the Middle East and China."

"As a consequence of geo-political risks, Pakistan is not seen as a friendly investment destination. Despite this, Pakistan's investment to GDP ratio has averaged 17% for the last decade and is 17% today after reaching a peak of 23% in 2007. In many ways, Pakistan's corporate leaders and professionals as amongst the most "battle hardened" pool of managerial talent in the world with the ability to manage risk and still show growth under the most challenging conditions".

Riaz Haq said...

Here are some excerpts from an NPR interview of Siddhartha Deb, the author of "The Beautiful and The Damned":

DEB: Well, I was interested in the changes that were happening there. Obviously, it's a lot of people experiencing change in new ways, in some sense, and I had gotten the impression that there was a very triumphalist version of this change, which is that the country is doing very well.

There was even a slogan that was coined by one of the political parties. It was called India Shining. And I was going back. I was writing feature articles. I was a freelance writer. And I was somewhat skeptical of this. It was pretty obvious that at the upper levels people were much better off materially than they had been in the past.

But certainly large numbers or swaths of people seem to be untouched or mired in the same poverty, or sometimes even worse because they could now see this incredible contrast. So I wanted to examine that. I wanted to do that by checking, by looking at the new rich. I wanted to look at people who were in the middle, people who were middle class.

DONVAN: Well, and the style in which the book is written still reads like a novel. It is full of color and texture and even sights and sounds and smells.

DEB: Thank you. That was very much the intention, to write something like a nonfiction novel, if that's possible. So the facts aren't made up, they're very scrupulously researched. I've tried to be as accurate as possible, but I wanted the texture, the flavor of a novel, of people in motion in some sense.

DONVAN: Can I say that the story that you've written reads to me as a very sad story?

DEB: That would be - that's a fairly, I think, reasonable, actually, interpretation. I think it's a sad story to me too, in many ways.

DONVAN: Even among those who feel that you describe - you describe an engineer named Chuck who is building a house. He had lived in the United States, and he's now building a house in the American model. He gives you a tour. He even uses American language. This is the open-plan kitchen, this is the master bedroom.

And yet you portray him as - his desires as being somewhat hollow, as though he's not a happy man himself.

DEB: Well, I mean, I think Chuck would see himself as a happy man, and I think that's reasonable. I've tried to allow people that space. But yes, I as a narrator come in, and I do sometimes question what some of my characters are saying.

So when someone like Chuck says, you know, he did say this, that there are these incredible contrasts in India, but that's okay, we're kind of one big happy family, and I question whether that's really the case, when, you know, you have at the very top end of the country, say you have, say, something like 66 billionaires.

And these numbers might be slightly old, but there are probably a few more billionaires since I last checked. But 66 billionaires who seem to have something like 30 percent of the country's wealth.

On the other end, you have like 800 million people, over 800 million people living on less than $2 a day. When you have a country where 40 percent of the children under the age of five suffer from malnutrition, it seems to me that these contrasts aren't really healthy. They're not just differences. They are really like living different worlds within the same country.

So yes, I actually come in as a narrator, and I question when, say, Chuck is a character, he sees his life as striving and successful. And I think that's reasonable, again, but I also question the fact that this house, this special zone in which the house is constructed, is being built on what is a demolished village, and I have very hard questions......

Riaz Haq said...

Stock and credit markets respond positively to rate cut by Pak central bank, according to The Express Tribune:

KARACHI: The bond and equity markets have reacted strongly to central bank’s surprise decision of slashing the interest rate to bring it on a par with pre-2008 crisis levels.

Karachi inter-bank offered rate (Kibor), the benchmark six-month lending rate, plummeted 95 basis points in a single day to a 26-month low of 11.96%, according to a Topline Securities research note.

Furthermore, yields of the actively traded one-year treasury bills and the benchmark 10-year Pakistan Investment Bonds fell by 75 basis points and 60 basis points to trade around 11.90-93% and 12.00-05%, respectively.

The State Bank of Pakistan (SBP) on Saturday cut its benchmark discount rate from 13.5% to 12%.

The rate cut has also benefitted well the stock market on account of better earnings for leveraged companies and reduction in risk-free rate, adds the note.

The Karachi Stock Exchange’s benchmark 100-share index opened with a gap of approximately 350 points to skip over 12,000 points for the first time in two months on Monday.

Profits of leveraged companies to jump 2-8%

Heavily leveraged companies from the cement, textile and fertiliser sectors – whose loans are floating and linked with Kibor – will have to bear lower interest charges from January 2012 following quarterly loan re-pricing in December, says the note.

These companies will be the major beneficiaries of the cut in discount rate, the fee commercial banks pay to borrow money from the SBP. DG Khan Cement, Engro and Pakistan State Oil will be some of the major gainers as their annualised earnings will increase by 7.8%, 6.5% and 2.1%, respectively, adds the research note.

Overall, the rate cut will augment earnings growth by 0.5% in 2012.

Riaz Haq said...

SIAM, India's auto-industry lobby, forecasts sales growth will slow to 2% to 4% for the year ending April, about one-tenth of what it was last year, according a report in the Wall Street Journal.

Rising prices are usually something auto makers welcome. Not in India.

As recently as April, some Indian auto makers were struggling to produce enough cars to meet demand as sales hit successive monthly highs.

But thanks to rising interest rates, buyers are hitting the brakes.

Across the industry, sales fell 16% in July compared with last year and 10% in August. September's decline was a relatively mild 1.4%, the Society of Indian Automobile Manufacturers reported Monday, though sales figures in the three ...

Here's more from Reuters:

NEW DELHI, Oct 10 (Reuters) - Car sales in India are expected to rise just 2 to 4 percent this fiscal year, an industry body said, cutting its forecast for the second time this year, as high interest rates and rising costs continue to hit demand in Asia's third-largest economy.

The growth forecast is down from the earlier estimate of 10 to 12 percent by the Society of Indian Automobile Manufacturers (SIAM), and 16 to 18 percent before that. Car sales had jumped 30 percent in the fiscal year 2010/11 that ended March.

"If the government continues to raise fuel prices and interest rates continue to go up the demand for cars will remain subdued," S Sandilya, President, SIAM and Chairman, Eicher Motors , told reporters.

Indian car sales last grew in single digits in 2008/09, at 1.39 percent.

Demand for cars in the world's second-fastest growing auto market after China has also been dented in recent months by rising vehicle costs, with many first-time buyers plumbing for motorcycles or scooters.

Car sales fell 1.8 percent in September to 165,925 cars, data released by SIAM showed on Monday. Demand for cars shrunk in July for the first time in nearly three years.

However, sales of commercial vehicles, a key pointer to the country's economic activity, rose 18.05 percent to 70,634, while motorcycle sales rose 19.93 percent to 933,465 vehicles.

India's central bank has raised interest rates 12 times since March last year in an effort to battle stubbornly high inflation, a move that has hurt credit-based purchases and slowed economic growth.

The Indian car market, which saw a 10 percent decline in August, is driven by a burgeoning and aspirational middle class that mostly relies on bank loans for purchases.

Maruti Suzuki , India's largest car maker, and 54.2 percent owned by Japan's Suzuki Motor Corp , posted a 21 percent drop in September sales, but rival Tata Motors , which makes both commercial vehicles and cars, reported a 22 percent increase for the month.

"The way things have been going in the last few months, this is a realistic number. While there is some uptick in festive demand, it's nowhere close to what it was in the last two years," said Vineet Hetamasaria, auto analyst at Mumbai's PINC Research.

SIAM raised its growth forecast for commercial vehicles to 13 to 15 percent, from the earlier forecast of 12 to 14 percent.

"Demand for movement of goods still remains, because the economy is still growing at 7 to 8 percent," SIAM's Sandilya said.

Riaz Haq said...

Here's a Dawn report on Pakistan auto sales July-Sept 2011:

KARACHI: While sale of cars, two and three wheelers and light commercial vehicles remained brisk from July-September 2011, production by a leading tractor assembler remained suspended between second week of July 2011 and September 2011.
Buying spree was witnessed for locally assembled cars thanks to huge arrival of home remittances, surging farm income, slight increase in car sales through bank financing, etc.

Even rising prices of locally produced cars and high cost of fuel (petroleum products and CNG) did not make any adverse impact on vehicle sales.

Pak-Suzuki Motor Company Limited (PSMCL) raised the prices by Rs14,000-30,000 followed by two to four per cent by Indus Motor Company (IMC).

Honda City also became costlier by Rs25,000 while Civic price was raised by Rs38,000.

Pakistan Automotive Manufacturers Association (PAMA) claimed rise in overall car sales to 38,065 units in July-September 2011 as compared to 30,030 units in the same month of last year.

Overall sale of costly cars (1,300cc and above) rose to 16,936 units as compared to 14,949 units.

Sale of Honda Civic, Honda City and Toyota Corolla stood higher at 1,710, 2,562 and 10,682 units as compared to 1,558, 2,274 and 10,371 units respectively. Suzuki Swift sales also surged to 1,826 units from 673 units.

In 1,000cc segment, overall car sales jumped to 7,343 in July-September 2011 from 5,679 units in the same period of last year in which sales of Suzuki Cultus and Suzuki Alto swelled to 3,710 and 3,633 units from 2,860 and 2,819 units respectively.

Increase in Suzuki Mehran sales to 8,415 units from 5,356 units made a positive impact on overall sales of 800cc and below 1,000cc cars which rose to 13,786 units from 9,402 units.

Sale of Daihatsu Cuore and Suzuki Mehran went up to 1,282 and 4,089 units as compared to 1,136 and 2,910 units.

A leading car assembler said he checked with many banks who intend to cut interest rates from Nov 1 after Central Bank`s decision to lower interest rates.

He said car financing by banks now enjoys 20 per cent share in overall car sales and this share may go up slightly after cut in interest rates.

From July onwards, the buyers especially on cash basis had resumed purchases and it was evident from sales trend in the first quarter of the current fiscal year.

Rising farm income also encouraged farmers and growers to purchase more new bikes, thus pushing up Honda bikes sales to 152,605 units in July-September 2011 from 126,701 units in the corresponding period of 2010.

Sale of Suzuki bikes also increased to 5,506 from 4,588 units while sale of Ravi and Habib bikes (Chinese two-wheelers) improved to 6,680 and 7,707 units from 5,971 and 4,053 units.

Qingqi and Sazgar three-wheeler sales reached 5,193 and 3,901 units from 2,787 and 2,976 units.

In pick-ups, a total of 4,586 units of Suzuki Ravi and 856 units of Toyota Hilux were sold in July-September 2011 as compared to 3,129 of Ravi and 285 units of Hilux in the same months during 2010.

In heavy vehicles, sales of only Master trucks rose to 110 units from 82 units while sales of Hino, Nissan and Isuzu trucks plunged to 231, 33 and 36 units from 422, 102 and 119 units.

In buses, Hino bus sales dropped to 56 units from 110 units and Isuzu bus sales also came down to 12 units from 23 units........

Qdoba said...

I think pak needs more generators first then IPADS OR TOYOTAS.

Riaz Haq said...

Car sales are rising by double digits in Pakistan and declining by double digits in India:

SIAM, India's auto-industry lobby, forecasts sales growth will slow to 2% to 4% for the year ending April, about one-tenth of what it was last year, according a report in the Wall Street Journal.

Rising prices are usually something auto makers welcome. Not in India.

As recently as April, some Indian auto makers were struggling to produce enough cars to meet demand as sales hit successive monthly highs.

But thanks to rising interest rates, buyers are hitting the brakes.

Across the industry, sales fell 16% in July compared with last year and 10% in August. September's decline was a relatively mild 1.4%, the Society of Indian Automobile Manufacturers reported Monday, though sales figures in the three ...

Buying spree was witnessed for locally assembled cars thanks to huge arrival of home remittances, surging farm income, slight increase in car sales through bank financing, etc.

Even rising prices of locally produced cars and high cost of fuel (petroleum products and CNG) did not make any adverse impact on vehicle sales.

Pakistan Automotive Manufacturers Association (PAMA) claimed rise in overall car sales to 38,065 units in July-September 2011 as compared to 30,030 units in the same month of last year.

Riaz Haq said...

qdoba: "I think pak needs more generators first then IPADS OR TOYOTAS."

Yes, I agree that the energy crisis needs to be dealt with on a more urgent basis.

Riaz Haq said...

Some commentators have bragged about passenger car ownership figures in India vs Pakistan. The latest available World Bank data (2006-7 shows that they are pretty close: 9 per 1000 in Pakistan vs 10 per 1000 in India.

I believe it does include dangerous contraptions like jugaads often seen plying on Indian roads.

Riaz Haq said...

Here's an excerpt from "Sweet Smell of Success" originally published in The Caravan Magazine before it was censored, by Sidhartha Deb, the author of "The Beautiful and The Damned", on quality of private higher education in India:

A PHENOMENALLY WEALTHY INDIAN who excites hostility and suspicion is an unusual creature, a fish that has managed to muddy the waters it swims in. The glow of admiration lighting up the rich and the successful disperses before it reaches him, hinting that things have gone wrong somewhere. It suggests that beneath the sleek coating of luxury, deep
under the sheen of power, there is a failure barely sensed by the man who owns that failure along with his expensive accoutrements. This was Arindam Chaudhuri’s situation when I first met him in 2007. He had achieved great wealth and prominence, partly by projecting an image of himself as wealthy and prominent. Yet somewhere along the way he had also created the opposite effect, which—in spite of his best efforts—had given him a reputation as a fraud, scamster and Johnny-come-lately.

Once I became aware of Arindam Chaudhuri’s existence, I began to find him everywhere: in the magazines his media division published, flashing their bright colours and inane headlines from little newsstands made of bricks and plastic sheets; in buildings fronted by dark glass, behind which earnest young men imbibed Arindam’s ideas of leadership; and on the tiny screen during a flight from Delhi to Chicago, when the film I chose for viewing turned out to have been produced by him. It was a low-budget Bombay gangster film with a cast of unknown, modestly paid actors and actresses: was it an accident that the film was called Mithya? The word means falsehood, appearances, a lie—things I would have much opportunity to contemplate in my study of Arindam.

Every newspaper I came across carried a full-page advertisement for Arindam’s private business school, the Indian Institute of Planning and Management (IIPM), with Arindam’s photograph displayed prominently. It was the face of the new India, in closeup. His hair was swept back in a ponytail, dark and gleaming against a pale, smooth face, his designer glasses accentuating his youthfulness. He wore a blue suit, and his teeth were exposed in the kind of bright white smile I associate with American businessmen and evangelists. But instead of looking directly at the reader, as businessmen and evangelists do to assure people of their trustworthiness, Arindam gazed off at a distant horizon, as if pondering some elusive goal.

There were few details about the academic programme or admission requirements in these advertisements, but many small, inviting photographs of the Delhi campus: a swimming pool, a computer lab, a library, a snooker table, Indian men in suits, a blonde woman. A fireworks display of italics, exclamation marks and capital letters described the perks given to students: “free study tour to Europe etc. for twenty-one days,” “world placements,” “Free Laptops for all.” Stitching these disparate elements together was a slogan: “Dare to Think Beyond the IIMs”—referring to the elite, state-subsidised business schools, and managing to sound promising, admonishing and mysterious at the same time. The new India needed a new kind of university, and a new kind of attitude, and Arindam, said the ads, was the man who could teach you how to find it.

"I'VE SPOKEN TO THE BOSS about you,” Sutanu said. “He said, ‘Why does he want to meet me?’”
Sutanu ran the media division of Arindam’s company from a basement office where there was no cellphone reception, and it took many calls and text messages to get in touch with him. When I finally reached him, he sounded affable enough, suggesting that we have lunch in south Delhi. We met at Flames, an “Asian Resto-Bar” in Greater Kailash-II with a forlorn statue of the Buddha tucked away in the corner...

Anonymous said...

Riaz Bhai, let it go.

This has little to do with disease burden.

Do read on this matter.

*Representative* S.Asian samples in Singapore (prior to the new wave of elite immigration ), Fiji, South Africa and the Carribean show that S.Asians are almost one standard deviation behind whites.

The disease burden hypothesis is one of many hypotheses that liberals come up with to pretend that the distribution of IQ is identical across races. This is simply untrue.

Anonymous said...

Riaz Bhai, do also read these posts about IIPM (the institute headed by Arindam Chaudhry).

Much respect to Gaurav Sabnis!

Anonymous said...

I believe it does include dangerous contraptions like jugaads often seen plying on Indian roads.

Yup and have a look at Pakistan's answer to Indian Tata Nano...
The Habib Sitara

I believe its a convertible :D

Mayraj said...
Pakistan emerges as second best performing market in Asia

Riaz Haq said...

Despite security concerns, tense relations with the US and economic slowdown, Pakistan’s stock market has managed to rank as the second best performing market in Asia after Indonesia in 2011 so far, according to a Topline Securities research note.

Corporate earnings and reduction in interest rates helped equities so far in 2011 amongst the Asian Emerging and Frontier markets tracked by MSCI, adds the note.

Resurgence of US crisis coupled with headwinds in eurozone saw huge selling in global equity markets as risk-averse offshore investors moved to safe heavens. The MSCI All Country World Index has slumped by 8% in 2011 till October 18 on concerns about the world economy and the lack of any credible solution to Europe’s debt issue, the reason also why most Asian Emerging and Frontier markets have posted negative returns so far in 2011.

Moreover, except the Indonesian market, all markets in MSCI Asian Emerging and Frontier markets are down 5% to 39% with India and China, the two leading markets falling by 26% and 24%, respectively.

Interestingly, Pakistan with a fall of 5% is so far the second best performing market amongst these 12 countries.

Due to fear of another recession, the benchmark MSCI Word Index is down 8%. Emerging and frontier market indices also followed by falling 18% and 25%, respectively

Riaz Haq said...

Here's Razib Khan of Brown Pundits on Washington Post's piece about "demographic dividend" in India:

"Amid population boom, India hopes for ‘demographic dividend’ but fears disaster. The article is OK, but I feel as usual it doesn’t do a good enough job highlighting the huge variation in fertility across India the nation-state. Tamil Nadu has the fertility of Northern Europe while Uttar Pradesh is like West Africa. Unfortunately the “demographic dividend” is going be driven by the most backward and unproductive regions of the nation on a per unit basis…."

Riaz Haq said...

Occasional and isolated but nonetheless tragic suicide cases like Raja Khan's in Pakistan get a lot of media coverage as they should. Meanwhile, over 200,000 farmer suicides in India have passed with little media attention in India.

Here's a Washington Post report on rising suicides in India:

NEW DELHI — Ram Babu’s last days were typical in India’s growing rash of suicides.

The poor farmer’s crop failed and he defaulted on the $6,000 loan he had taken to buy a tractor. The bank’s collectors hounded him, even hiring drummers to go round the village drawing attention to his shame.

“My father found it unbearable. He was an honorable man and he couldn’t take the humiliation. The next day he hanged himself from a tree on his farm,” his son Ram Gulam said Friday.

Babu’s suicide went unreported in local newspapers, just another statistic in a country where more than 15 people kill themselves every hour, according to a new government report.

The report released late Thursday said nearly 135,000 people killed themselves in the country of 1.2 billion last year, a 5.9 percent jump in the number of suicides over the past year.

The suicide rate increased to 11.4 per 100,000 people in 2010 from 10.9 the year before, according to the statistics from the National Crime Records Bureau.

Financial difficulties and debts led to most of the male suicides while women were driven to take their lives because of domestic pressures, including physical and mental abuse and demands for dowry.

A 2008 World Health Organization report ranked India 41st for its suicide rate, but because of its huge population it accounted for 20 percent of global suicides.

The largest numbers of suicides were reported from the southern Indian states of Kerala, Tamil Nadu, Andhra Pradesh and Karnataka, where tens of thousands of impoverished farmers have killed themselves after suffering under insurmountable debts.

The loans — from banks and loan sharks — were often used to buy seeds and farm equipment, or to pay large dowries to get their daughters married. But a bad harvest could plunge the farmer over the edge.

Sociologists say the rapid rise in incomes in India’s booming economy has resulted in a surge in aspirations as well among the lower and middle classes, and the failure to attain material success can trigger young people to suicide.

“The support that traditionally large Indian families and village communities offered no longer exists in urban situations. Young men and women move to the cities and find they have no one to turn to for succor in times of distress,” said Abhilasha Kumari, a sociology professor in New Delhi.

Riaz Haq said...

Here's WHO data on suicide rates in Asia:

Pakistan has the lowest estimated prevalence of less than 3 per 100,000, followed by Thailand at 7.3 per 100,000. Australia, Malaysia, New Zealand and Singapore have low to medium rates of between 9.9 and 13.1 per
100,000. Higher rates of above 15 per 100,000 are seen in China, Hong Kong Special Administrative Region (Hong Kong SAR), and India and still higher rates of above 20 per 100,000 are seen in China, Japan, the Republic of Korea, and Sri Lanka.

Riaz Haq said...

Here are some of the findings of a recent paper by Durre-e-Nayab of Pakistan Institute of Development Economics (PIDE) titled "Estimating the Middle Class in Pakistan":

Depending on the definition applied, it is found that the size of the middle class ranges drastically in the country, as can be seen from Table 2. Applying the definitions having solely an economic rationale, we find the middle class to range from 60 per cent of the population (Table 2, Definition One) to being totally non-existent (Table 2, Definition Five). Translating it in number of people, using the population base of 187 million as it stands on mid-year 2011 (USCB, 2011 and UN, 2009), the size of the middle class ranges from a huge 112 million to no one. This variability, as stressed earlier, reflects the complexities and
arbitrariness associated with defining and measuring the middle class.

Among all the definitions given above, Definition Eight and Definition Thirteen, based on gradation of income and expenditure per person per day, respectively, are currently the most
extensively used measure employed to estimate the middle class (as also used by Chun (2010) and Bhandari (2010) among others)3. This definition too, however, suffers from the same drawback of relying solely on one criterion. As also pointed out by Eisenhauer (2008), Atkinson and Bourguignon (1982), Kolm (1977), Bourguignon and Chakravarty (2003) and Gilbert (2003), being a part of the middle class should be ascertained by a person’s socio-economic attributes holistically. Income is an important aspect but other qualities like level of health, wealth,
education and specialised knowledge are also significant factors for constituting a class. Technically speaking too, most of the definitions suffer from serious drawbacks. For instance, the ‘quintile approach’ can be useful in measuring or comparing income or expenditure growth but cannot be used as a method to estimate the middle class as the size cannot shrink or expand and by definition would permenantly remain at 60 percent. Any denomination of the median income should also be used with caution in low income countries like Pakistan. Taking 75 per cent of the median income might lead to the inclusion of people below the poverty line in countries with very low income levels. In the above-stated definitions and resulting estimates there are issues with the lower bounds
set for inclusion in the middle class. While some of the definitions (like Definition Three and Five) set the limit too high4, resulting in a very small middle class or in the absence of a middle class altogether, there are other definitions that set the limit too low, like those that set the lower
bound at $2 per person per day. Does the middle class begin where poverty ends? Ravallion (2010: 446) supports, “the premise that middle class living standards begin when poverty ends”.
This paper, however, supports the argument forwarded by Horrigan and Haugen (1988:5) when they posit, “to ensure that the lower endpoint of the middle class represents an income
significantly above the poverty line”. The middle class should, hence, include only those households that do not face the risk of experiencing poverty at all, and are not just those who
are outside the the realm of poverty at a particular time.

Riaz Haq said...

Karachi's HDI is about 0.799, much higher than Pakistan's national human development index and comparable to European nations of Portugal and Poland, and higher than Malaysia's.

Here's a brief UNDP description of human dev in Pakistan:

According the Human Development Report 2010, Pakistan’s HDI value increased from 0.311 to 0.490 during 1980 to 2010, an increase of 58% or average annual increase of about 1.5% which ranked it 10 in terms of HDI improvement in comparison to the average progress of other countries. Pakistan’s life expectancy at birth increased by more than 9 years, mean years of schooling increased by about 3 years and expected years of schooling increased by almost 4 years. Pakistan’s GNI per capita increased by 92 per cent during the same period.
Pakistan’s 2010 HDI of 0.490 is below the average of 0.516 for countries in South Asia. It is also below the average of 0.592 for medium human development countries. From South Asia, Pakistan’s 2010 “HDI neighbours”, i.e. countries which are close in HDI rank and population size, are India and Bangladesh, which had HDIs ranked 119 and 129 respectively. Pakistan is also compared to the Islamic Republic of Iran, a high human development country.

Riaz Haq said...

Here's a report on Benazir Income Support Program:

ISLAMABAD: The Benazir Income Support Programme (BISP) has proved to be highly effective programme for poverty alleviation and women empowerment considering its efficiency, technology based operations and transparency; the programme ought to be replicated in the other countries of the world as well.

According to a press release, Michal Rutkowski, Director Human Development South Asian Region, World Bank, said this during a meeting with Federal Minister and Chairperson of BISP, Farzana Raja while heading a delegation here at BISP Secretariat Wednesday.

Rutkowski said that the World Bank is proud of working with organization like BISP and appreciates its performance and reliability. While taking special interest in vocational training scheme of BISP, he said that the corporate sector and foreign employers may also invest in this particular initiative.

He termed Waseela-e-Taleem initiative of BISP, instrumental in the promotion of education, as similar initiatives have been proved successful in the other countries as well.

Earlier, Farzana Raja presented details of various initiatives of BISP for uplifting the living standards of millions of poor families across Pakistan. She said that one million out of school children of these poor families will be enrolled in the schools under Waseela-e-Taleem.

She said that BISP has employed state of the art technology in all of its mechanisms to facilitate its beneficiary in a more efficient and transparent manner. Farzana Raja said that BISP is seeking cooperation from various public and private organizations of the world working in the social sector to continue its various initiatives aiming at poverty alleviation in an effective manner.

She added further that BISP needs support of the World Bank for marketing BISP in the world especially for replication of such experiences in the other countries.

Riaz Haq said...

Here's an excerpt from Dr. Ishrat Husain's comp of India-Pak economy:

Pakistan is one of the few developing countries that has achieved an average annual
growth rate of over 5 percent over the six decades. Consequently, the incidence of poverty has
declined from 40 percent to 24 percent. The salient features of Pakistan’s economic history are
summarized below:
• A country with 30 million people in 1947 that couldn’t feed itself and had to import all its
food requirements is not only able to fulfill the domestic needs of 170 million people at a
much higher per capita consumption level, but also exports wheat and rice .
• An average Pakistani earned about $ 1050 in 2009 compared to less than $ 100 in 1947.
In US current dollar terms the per capita income has expanded almost ten fold.
• Agriculture production has risen five times with cotton attaining a level of more than 12
million bales compared to 1 million bales in 1947. Pakistan has emerged as one of the
leading world exporter of textiles.
• Manufacturing production index is well over 13,000 with the base of 100 in 1947. Steel,
cement, automobiles, sugar, fertilizer, cloth and vegetable ghee, industrial chemicals,
refined petroleum and a variety of other products are manufactured for the domestic
market and in many cases for the world market too.
• Per capita electricity generation has reached 10,160 kwh compared to 100 in 1947.
Pakistan’s vast irrigation network of large storage reservoirs and dams, barrages, link
canals constructed during the last five decades has enabled the country to double the area
under cultivation to 22 million hectares. Tubewell irrigation provides almost one third of
additional water to supplement canal irrigation.
• The road and highway network in Pakistan spans 250,000 km-more than five times the
length inherited in 1947. Modern motorways and super highways and four lane national
highways link the entire country along with secondary and tertiary roads.
• Natural gas was discovered in the country in the 1950s and 32 billion cubic feet of
natural gas is generated, transmitted and distributed for industrial, commercial and
domestic consumption accounting for 50 percent of the country’s energy needs.
• Private consumption standards have kept pace with the rise in income. There are 52 road
vehicles for 1000 persons relative to only one vehicle for the same number of population
in 1947. Phone connections have reached 100 million from almost scratch. TV sets which
were non-existent adorn 62 out of every 1,000 houses.

Riaz Haq said...

India will not reach its Millennium Development Goal on sanitation before 2047, while Bangladesh, Pakistan and Nepal will not achieve the target before 2028, according to a United Nations report released on the eve of World Toilet Day 2011.

The WaterAid report titled "Off-track, off-target: Why investment in water, sanitation and hygiene is not reaching those who need it most" says that 818 million Indians and 98 million Pakistanis lack access to toilets. It also reports that 148 million Indians and 18 million Pakistanis do not have adequate access to safe drinking water.

Riaz Haq said...

Indian rupee hit record low amidst high inflation and high twin deficits, according to Wall Street Journal:

The Indian rupee fell to a record low against the U.S. dollar Tuesday as high inflation and a gaping current-account deficit weighed on demand for the local unit, before a recovery in global risk appetite helped trim the greenback's gains.

The dollar was at INR52.30 late Tuesday, up from INR52.16 late Monday, after rising to as much as INR52.725 during the session, its highest ever. The dollar's previous high was INR52.1950 on March 3, 2009.

The pace of the rupee's fall caught most market watchers off guard, forcing firms with unhedged overseas debt to rush for cover, accelerating the fall.

Adding to this, exporters have been wary of locking into a dollar rate for their future revenue, when the dollar's rally may well have more steam.

"The rupee is being swept by a self-fulfilling squeeze--capital is being pulled from hot money markets in Asia, and the rupee is just far more vulnerable than other Asians with its trade deficit," said Sean Callow, a Sydney-based currency strategist at Westpac Bank.

But some argue that the rupee's slide could be on its last legs. UBS, for example, argues that the rupee's fall has less to do with local factors such as inflation and slowing economic growth in India, and more to do with re-rating the rupee to a basket of currencies that's more sensitive to the global economy. The Swiss house advises buying the rupee at this point, as a bet on a global cyclical rebound.

Rupee bulls got a boost when a federal government official told Dow Jones Newswires that the central bank was planning to offer a dollar liquidity window to oil importers. Under the planned window, oil importers would be able to pay for their greenback purchases by selling the central bank the so-called oil bonds, which are issued to them by the government in exchange for selling fuel products at below-market prices.

If this window comes into effect, it would take a key source of greenback demand out of the currency market, helping to ease the rush for the dollar, said the treasury head of a foreign bank.

In the sovereign debt market, Indian government bonds were under pressure on the growing view that the federal government would struggle to stick to its fiscal deficit target.

The benchmark 8.79% 2021 bond ended at INR99.64, from Monday's INR99.76.

Royal Bank of Scotland reckons India's fiscal deficit will overshoot its target of 4.6% of gross domestic product by at least one percentage point because of rising subsidies on food and fuel and dwindling tax revenue.

Traders say an overshoot of the fiscal deficit of that magnitude could push the benchmark bond yield beyond 9%.

Riaz Haq said...

Here's a critical analysis of Tom Friedman's "Flat World" on India:

In the first chapter of his bestseller on globalization, The World Is Flat, three-time Pulitzer Prize–winning foreign affairs columnist for The New York Times Thomas Friedman suggests that his repertoire of achievements also includes being heir to Christopher Columbus. According to Friedman, he has followed in the footsteps of the fifteenth-century icon by making an unexpected discovery regarding the shape of the world during an encounter with “people called Indians.”

Friedman’s Indians reside in India proper, of course, not in the Caribbean, and include among their ranks CEO Nandan Nilekani of Infosys Technologies Limited in Bangalore, where Friedman has come in the early twenty-first century to investigate phenomena such as outsourcing and to exult over the globalization-era instructions he receives at the KGA Golf Club downtown: “Aim at either Microsoft or IBM.” Nilekani unwittingly plants the flat-world seed in Friedman’s mind by commenting, in reference to technological advancements enabling other countries to challenge presumed American hegemony in certain business sectors: “Tom, the playing field is being leveled.”

The Columbus-like discovery process culminates with Friedman’s conversion of one of the components of Nilekani’s idiomatic expression into a more convenient synonym: “What Nandan is saying, I thought to myself, is that the playing field is being flattened… Flattened? Flattened? I rolled that word around in my head for a while and then, in the chemical way that these things happen, it just popped out: My God, he’s telling me the world is flat!”

No compelling justification is ever provided for how a war against deterrables will solve the problem of undeterrables who by definition cannot be deterred.

The viability of the new metaphor has already been called into question by Friedman’s assessment two pages prior to the flat-world discovery that the Infosys campus is in fact “a different world,” given that the rest of India is not characterized by things like a “massive resort-size swimming pool” and a “fabulous health club.” No attention is meanwhile paid to the possibility that a normal, round earth—on which all circumferential points are equidistant from the center—might more effectively convey the notion of the global network Friedman maintains is increasingly equalizing human opportunity.

An array of disclaimers and metaphorical qualifications begins to surface around page 536, such that it ultimately appears that the book might have been more appropriately titled The World Is Sometimes Indefinitely Maybe Partially Flat—But Don’t Worry, I Know It’s Not, or perhaps The World Is Flat, Except for the Part That Is Un-Flat and the Twilight Zone Where Half-Flat People Live. As for his announcement that “unlike Columbus, I didn’t stop with India,” Friedman intends this as an affirmation of his continued exploration of various parts of the globe and not as an admission of his continuing tendency to err—which he does first and foremost by incorrectly attributing the discovery that the earth is round to the geographically misguided Italian voyager.

Leaving aside for the moment the blunders that plague Friedman’s writing, the comparison with Columbus is actually quite apt in other ways, as well. For instance, both characters might be accused of transmitting a similar brand of hubris, nurtured by their respective societies, according to which “the Other” is permitted existence only via the discoverer-hero himself. While Columbus is credited with enabling preexisting populations on the American continent to enter the realm of true existence by reporting them to European civilization, Friedman assumes responsibility for the earth’s inhabitants in general without literally having to encounter them.

Riaz Haq said...

India fares worst in terms of low birth weight and underweight children, and under-five infant mortality compared to Brazil, Russia and all South Asian neighbors, says BBC's Soutik Biswas:

Will the proposed law to provide cheap food to more than half of India's people eliminate hunger, the most shameful scourge of an aspiring superpower?

The jury is still out on how the $19bn (£12bn) scheme will work, as is the case with similar big-ticket welfare schemes launched by what many believe is an endemically weak and corrupt state.

But there is little doubt that India needs to fight malnutrition on a war footing, and the food security scheme may well be its last chance to redeem itself.

Many believe that it does not behove a country which never tires of gloating about its red hot economic growth to have millions of malnourished and starving people.

The facts on the ground are startling. India has the largest number of malnourished children in the world, a rate worse than the average in Africa.

Nearly half of India's children under three are malnourished. More than half of the tribes' children are underweight and stunted.

India fares worst in terms of low birth weight and underweight children, and under-five infant mortality compared to Brazil, Russia and all South Asian neighbours.

India also has the highest number of Vitamin A deficient children in the world: nearly 6% of the children suffer from eye problems related to the deficiency. Of the 37m people in the world who are blind, about 15m are from India. More than 320,000 children suffer from avoidable blindness.
Then there are India's notoriously fickle public distribution system shops aimed at providing food security to people. Over 500m people are supposed to benefit through a gigantic distribution network of half a million fair-price shops supplying cheap food grains.

Here too, the results are mixed and contested. In many states, it has failed to make cheap food grains available to the poor. Theft of supplies, fraudulent beneficiaries and hoarding by the shop-owners is not uncommon.
Cart before horse?

So will the latest food security scheme aimed at providing subsidised food grains to 75% of the rural population and half of the urban households work?

There are many economists who wonder how India will cough up the funds to finance the scheme which will see the country's food subsidy bill climb to $19bn from $13bn. The government insists money will not be a problem.

There are also questions about how beneficiaries will be identified and targeted in a transparent manner in a country where there are different official estimates of the poorest of the poor - from 37% to 77% of the people, depending on whom you believe.

India's state-run cold storage system is shambolic, so where is the guarantee that some 65m tonnes of food grains procured from farmers for distribution for the scheme - up from 55m tonnes presently - will not rot before reaching the beneficiary? How can the food grains be distributed through the leaky public distribution system shops without reforming them?

So is India again putting the cart before the horse? Without reforming its laws and public institutions, welfare schemes with the best intentions run the risk of floundering.

For the scheme to work, the government will need to target beneficiaries properly and revamp the distribution system. The public distribution system, for example, could be made accountable by issuing smart cards to beneficiaries to eliminate bogus cards and fraudulent withdrawal.

If the food security scheme does not work, economists believe, India is doomed to remain a hungry republic. It is already one of the fast-growing economies with the hungriest people in the world. And it can get worse.

Riaz Haq said...

According to The Fiber Report 2009/10, Indians consumed 4.18 million tons of cotton while Pakistanis consumed 2.558 million tons.

Assuming a population of 1.2 billion for India and 180 million for Pakistan, the per capita cotton consumption works out to 3.48 Kg in India and 14.2 Kg in Pakistan.

Riaz Haq said...

Here are excerpts from a Dawn report on World Bank's assessment of Pakistan's economy:

...Pakistan is South Asia’s second largest economy, representing about 15 per cent of regional GDP.
The portion on Pakistan points out that the country’s economy firmed in the second half of 2011. Industrial production surged to grow at a robust 32.1pc annualised pace during the three months ending in October, after falling at 9.1 and 10.1pc rates during the first and second quarters, respectively.

Part of the strengthening in growth reflects base effects due to the widespread flooding that had hampered activity in the second half of 2010. Since the floods occurred in July and August 2010, GDP growth on a fiscal year basis (ending June-2011) slowed to 2.4pc.

The report notes that Pakistan’s weak growth outturns are also tied to “worsening security conditions, accompanied by greater political uncertainty and a breakdown in policy implementation”.

The report also notes that “infrastructure bottlenecks, including disruptions in power delivery,” remain widespread.

A notable bright spot has been a strengthening of exports, evident particularly in the first half of 2011, led by textiles that surged 39pc in the first half of the year.However, like India, Pakistan’s export volume growth saw a sharp fall-off in October.

Indeed, Pakistan’s export volumes fell to a minus 46pc rate in the three-months ending October.

Along with an upswing in worker remittances inflows, robust exports have supported Pakistan’s external positions and contributed to an improvement in the current account from a deficit of 0.9pc of GDP in 2010 to a surplus of close to 0.5pc of GDP in the 2011 calendar year.

The World Bank notes that monetary tightening in Pakistan brought about positive real lending rates in early 2011 as well, the first time since late 2009.
The bank points out that for South Asian nations, including India and Pakistan, domestic crop conditions and price controls are more important determinants of domestic food price inflation.
Regional monetary policy authorities face several challenges in reducing inflation.

More recently, currency devaluation has contributed to inflation as well. In Pakistan, monetary authorities have also been monetising the deficit, complicating the efficacy of other monetary policy efforts to reduce inflation.

A key factor working against monetary policy efforts is the overall stance of fiscal policy, which despite some consolidation, remains very loose.

Monetary authorities in Pakistan have responded to persistent price pressures by raising policy interest rates and/or introducing higher reserve requirements.

Lower revenue growth has contributed to larger fiscal deficits in Pakistan. Terms of trade losses are estimated at about 1.9pc of GDP for the region in aggregate. India and Pakistan saw negative impacts of close to 1.8pc of GDP – estimated January through September 2011 terms of trade impacts relative to 2010.

Remittance inflow to Pakistan rose by an estimated 25pc in 2011, partly in response to the widespread flooding in the second half of 2010.

International reserve positions in South Asia have generally improved since mid-2008. Latest readings of foreign currency holdings were equivalent to at least three-months of merchandise imports in Pakistan.
A good crop year (2011-12) in much of South Asia and sustained high regional stocks are providing a buffer for grain prices and import demand in 2012....

Riaz Haq said...

It is official: India has the world's most toxic air, according a news report in The Hindu:

In a study by Yale and Columbia Universities, India holds the very last rank among 132 nations in terms of air quality with regard to its effect on human health.

India scored a miniscule 3.73 out of a possible 100 points in the analysis, lagging far behind the next worst performer, Bangladesh, which scored 13.66. In fact, the entire South Asian region fares badly, with Nepal, Pakistan and China taking up the remaining spots in the bottom five of the rankings.

These rankings are part of a wider study to index the nations of the world in terms of their overall environmental performance. The Yale Center for Environmental Law and Policy and Columbia's Center for International Earth Science Information Network have brought out the Environment Performance Index rankings every two years since 2006.

In the overall rankings — which takes 22 policy indicators into account — India fared minimally better, but still stuck in the last ten ranks along with environmental laggards such as Iraq, Turkmenistan and Uzbekistan. At the other end of the scale, the European nations of Switzerland, Latvia and Norway captured the top slots in the index.

India's performance over the last two years was relatively good in sectors such as forests, fisheries, biodiversity and climate change. However, in the case of water — both in terms of the ecosystem effects to water resources and the human health effects of water quality — the Indian performance is very poor.

The Index report was presented at the World Economic Forum currently taking place in Davos, where it's being pitched as a means to identify the leaders and the laggards on energy and environmental challenges prior to the iconic Rio+20 summit on sustainable development to be held in Brazil this June.

Riaz Haq said...

India is the deadliest country for girl child, according to a report published by the Times of India:

NEW DELHI: It's official - India is the most dangerous place in the world to be a baby girl. Newly released data shows that an Indian girl child aged 1-5 years is 75% more likely to die than an Indian boy, making this the worst gender differential in child mortality for any country in the world.

Newly released United Nations Department of Economic and Social Affairs ( UN-DESA) data for 150 countries over 40 years shows that India and China are the only two countries in the world where female infant mortality is higher than male infant mortality in the 2000s. In China, there are 76 male infant deaths for every 100 female infant deaths compared with 122 male infant deaths for every 100 female infant deaths in the developing world as a whole.

The released data has found that India has a better infant mortality sex ratio than China, with 97 male infant deaths for every 100 female, but this is still not in tune with the global trend, or with its neighbours Sri Lanka (125) or Pakistan (120).

When it comes to the child mortality sex ratio, however, India is far and away the world's worst. In the 2000s, there were 56 male child deaths for every 100 female, compared with 111 in the developing world. This ratio has got progressively worse since the 1970s in India, even as Pakistan, Sri Lanka, Egypt and Iraq improved.

The UN report is clear that high girl child mortality is explained by socio-cultural values. So strong is the biological advantage for girls in early childhood that higher mortality among girls should be seen as "a powerful warning that differential treatment or access to resources is putting girls at a disadvantage", the report says.

"Higher female mortality from age 1 onwards clearly indicated sustained discrimination," says P Arokiasamy, professor of development studies at Mumbai's International Institute for Population Studies, who has studied gender differentials in child mortality in India. "Such neglect and discrimination can be in three areas: food and nutrition, healthcare and emotional wellbeing. Of these, neglect of the healthcare of the girl child is the most direct determinant of mortality," says Arokisamy. Studies have shown that health-related neglect may involve waiting longer before taking a sick girl to a doctor than a sick boy, and is also reflected in lower rates of immunization for girls than boys.

Moreover, since the outrage over India's poor child sex ratio came out of census data for children aged 0-6 years, the UN data on child mortality indicates that a campaign against female foeticide alone is not a complete solution. "Pre-natal and post-natal discrimination are complementarily contributing to gender imbalance," agrees Dr Arokiasamy. While pre-natal discrimination in the form of sex-selective abortions is more common among better educated upper income households, post-natal discrimination or neglect is more common among poorer, less educated rural households, he adds.

Riaz Haq said...

Here's Russian analyst Anatol Karlin on India's prospects and its comparison with China:

It is not a secret to longtime readers of this blog that I rate India’s prospects far more pessimistically than I do China’s. My main reason is I do not share the delusion that democracy is a panacea and that whatever advantage in this sphere India has is more than outweighed by China’s lead in any number of other areas ranging from infrastructure and fiscal sustainability to child malnutrition and corruption. However, one of the biggest and certainly most critical gaps is in educational attainment, which is the most important component of human capital – the key factor underlying all productivity increases and longterm economic growth. China’s literacy rate is 96%, whereas Indian literacy is still far from universal at just 74%.
The big problem, until recently, was that there was no internationalized student testing data for either China or India. (There was data for cities like Hong Kong and Shanghai, but it was not very useful because they are hardly representative of China). An alternative approach was to compare national IQ’s, in which China usually scored 100-105 and India scored in the low 80′s. But this method has methodological flaws because the IQ tests aren’t consistent across countries. (This, incidentally, also makes this approach a punching bag for PC enforcers who can’t bear to entertain the possibility of differing IQ’s across national and ethnic groups).
Many Indians like to see themselves as equal competitors to China, and are encouraged in their endeavour by gushing Western editorials and Tom Friedman drones who praise their few islands of programming prowess – in reality, much of which is actually pretty low-level stuff – and widespread knowledge of the English language (which makes India a good destination for call centers but not much else), while ignoring the various aspects of Indian life – the caste system, malnutrition, stupendously bad schools – that are holding them back. The low quality of Indians human capital reveals the “demographic dividend” that India is supposed to enjoy in the coming decades as the wild fantasies of what Sailer rightly calls ”Davos Man craziness at its craziest.” A large cohort of young people is worse than useless when most of them are functionally illiterate and innumerate; instead of fostering well-compensated jobs that drive productivity forwards, they will form reservoirs of poverty and potential instability.

Instead of buying into their own rhetoric of a “India shining”, Indians would be better served by focusing on the nitty gritty of bringing childhood malnutrition DOWN to Sub-Saharan African levels, achieving the life expectancy of late Maoist China, and moving up at least to the level of a Mexico or Moldova in numeracy and science skills. Because as long as India’s human capital remains at the bottom of the global league tables so will the prosperity of its citizens....

Riaz Haq said...

Here are excerpts of an article by Dr. Ata-ur-Rehman published in Pakistan Herald:

On July 23, 2006, an article was published in the leading daily Indian newspaper Hindustan Times, titled “Pak threat to Indian science.” It was reported that Prof C N R Rao (chairman of the Indian prime minister’s Scientific Advisory Council), had made a detailed presentation to Indian Prime Minister Manmohan Singh about the rapid strides that Pakistan was making in the higher education sector after the establishment of the Higher Education Commission in October 2002 and my appointment as its first chairman. The article began with the sentence “Pakistan may soon join China in giving India serious competition in science.”

Serious apprehensions were expressed before the Indian prime minister at the rapid progress being made by Pakistan in the higher education and science sectors, first under the ministry of science and technology after my appointment as the federal minister of science and technology of Pakistan in 2000, and later under the Higher Education Commission. It was stressed during the presentation to the Indian prime minister that if India did not take urgent measures to upgrade its own higher education sector, Pakistan would soon take the lead in key areas of higher education, science and technology.

Something remarkable happened in Pakistan during the short period from 2000 to 2008 that rang alarm bells in India. It also drew unmitigated praise from neutral international experts. Three independent and authoritative reports, praising the outstanding performance of the HEC, were published by the World Bank, Usaid and the British Council. Pakistan won several international awards for the revolutionary changes in the higher education sector brought about under the leadership of the writer. The Austrian government conferred its high civil award “Grosse Goldene Ehrenzeischen am Bande” (2007) on the writer for transforming the Higher Education sector in Pakistan. The TWAS (Academy of Sciences for the Developing World, Italy) Award for Institutional Development was conferred on the writer at the academy’s 11th general conference in October 2009.

Prof Michael Rode, the chairman of the United Nations Commission on Science, Technology and Development and presently heading a Network of European and Asian Universities (ASIA-UNINET), wrote: “The progress made was breathtaking and has put Pakistan ahead of comparable countries in numerous aspects. The United Nations Commission on Science and Technology has closely monitored the development in Pakistan in the past years, coming to the unanimous conclusion that (the) policy and programme is a ‘best-practice’ example for developing countries aiming at building their human resources and establishing an innovative, technology-based economy.”

Pakistan was poised to make a major breakthrough in transitioning from a low value-added agricultural economy to a knowledge economy. Alas, corrupt politicians with forged degrees plotted to destroy this wonderful institution where all decisions were merit-based, a trait unacceptable to many in power. A government notification was issued on Nov 30, 2010, to fragment the HEC and distribute the pieces. At this point I intervened. It was on my appeal to it that the Supreme Court declared the fragmentation of the HEC to be unconstitutional. The development budget of the HEC has, however, been slashed by 50 percent and most development programmes in universities have come to a grinding halt.

The Indian government need not have worried. We Pakistanis, alas, know how to destroy our own institutions.

Riaz Haq said...

Pak threat to Indian science

Hindustan Times

Pakistan may soon join China in giving India serious competition in science. “Science is a lucrative profession in Pakistan. It has tripled the salaries of its scientists in the last few years.” says Prof C.N.R. Rao, Chairman of the Prime Minister’s Scientific Advisory Council.

In a presentation to the Prime Minister, Rao has asked for a separate salary mechanism for scientists. The present pay structure, he says, is such that “no young technical person worth his salt would want to work for the Government or public sector”.

He adds, “You needn’t give scientists private sector salaries, but you could make their lives better, by say, giving them a free house.”

Giving his own example, he says, “I have been getting a secretary’s salary for the last 35 years. But I have earned enough through various awards.

But I can raise a voice for those who aren’t getting their due.” Last year, Rao won the prestigious Dan David Award, from which he created a scholarship fund. So far, he has donated Rs 50 lakh for scholarship purposes.

The crisis gripping Indian science seems to be hydra-headed. “None of our institutes of higher learning are comparable with Harvard or Berkeley,” points out Rao. The IITs, he says, need to improve their performance: a faculty of 350 produces only about 50 PhD scholars a year. “That’s one PhD per 5-6 faculty members,” says the anguished Professor.

Rao fears that India’s contribution to world science would plummet to 1-1.5 per cent if we don’t act fast. At present, India’s contribution is less than three per cent. China’s is 12 per cent.

“We should not be at the bottom of the pile. When I started off in the field of scientific research at 17-and-a-half, I had thought that India would go on to become a top science country. But now, 55 years later, only a few individuals have made it to the top grade,” he laments.

Riaz Haq said...

Here are "Ten Things for India to Achieve its 2050 Potential", brought out by Jim O'Neill, Head Global Research at Goldman Sachs, and Tushar Poddar, V-P Research, Asia Economic Research Team at Goldman Sachs India, as reported by India's Economic Times:

1. Improve governance

2. Raise educational achievement

3. Increase quality & quantity of universities

4. Control inflation

5. Introduce credible fiscal policy

6. Liberalize financial markets

7. Increase trade with neighbors

8. Increase agricultural productivity

9. Improve infrastructure

10. Improve environmental quality

Riaz Haq said...

Pakistan is the third largest arms importer after India and South Korea, according to SIPRI:

Asia and Oceania accounted for 44 per cent of global arms imports, followed by Europe (19 per cent), the Middle East (17 per cent), the Americas (11 per cent) and Africa (9 per cent).

India was the world’s largest recipient of arms, accounting for 10 per cent of global arms imports. The four next largest recipients of arms in 2007–2011 were South Korea (6 per cent of arms transfers), Pakistan (5 per cent), China (5 per cent) and Singapore (4 per cent).

‘Major Asian importing states are seeking to develop their own arms industries and decrease their reliance on external sources of supply,’ said Pieter Wezeman, senior researcher with the SIPRI Arms Transfers Programme. ‘A large share of arms deliveries is due to licensed production.’

China shifts from imports to exports

China, which was the largest recipient of arms exports in 2002–2006, fell to fourth place in 2007–11. The decline in the volume of Chinese imports coincides with the improvements in China’s arms industry and rising arms exports.

Between 2002–2006 and 2007–11, the volume of Chinese arms exports increased by 95 per cent. China now ranks as the sixth largest supplier of arms in the world, narrowly trailing the United Kingdom.

‘While the volume of China’s arms exports is increasing, this is largely a result of Pakistan importing more arms from China’, said Paul Holtom, director of the SIPRI Arms Transfers Programme. ‘China has not yet achieved a major breakthrough in any other significant market.’
Other notable developments

In 2011 Saudi Arabia placed an order with the USA for 154 F-15SA combat aircraft, which was not only the most significant order placed by any state in 2011 but also the largest arms deal for at least 2 decades.

Greece’s arms imports decreased by 18 per cent between 2002–2006 and 2007–11. In 2007–11 it was the 10th largest arms importer, down from being the 4th largest in 2002–2006. Greece placed no new order for major conventional weapons in 2011.

Venezuela’s arms imports increased by 555 per cent between 2002–2006 and 2007–11 and it rose from being the 46th largest importer to the 15th largest.

The volume of deliveries of major conventional weapons to states in North Africa increased by 273 per cent between 2002–2006 and 2007–11. Morocco’s imports of major weapons increased by 443 per cent between 2002–2006 and 2007–11.

The comprehensive annual update of the SIPRI Arms Transfers Database is accessible from today at

Anonymous said...

Mr. Riaz you are talking a lot about India and trying to reflect the black side of the coin. This clearly demonstrates your concern for India and Indians.

Let me know how many PhD's pass out of Pakistan as compared to 5000 a year in India.

How many companies like Tata, Reliance, Infosys, Vedanta are operating in Pakistan.

What's the share of scientists and engineer from Pakistan in world. Let me also give you statistics from India(26% scientist in NASA, 34% in Microsoft, 38% Indian Doctors in America, 28% Indian employee in IBM and the list goes on.)

Just update yourself with latest GDP and per capita income (both nominal and PPP)

Comparing the present GDP it seems like Pakistan is no where as compared to India.

I would like to suggest you one thing DO and DON'T just speak, its your work which represents Who you are.

Riaz Haq said...

Here are some excerpts of The Australian story on the eve of BRICS summit:

INDIA is routinely touted as a big emerging market and a rising global player. Tomorrow New Delhi will host the fourth BRICS summit of the non-Western powerhouses Brazil, Russia, India, China, and South Africa.
Most major global corporations have a presence there, with substantial expansion plans. Many Indian corporations are expanding their footprints abroad, including in Australia, through investment, mergers and acquisitions. India's growing economic weight has translated into increased political clout.
And yet India has the world's biggest pool of poor, sick, starving and illiterate. It ranks 134 on ease of doing business indicators, 119 on human development, 122 on gender equality, and 87 on corruption. On average, more than 16,500 farmers have committed suicide every year for 13 years running. The annual road death toll is around 150,000, thrice as many as the US or, on a per vehicle basis, almost 20 times the US. Most of those killed in India's traffic accidents are pedestrians, cyclists, motorcyclists and pillion riders - those from the poorer end of society.

Even this single statistic is a proxy for several ailments, including inadequate infrastructure that adds to road risks and public corruption that ensures weak compliance with driving skills and safety regulations.

A report published in January by the Hong Kong-based Political and Risk Consultancy rated India's bureaucrats the most inefficient in Asia with a score of 9.21 out of 10, below China (7.11), The Philippines (7.57), Indonesia (8.37) and Vietnam (8.54). Singapore was judged the best (2.25) followed by Hong Kong (3.53). The report was based on a survey of business executives. Respondents also highlighted onerous and complex tax, environmental and other regulations and a time-consuming, costly and unpredictable court system.

Also in January, the Program for International Student Assessment published its findings of comparative national academic performance of 15-year-old school students in maths, science and English. In the 73 countries tested, India came second last, ahead only of Kyrgyzstan. An eighth-grade Indian student fared the same as a South Korean grade three or a Shanghai grade two student.

Yet another study, also published in January, based on a survey of height and weight of more than 100,000 children in six states, found that 42 per cent of India's children were moderately-severely underweight, and 59 per cent suffered from moderate-severe stunting. Prime Minister Manmohan Singh described the results as a "national shame".

The following month a government committee concluded that Indian railways have been responsible for thousands of deaths. Some 15,000 people are killed every year trying to cross unfenced railway tracks, half of them in Mumbai alone.

The report called for urgent investment, but when the Railway Minister announced a fare increase to raise the revenue base to invest back in railways for modernisation and upgrade of services and safety, he was forced to resign by his own party, which is in the coalition government.

We read last year how India has more mobile phones than toilets. Some years ago, I had organised an international workshop in a resort along a beautiful stretch of India's eastern coast.

A European participant decided to go for a pre-breakfast run along the beach. I well remember his look of utter disgust and horror as he told us how he had to thread his way through the folks of the village squatting along the beach, defecating. According to a UNICEF survey last year, 58 per cent of the world's population practising open defecation lives in India....

Riaz Haq said...

Here are excerpts of a Bloomberg piece by Indian journalist Pankaj Mishra on Pakistan's "unplanned revolution":

However, I also saw much in this recent visit that did not conform to the main Western narrative for South Asia -- one in which India is steadily rising and Pakistan rapidly collapsing.

Born of certain geopolitical needs and exigencies, this vision was always most useful to those who have built up India as an investment destination and a strategic counterweight to China, and who have sought to bribe and cajole Pakistan’s military-intelligence establishment into the war on terrorism.

Seen through the narrow lens of the West’s security and economic interests, the great internal contradictions and tumult within these two large nation-states disappear. In the Western view, the credit-fueled consumerism among the Indian middle class appears a much bigger phenomenon than the extraordinary Maoist uprising in Central India.
Traveling through Pakistan, I realized how much my own knowledge of the country -- its problems as well as prospects -- was partial, defective or simply useless. Certainly, truisms about the general state of crisis were not hard to corroborate. Criminal gangs shot rocket-propelled grenades at each other and the police in Karachi’s Lyari neighborhood. Shiite Hazaras were being assassinated in Balochistan every day. Street riots broke out in several places over severe power shortages -- indeed, the one sound that seemed to unite the country was the groan of diesel generators, helping the more affluent Pakistanis cope with early summer heat.
Gangsters with Kalashnikovs

In this eternally air-conditioned Pakistan, meanwhile, there exist fashion shows, rock bands, literary festivals, internationally prominent writers, Oscar-winning filmmakers and the bold anchors of a lively new electronic media. This is the glamorously liberal country upheld by English-speaking Pakistanis fretting about their national image in the West (some of them might have been gratified by the runaway success of Hello magazine’s first Pakistani edition last week).

But much less conspicuous and more significant, other signs of a society in rapid socioeconomic and political transition abounded. The elected parliament is about to complete its five- year term -- a rare event in Pakistan -- and its amendments to the constitution have taken away some if not all of the near- despotic prerogatives of the president’s office.

Political parties are scrambling to take advantage of the strengthening ethno-linguistic movements for provincial autonomy in Punjab and Sindh provinces. Young men and women, poor as well as upper middle class, have suddenly buoyed the anti-corruption campaign led by Imran Khan, an ex-cricketer turned politician.

After radically increasing the size of the consumerist middle class to 30 million, Pakistan’s formal economy, which grew only 2.4 percent in 2011, currently presents a dismal picture. But the informal sector of the economy, which spreads across rural and urban areas, is creating what the architect and social scientist Arif Hasan calls Pakistan’s “unplanned revolution.” Karachi, where a mall of Dubai-grossness recently erupted near the city’s main beach, now boasts “a first world economy and sociology, but with a third world wage and political structure.”

Even in Lyari, Karachi’s diseased old heart, where young gangsters with Kalashnikovs lurked in the alleys, billboards vended quick proficiency in information technology and the English language. Everywhere, in the Salt Range in northwestern Punjab as well as the long corridor between Lahore and Islamabad, were gated housing colonies, private colleges, fast- food restaurants and other markers of Pakistan’s breakneck suburbanization....

Riaz Haq said...

Here are excepts of an interview of Elliot Theorist Mark Galasiewski who's bullish on Pakistan:

To answer your question, there are various ways to make long-term investment decisions. For example, Warren Buffett has shown that picking individual stocks can provide good returns over time. But it's a very labor-intensive and time-consuming process, to research companies thoroughly enough to have the kind of conviction that he does. And his “buy and hold” strategy means that he suffers significant drawdowns in his portfolio at times -- like during the 2007-2009 crash.

Elliott wave analysis gives you the opportunity to make long-term bets with a similar conviction -- but with a fraction of the elbow grease. Instead of pouring over hundreds of quarterly reports and legal documents, you look for Elliott wave patterns in the charts of market indexes. Those patterns reflect investors' collective bias, bullish or bearish. (I won't go into details of why this is so; our Club EWI has tons of free reports explaining the mechanics of the Elliott Wave Principle.)

So, knowing what part of the Elliott wave pattern your market is in, you know how the pattern should progress from there, ideally. And that gives you a probabilistic forecast for the trend. It doesn't work 100% of the time (what does), but our subscribers remember more than one successful forecast we've made using Elliott waves.

For example, on March 23, 2009 -- at the time when almost no one felt bullish -- we issued a special report to our subscribers forecasting a multi-year bull market in Indian stocks. Two weeks later, we identified three more markets in the region -- Pakistan, Sri Lanka, and Indonesia -- that we believed were also likely to enjoy an "Indian Ocean Renaissance."

India, Pakistan, Sri Lanka, Indonesia have all since generated some of the best returns among global stock markets. Without knowledge of the Elliott Wave Principle, it would have been difficult to forecast the boom -- especially given the dismal news events at the time. Do you remember the headlines in early 2009?

The world was engulfed by the global financial crisis, and most people believed the worst was still ahead. The currencies of India, Pakistan, Sri Lanka, and Indonesia had collapsed. Pakistan and India were on the brink of conflict over the Mumbai terrorist attacks of late 2008. A civil war was still raging in Sri Lanka. Who would turn bullish on stock under those "fundamental" conditions? We did, and only because Elliott wave patterns in the price charts of those four markets told us to "buy."

And by the way, the terrible conditions in India, Pakistan and Sri Lanka mostly reversed along with the market rally over the next year.
The Wave Principle is how the market works. Financial markets are non-rational and counter-intuitive. Investing according to conventional assumptions eventually leads to financial ruin, since the market too often does the opposite of what most people expect.

Even thinking contrarily is insufficient, because sometimes it’s necessary to run with the herd. But Elliott wave analysis helps you to determine which psychological stance is most appropriate at any given time. Often, the news at the time would be suggesting you do the opposite.,-Pakistan,-Sri-Lanka,-Indonesia-How-Elliott-Wave-Analysis-Turned-BULLISH-When-Few-Dared.-Part-.aspx

Riaz Haq said...

In an Op Ed piece titled "Knowledge Economy" published in The News, Pak HEC chair Javaid Laghari argues for greater investment in education by the govt.

While the author's intent to goad Pakistani govt into higher funding of education is laudable, his use of stats to make his case makes little sense. He talks about 504 universities and 80 million Internet users in India which represent a lower percentage penetration for India's 1.2 billion people when compared with 143 universities and 20 million Internet users in Pakistan. I think we should expect more persuasive data from this gentleman.

Riaz Haq said...

Here's an interesting perspective on Pak economy in a Dawn Op Ed by Akbar Zaidi:

Is the analysis that this is Pakistan’s worst-ever economic performance valid, or is this merely point-scoring and political posturing by those who represent different political dispensations?

Many of the key economic numbers which are to be announced later this month in the Economic Survey will show that some are, indeed, the worst ever, or at least the worst in the last 50 years. While inflation was higher during the Z.A Bhutto government, there has hardly been a month of the 51 months in power of this government, when it has not been in double digits; this is a notorious first.

Similarly, the fiscal deficit has been in the range of 4-6.5 per cent under this government, but was higher — often more than eight per cent of GDP — under Gen Ziaul Haq’s military rule. The growth rate in the pre-9/11 Musharraf three years 1999-2002, after which his government received a bonanza and huge windfall, was a mere three per cent, but it has been lower, though only slightly so, over the last four years.

Overall domestic debt, which has been growing over the last four years, is still much lower than that which was accumulated over the Ziaul Haq period and in the period between 1988-1999. However, two indicators which are considerably worse and are particularly worrying are the falling tax-to-GDP ratio and investment.

There are numerous other indicators related to the economy, which have never been this good, despite problems in slowing trends. Per capita income continues to rise albeit at a slower pace; remittances and exports have also improved; and poverty is probably lower than many were expecting, given Pakistan’s slow growth and rising and persistent food inflation.

Any fair, unbiased account of the state of Pakistan’s economy shows that while parts of Pakistan’s economy have been in a poor state, this is certainly not the worst period ever. Moreover, many of the factors which have affected the current state of affairs have their origin in the policies of the Musharraf era.

Nevertheless, what is perhaps striking about the last four years has been the poor and wavering economic management and leadership of the economic team. The absence of vision, insight and any clear idea of what needs to be done, given Pakistan’s persistent and, in many cases serious and growing, economic problems, has been the most striking aspect in the leadership of the Ministry of Finance and the Planning Commission.

A committed and more able leadership was critical to improving Pakistan’s economic situation, and in this perhaps lies the government’s biggest failure. While it is clear that the economy’s overall performance has certainly not been the ‘worst ever’, the verdict on the economic team and its leadership, is less certain.

Riaz Haq said...

Using Siddharth Vij's interpretation, here's how BL data looks for Pakistan:

1. No Schooling 38% vs 32.7% India

2. Prim Total 21.8% vs 20.9% India

3. Prim Complete 19.3% vs 18.9% Ind

4. Sec Total 34.6% vs 40.7% India

5. Sec Complete 22.5% vs 1.3% India

6. Ter Total 5.5% vs 5.8% India

7. Ter Complete 3.9% vs 3.1% India

If you add up serial numbers 1, 2, 4 and 6, you reach 100%. This is the entire universe – each and every Pakistani above the age of 15 is assigned to one and only one of these buckets. 38 out of every 100 Pakistanis (vs 32% of Indians) above the age of 15 in 2010 have had no formal schooling. 22 have been only to primary school, 35 reached as far as secondary school while the rest made it all the way to college...... All that BL tells us is that for 34.6% of Pakistanis (vs 40.7% of Indians) above the age of 15, the highest level of educational attainment is secondary schooling. If to this 34.6% you add the 5.5% who have some tertiary education, you come up with a figure of 40.1% Pakistanis (vs 46.5% of Indians) above the age of 15 having had some secondary schooling during their life time.

Another important point to note in Barro-Lee data is that Pakistan has been enrolling students in schools at a faster rate since 1990 than India. In 1990, there were 66.2% of Pakistanis vs 51.6% of Indians who had no schooling. In 2000, there were 60.2% Pakistanis vs 43% Indians with no schooling. In 2010, Pakistan reduced it to 38% vs India's 32.7%.

Riaz Haq said...

Here's World Bank economist's assessment of Pak competitiveness, according to The News:

Pakistan needs to improve its competitiveness for rapid industrialisation, which offers it a range of potential benefits, including more jobs creation, tax revenues and economic growth, said Dan Biller, World Bank’s lead economist on South Asia Region for Sustainable Development.

Addressing businessmen in Lahore, he said that the GDP growth of Pakistan in 2011 was only 24 percent, while China grew at 9.2 percent, India 7.8 percent, Sri Lanka at eight percent, Indonesia 6.4 percent and Malaysia 5.2 percent.

Among all these countries, Pakistan has the largest agricultural share of GDP and smallest industrial share, he said.

Biller said that lower industrialisation in Pakistan against other regional countries is due to its lower competitiveness, adding that Pakistan ranks poorly on the Global Competitive Index of the World Economic Forum. Pakistan’s institutions are weak, scoring 3.4 points out of 10, he said, adding that Malaysia score 5.2 points, China 4.3 points, India 3.8 points, Indonesia 3.8 points and Sri Lanka scored 4.2 points on quality of institutions.

Biller said that Pakistan’s score in infrastructure was dismal 2.8 points, while Malaysia scored 5.5, China 4.3, India 3.6, Indonesia 3.8 and Sri Lanka scored 4.1 points.

Similarly, he said, Pakistan’s score was the lowest among these countries in macroeconomic stability, health and primary education, higher education and training, goods market efficiency and labour market efficiency. Only in the market size, Pakistan had a better score than Sri Lanka, he added.

He also said that Pakistan has the most expensive and least-efficient port systems in the region, adding that the handling charges at the Karachi Port Trust are $110 per ton. India charges $80 per ton, Sri Lanka $150 per ton and Hong Kong charged $140 per ton. Ship charges of 2,800 tons are $30,000 at KPT, $5,500 in Sri Lanka, $6,000 in Hong Kong and $25,000 in the Indian port.

He said Pakistan handles 55 containers per hour, Sri Lanka 70 per hour, Hong Kong 100 per hour and India 65 per hour. The Customs authorities in Pakistan examine 10 percent containers physically; Sri Lanka and Hong Kong less than five percent, while physical examination of containers in India is also high, but less than 100 percent, he said, adding that Pakistani ports lack water depth, which is 10.5 feet at KPT, 13 feet in Sri Lanka, 14 feet in Hong Kong and 12 feet in Indian ports.

The World Bank economist said that Pakistan provides relatively low access to services that impeded foreign investment. Pakistan has two fixed telephone lines per 100 people against 22 in China, 2.9 in India, 17.2 in Sri Lanka, 15.8 in Indonesia and 16.1 in Malaysia.

Around 99.4 percent of the population in China has access to electricity; it is 66.3 percent in India, 76.6 percent in Sri Lanka, 62.4 percent in Pakistan, 64.5 percent in Indonesia and 99.4 percent in Malaysia, he added.

The roads and power generation are number one infrastructure concern for the businesses worldwide, Biller said, and advised Pakistan to reduce the transport cost that is critical to competitiveness.

In addition, the state should ensure safe mobility and enhance regional connectivity. Pakistan’s foreign market access potential is at least 4.5 times higher than the United States, he said, adding that its current market access is only 4-9 percent of the United States.

Pakistan’s market share in total global exports is less than half percent and remained stagnant since 2000. India, on the other hand, increased its global export share from 0.6 percent in 2000 to 1.5 percent in 2010, he added.

HopeWins said...

Dr. Haq,

We seem have a lot of juggling going on in terms of taking nominal per capita GDP figures from some place and PPP ratios from another place and so on.

Since this article already includes a link for implied-PPP from the Trading Economics database service, I think it would be more consistent to use the WB/IMF data from that source to make your point.

Here is the point you were trying to make:

What do we see?

Since the post-Cold-War reforms began all over South-Asia in 1992, the following are clearly observable:

1) Bangladesh's per capita GDP on PPP basis has increased from 550$ to 1650$ (3 times)
2) India per capita GDP on PPP basis has increased from 950$ to 3600$ (4 times)
3) Sri-Lanka's per capita GDP on PPP basis has increased from 1650$ to 5000$ (3 times)
4) Pakistan's per capita GDP on PPP basis has increased from 1400$ to 2700$ (2 times)

At the start of the South-Asia-wide post Cold War reforms, the 1992 ranking were:
1) Sri-Lanka at 1650$
2) Pakistan at 1400$
3) India at 950$
4) Bangladesh at 550$

In 2010, 18 years later, the rankings were as follows:
1) Sri-Lanka at 5000$
2) India at 3600$
3) Pakistan at 2700$
4) Bangladesh at 1650$

Note the following general trends that are observable in the World Bank (WB) data linked above:

1) Bangladesh is rapidly catching up with Pakistan. In 1992, Pakistan was 160% richer than Bangladesh (Pakistan 1400$, Bangladesh 550$). While Pakistan stagnated under Bhutto/Sharif, Bangladesh surged forward to finish 2003 with Pakistan now only 80% richer (Pakistan 1800$, Bangladesh 1000$). Pakistan and Bangladesh then both boomed, to finish in 2010 with Pakistan now only 60% richer (Pakistan 2700$, Bangladesh 1650$).

2) Similarly, Pakistan was 50% richer than India in 1992 (Pakistan 1400$, India 950$). Pakistan then stagnated under Sharif/Bhutto and India managed to catch-up by 2003 (Pakistan 1800$, India 1800$). Pakistan and India then both boomed, although at different growth rates, to finish with India 33% richer in 2010 (Pakistan 2700$, India 3600$)

3) Sri-lanka and Pakistan were comparable in 1992, with sri-lanka only 15% richer (Pakistan 1400$, Sri-Lanka 1650$). While Pakistan stagnated under Bhutto/Sharif, Sri-lanka surged forward to finish 2003 with Sri-lanka now 66% richer than Pakistan (Pakistan 1800$, Sri-Lanka 3000$). Pakistan and Sri-Lanka then both boomed, with Sri-lanka pulling even further ahead to finish with Sri-Lanka now 85% richer (Pakistan 2700$, Sri-Lanka 5000$).

4) Over the 1992-2010 period Pakistan showed the smallest expansion, with Pakistan's per capita GDP PPP basis only doubling over than period. Sri-Lanka and Bangladesh experienced faster expansion, with their per capita GDP PPP basis trebling over that period. India showed the fastest expansion, with a quadrupling of its per capita GDP PPP basis over the 1992-2010 period.

If Pakistan continues to stagnate (GDP Growth Rate < Population Growth Rate) under Zardari/Chaudhary/Sharif, there is a very real danger that everyone else in South Asia will move forward and even Bangladesh will surpass us in terms of per capita GDP PPP basis in 10 years time.

The sooner we recognize the reality, the sooner we will be able to deal with our problems in Pakistan. Denial and figure-juggling is not going to get us anywhere. Convoluted arguments in cyberspace do not change the physical facts on the ground.

Thank you.

Riaz Haq said...

HopeWins: "Since this article already includes a link for implied-PPP from the Trading Economics database service, I think it would be more consistent to use the WB/IMF data from that source to make your point."

I have taken the nominal per cap gdp figures from the primary sources; Economic Surveys published by the govts of India & Pak.

India's per capita income for 2011-12 Rs 60,972, according to Economic Survey of India 2011-12. It translates into US $1143.09, using INR 53.25 to a US dollar.

The preliminary official estimates by Economic Survey of Pakistan are indicating that Pakistan's nominal per capita income has increased by 9% to $1,372 in 2011-12 from $1,258 in 2010-11.

India's PPP factor of 2.9 appears to be bogus because WB and IMF use 2.3 as PPP for the income range for India and Pakistan.

Anonymous said...

@Indians: PAKISTAN has Riaz type peoples, who never run after seeing critical situation, they tackle it always. thats why we never try to do propagenda like SHINING PAKISTAN but we showed....... PAKISTAN IS GROWING, PAKISTAN IS ON ITS OWN WAY...... GO GREEN, BLEED GREEN.....

HopeWins Junior said...

QUOTES from a 1999 Article:

(1a) India cut itself off from the world economy for 40 of its 50 years of independence,
(1b) whereas Pakistan remained relatively open.
(2a) Pakistan had constant balance-of-payments crises,
(2b) whereas India was a rare suppliant at the IMF.
(3a) India poured money into heavy industry, developing huge steel and refining industries.
(3b) Pakistan has little industry worth mentioning.
(4) Nonetheless its economy outgrew India’s until recently,
(5) And its GDP per head is a good 20% higher

The Economist (1999):

How many of these things are true today (2012)? And how many have changed?

How many of these trends have magnified since 1999? And how many diminished?

Anonymous said...

It’s hit an all-time low. Pakistan’s commitment to the higher education sector has been scaled back by 10 percent at the same time that India has raised its higher-education budget by 25 percent. This reduction is in addition to the 40 percent cut imposed last year. This shortsightedness imperils economic growth by stunting prospects of a viable middle class.

India has a population six times the size of Pakistan’s. Its GDP, at $1.8 trillion, is 10 times larger than ours. Its growth rate is 8.5 percent, ours is 2.4 percent. Its value-added exports, at $250 billion, are more than ours by a factor of 15; and its FDI, at $26 billion per year, dwarfs ours by a factor of 22. India is set to surpass Japan to become the world’s third largest economy by 2014. This has all been made possible, in no small measure, because of India’s human capital. Pakistan needs to take a leaf out of their book to realize the possible.

The World Bank identifies several key factors to achieve and sustain economic growth: education, a skilled workforce, information and communication technologies, and innovation. These are the veritable pillars of a knowledge economy. Likewise, the World Economic Forum’s Global Competitiveness Report 2010-2011 lists higher education and training, technology readiness, and innovation as essential for competitiveness.

Catching up to the rest of the world must start now. And there is much ground to cover. For Pakistanis between the ages of 17 and 23, access to higher education is at 5.1 percent—one of the lowest in the world. (India is at 12.2 percent and aiming for 30 percent by 2020.) Pakistan has 132 universities for a population of 180 million and a student population of about 1.1 million. India has 504 universities with an enrollment of over 15 million (its enrolment target is 40 million by 2020). Pakistan has approved funding for two new universities. Over the next five years, India will have established 29 universities and 40 other institutes. Pakistan can today produce about 700 Ph.D.s every year (up from a dismal 200 in 2002) while India can produce 8,900 and China some 50,000.

It’s the middle class that makes the difference. India’s represents 32 percent of the total population and is growing at 1 percent annually. By investing heavily in education and entrepreneurship, they hope half the population will qualify as middle class by 2040. Pakistan’s middle class is about 12 percent of the population, and struggling as more and more people slip below the poverty line each year.

India’s political leadership is putting out all the right signals. India has a Knowledge Commission headed by a world-renowned expert serving as an adviser to the prime minister; a Ministry of Human Resource Development, and a strong and centralized University Grants Commission. New Delhi alone is spending 3.5 percent of GDP on education, with 1.03 percent, or $11.5 billion, on higher education alone. This federal allocation is in addition to the states financially supporting university budgets, in some cases covering up to 80 percent of their costs. Pakistan is spending only about 1.3 percent on education and 0.22 percent on higher education.

Sixty-four years ago, Pakistan and India started out evenly enough in terms of education and skilled-workforce levels. India has overshot us and is now competing with the big boys, swiftly and dedicatedly catching up with the developed world in higher education, science, technology, innovation, and research. Pakistan cannot afford to be left behind. We cannot allow security threats, the financial and ideological allure of Islamist radicalism, and bad governance to defeat us. Shoring up higher education and innovation are the solutions that will yield tangible, long-lasting benefits. Yet we are only capable it seems of dialing down attention to areas that can guarantee our success. Pakistan must push to improve and expand higher education. With so much at stake and so much we can do, this is the wise way forward.

Riaz Haq said...

Anon: " Pakistan’s middle class is about 12 percent of the population, and struggling as more and more people slip below the poverty line each year."

Nonsense! Pakistan's middle class is 40% of the population vs India's 25% of its population.

And Pakistan has continued to offer much greater upward economic and social mobility to its citizens than neighboring India over the last two decades. Since 1990, Pakistan's middle class had expanded by 36.5% and India's by only 12.8%, according to an ADB report titled "Asia's Emerging Middle Class: Past, Present And Future.

HopeWins Junior said...

Dr. Haq,

Please see figure 1.5 on page 12 of this FY12 GOP report:

Notice the following in that graph:

A) BOOM during Musharraf's Reign

Per Capita GDP went from 663$ in FY04 to 1015$ in FY08.

The increase was 352$ over 4 years.

B) BUST during Zardari's Reign

Per Capita GDP went from 1015$ in FY08 to 1372$ in FY12.

The increase was 357$ over 4 years.


Can you believe that?

We did >>BETTER<< during the last 4 years of the Zardari-Bust than we did in the preceding 4 years of the Musharraf-Boom.

Can you explain how this happened?

Thank you.

PS: By way of reference, please also see fig 1.1 on Page 2 of the same file linked above.

A) BOOM during Musharraf's Reign
GDP Growth Rate FY03: 4.7%
GDP Growth Rate FY04: 7.5%
GDP Growth Rate FY05: 9.0%
GDP Growth Rate FY06: 5.8%
GDP Growth Rate FY07: 6.8%

B) BUST during Zardari's Reign
GDP Growth Rate FY08: 3.7%
GDP Growth Rate FY09: 1.7%
GDP Growth Rate FY10: 3.1%
GDP Growth Rate FY11: 3.0%
GDP Growth Rate FY12: 3.7%

HopeWins Junior said...

^^RH on Oct 10, 2011: "Here are a couple of excepts from a piece written for Maleeha Lodhi's compendium "Pakistan Beyond The Crisis State" by Mudassar Mazhar Malik, an MIT (Sloan) and LSE (London) educated Pakistani economist and investment banker on his assessment of Pakistan today:
..Pakistan's investment to GDP ratio has averaged 17% for the last decade and is 17% today after reaching a peak of 23% in 2007."

Even assuming a low initiating ICOR of 3, we will still need an average investment-to-GDP ratio of 21-24% to achieve an sustainable 7-8% average growth rate in the medium-term.

So what is our "investment to GDP ratio" now?

Perhaps Malik (educated at MIT, Sloan, LSE, London) should look up the latest GOP report...

Table 1.6 Page 13:

Riaz Haq said...

A recent UNESCO report shows that Pakistan had 162 science and tech researchers per million people in 2009, a 2X increase from from 80 in 2005.

By contrast India had 152 S&T researchers per million inhabitants in 2009, up from 136 in 2005.

Riaz Haq said...

According to World Values Survey done by two Swedish researchers, India, Jordan, Bangladesh and Hong Kong by far the least tolerant.

In only three of 81 surveyed countries, more than 40 percent of respondents said they would not want a neighbor of a different race. This included 43.5 percent of Indians, 51.4 percent of Jordanians and an astonishingly high 71.8 percent of Hong Kongers and 71.7 percent of Bangladeshis.

Unfortunately, the Swedish economists did not include all of the World Values Survey data in their final research paper. So I went back to the source, compiled the original data and mapped it out on the infographic above. In the bluer countries, fewer people said they would not want neighbors of a different race; in red countries, more people did.

Pakistan, remarkably tolerant, also an outlier. Although the country has a number of factors that coincide with racial intolerance – sectarian violence, its location in the least-tolerant region of the world, low economic and human development indices – only 6.5 percent of Pakistanis objected to a neighbor of a different race. This would appear to suggest Pakistanis are more racially tolerant than even the Germans or the Dutch.

Riaz Haq said...

Sharp fall in Indian currency against the US dollar and slower economic growth have caused India's GDP for Fiscal  Year 2012-13 to shrink in US $ terms to $1.84 trillion from $1.87 trillion a year earlier. The Indian rupee has plummeted from 47.80 in 2012 to 54.30 to a US dollar in 2013, according to Business Standard. Since this report was published in Business Standard newspaper, Indian rupee has declined further against the US dollar to Rs. 59.52 today. At this exchange rate, India's GDP is down to $1.68 trillion, about $200 billion less than it was in  Fiscal 2011-12.

Meanwhile,  Pakistan's economy continues to struggle with its annual GDP rising just 3.6% to $252 billion ($242 billion at Rs. 100 to a USD exchange rate)  in fiscal 2012-13, according to Economic Survey of Pakistan 2012-13 estimates based on 9 months data. The country is facing militancy and energy shortages impacting its economy.

Riaz Haq said...

Here's a Dhaka Tribune report comparing Bangladesh, India and Pakistan:

South Asia is one of the fastest growing regions of the world and is home to one-fifth of the global population. India, Pakistan and Bangladesh, the three largest economies of the region, hold the key to lifting several millions out of the vicious poverty cycle into economic prosperity. Although traditionally India and Pakistan generated the most interest around the globe,

Bangladesh has come into the spotlight over the past decade with drastically improving social indicators and a growth rate of around 6% throughout the financial crisis and global recession.

So how has the Bangladeshi economy performed over the past decade compared to the Indian and Pakistani economies?

The simplest measure of economic well-being of a country is its GDP per capita which is a measure of the value of total goods and services produced in a country divided by the total population. From the graph below, one can see that all three nations have more than doubled their GDP per capita with India and Pakistan bringing larger absolute increase compared to Bangladesh.

Sadly, Bangladesh continues to remain poorer than India and Pakistan with the gap increasing over the decade and the gaps in absolute terms have more than doubled with India and Pakistan (see graph 1).

A much more dynamic performance of the economy can be seen from observing the trend in the economic growth rate of the three nations. The Bangladeshi economy maintained a near constant growth rate of around 6% throughout the decade compared to the large gyrations in growth rate of India and Pakistan and it managed to do so throughout the global financial crisis of 2008-12.....
Long term growth potential in an economy can usually be seen from gross savings (% of GDP). Gross savings is gross national income and net transfers less total consumption in the economy. Saving in an economy is important as it in turn provides internal fund for borrowing and investment in the economy.

Bangladesh did manage to attain the highest gross savings as a proportion of GDP by 2011. It saved over 30 cents for every $1 of goods and services produced from year to year since 2003. This broadly shows that the country has a large potential to bring about significant investment from its own fund just like India and unlike Pakistan which saw a drastic fall in gross savings over the decade (see graph 4).

However, capital formation has been rather sluggish in Bangladesh despite growth in savings. Gross capital formation (Gross domestic investment) as a proportion of GDP remained constant at 25% throughout the decade unlike India, which increased it significantly. This shows that, in general, Bangladesh has been building less infrastructure and investing less in industries than it can, something that the government needs to take look into account.

Riaz Haq said...

India on verge of financial crisis, says The Guardian:

The Reserve Bank of India (RBI) in Mumbai. The country is facing its own financial crisis. Photograph: Vivek Prakash/REUTERS
India's financial woes are rapidly approaching the critical stage. The rupee has depreciated by 44% in the past two years and hit a record low against the US dollar on Monday. The stock market is plunging, bond yields are nudging 10% and capital is flooding out of the country.

In a sense, this is a classic case of deja vu, a revisiting of the Asian crisis of 1997-98 that acted as an unheeded warning sign of what was in store for the global economy a decade later. An emerging economy exhibiting strong growth attracts the attention of foreign investors. Inward investment comes in together with hot money flows that circumvent capital controls. Capital inflows push up the exchange rate, making imports cheaper and exports dearer. The trade deficit balloons, growth slows, deep-seated structural flaws become more prominent and the hot money leaves.

The trigger for the run on the rupee has been the news from Washington that the Federal Reserve is considering scaling back - "tapering" - its bond-buying stimulus programme from next month. This has consequences for all emerging market economies: firstly, there is the fear that a reduced stimulus will mean weaker growth in the US, with a knock-on impact on exports from the developing world. Secondly, high-yielding currencies such as the rupee have benefited from a search for yield on the part of global investors. If policy is going to be tightened in the US, then the dollar becomes more attractive and the rupee less so.

But while the Indonesian rupee and the South African rand are also feeling the heat, it is India – with its large trade and budget deficits – that looks like the accident most likely to happen. On past form, emerging market crises go through three stages: in stage one, policymakers do nothing in the hope that the problem goes away. In stage two, they cobble together some panic measures, normally involving half-baked capital controls and selling of dollars in an attempt to underpin their currencies. In stage three, they either come up with a workable plan themselves or call in the IMF. India is on the cusp of stage three.

Riaz Haq said...

India and Pakistan are running neck and neck in per capita GDP in both nominal US dollar terms and purchasing power parity terms, according to data available from multiple sources.

CIA World Factbook reports that the 2013 official exchange rate GDP of India is $1.67 trillion while that of Pakistan is $237 billion. It's a ratio of 7, about the same as the population ratio between the two countries.

Riaz Haq said...

Pakistan were crushed by India in their first World Cup match on Sunday, but BuzzFeed India’s editor Rega Jha’s gave Pakistanis something to cheer about when she admitted on Twitter that Pakistanis were ‘hotter’ than ‘ugly’ Indians.
Taking to her Twitter account, the 23-year-old editor tweeted, “it’s so sad that no matter who wins, Pakistanis will continue to be way hotter than us and we’ll continue to be their ugly neighbours.”

Riaz Haq said...

The Emerging Middle Class in Pakistan: How it Consumes, Earns, and Saves
Dr. Jawaid Abdul Ghani
Professor, Strategy and Marketing Research,
Karachi School of Business and Leadership

During the first decade of the twenty first century, and for the first time in the history of
Pakistan, over half of the households in the country belonged to the middle class (M-class).
During this period (2002-2011) the M-class, defined as households with daily per capita
expenditures of $2-$10 in 2005 purchasing power parity dollars1
, grew from 32 percent to 55
percent of all households in the country, and the number of people in this class doubled from 38
million to 84 million. Real aggregate national consumption increased by about $60 billion, of
which $55 billion was accounted for by the increase in consumption of the M-class. As a result
90 percent of the increase in national consumption during this decade came from the increase in
consumption of the M-class2
. It is not surprising that the Asian Development Bank listed
Pakistan as among the top five countries3
in the Asia Pacific region with the fastest growing Mclass
during 1990-2008 (Chun 2010).
What characterizes the M-class? Bannerjee and Duflo (2008) suggest that holding a relatively
secure job is the single most important characteristic of the M-class. Individuals with higher
levels of “permanent income” are less vulnerable to economic shocks, have lower discount rates
for future rewards and thus invest more in health, education, and other “rent generating”
credentials. Professionals and others in the “service class” with large amounts of human capital
and stable employment relationships are considered the most likely to invest in securing their
own and children‟s future. Indeed, according to Sorenson (2000) it is the level of uncertainty in
“lifetime wealth” and resulting living conditions which result in differences among social
. M-class values are described as optimism and confidence regarding the future, a
preference for moderation and stability, a willingness to pay a little extra for quality, the “ability
to defer gratification”, and income often based on specialized skills. As a result the M-class has
the “base amount of income to invest in productive activities that contribute to economy-wide
welfare” (Chun 2010), and is more likely to accumulate human capital and savings, and more
inclined towards entrepreneurship (Lopez 2012, Meyer 2012).


Dear Sir,

I respect you for your in-depth knowledge but I just want to know few things:-

1)How many Management Institutes are there in Pakistan which can figure among top 100 Business Schools of the World? India has IIM(A), IIM(B), & ISB.
2) Again I want to understand is there any Medical College in Pakistan which can match AIIMS?.
3) Also I want to understand what is strength of PAK Non-Residents, and names of some women/men who made it to the list of Forbes Most Powerful persons list?.
4) Also want to know the strength of Pakistan Film Industry, and what is the average remuneration they receive for acting?
5) Also I want to know the strength of Pakistan's Television Industry?
6) Milk Production in Pakistan?
7) Sports other than Cricket & Hockey? like Chess, Soccer, Tennis, etc
8) Pakistan's Space Program?
9) Telecommunication Industry?
10) Software & Hardware Industry?
11) Railway Industry? Aviation Industry? Are they indigenous?
12) Banking & Insurance Industry? Mutual Funds Industry?
13) How many people are covered under Pension Scheme?

If according to your report if India is so backwards than Pakistan then why it is so major players are investing in India?

Riaz Haq said...

Frankly Indan: " I just want to know few things:-"

I have blogged about most, if not all, of the questions you are asking. Please search my blog to get your answers.


Irrespective of the relation between both the countries, no one can deny that both the countries have some high caliber intellectuals. You are surely one of them. I respect you for your knowledge and seek blessings from you. I only hope that one day we both shed our differences and be united. Thanks. I shall continue to follow your blog.