Friday, October 16, 2015

Wealth Report: Pakistan Middle Class Larger & Richer Than India's

Pakistan’s middle class consists of over 6.27 million adults, according to wealth criteria used by Credit Suisse in its Global Wealth Report 2015. It represents 5.7% share of Pakistan’s total adult population of 111 million, almost twice as large as India’s middle class made up of 3% of its adult population based on the same criteria.

Source: Credit Suisse Wealth Databook 2015

Average ($4,459) and median ($2,216) wealth figures for Pakistani middle class adults are higher than average ($4,352) and median ($868) wealth figures for their Indian middle class counterparts. It's a consequence of lower income wealth inequality in Pakistan compared to its neighbor.  For comparison, only 1.1% of Bangladesh adult population qualify as middle class. Their average wealth is $2,201 and median wealth $1,102 per adult.

Pakistan Wealth Source: Global Wealth Report 2015 Via Express Tribune
Credit Suisse's report estimates Pakistan's total private wealth in mid-2015 at $495 billion, Bangladesh's at $237 billion and India's at $3.45 trillion.

Credit Suisse said Pakistan's middle class is the 18th largest and India's 8th largest in the world. The report says 14% of world adults qualify as middle class in 2015 and they own 32% of the world's wealth. 6.7 million Pakistani adults make up 0.9% of the world's middle-class adult population. China tops the list with 108.7 million, followed by the United States 91.8 million and Japan 62 million.

A little more than 90% Pakistani adults had wealth less than $10,000 in 2015. The share of Pakistani adults with wealth between $10,000 and $100,000 in 2015 was 9.8% while only 0.1% adults owned wealth in the range of $100,000 and $1 million, the report revealed.

Other studies based on income criteria of $2 or more per day put Pakistan's middle class at 55% of the population. A 2010 ADB report titled "Asia's Emerging Middle Class: Past, Present and Future" report put Pakistan's middle class growth from 1990 to 2008 at 36.5%, much faster than India's 12.5% growth in the same period. Other reports have indicated Pakistan's median per capita income is higher than both India's and Bangladesh's.

Even though Pakistan's GDP growth has been relatively low compared to India and Bangladesh in recent years, the country's middle class has continued to grow rapidly. It's explained as follows: It's not the overall GDP growth and average per capita income and wealth increases but the median per capita income and wealth growth that tells you how the GDP gains are shared among the population.

Data shows that economic gains in Pakistan are shared better than India and Bangladesh because of lower inequality. Income poverty rate (those below $1.25 per capita per day) in India is 33% and Bangladesh 43% versus 13% in Pakistan, according to WB data on povcalNet. Gini Index for India is 33, Pakistan 29 and Bangladesh 32, indicating that Pakistan has lower inequality.

Related Links:

Haq's Musings

Pakistan's Middle Class Grows to 55%

Upwardly Mobile Pakistan

Median Per Capita Incomes of Bangladesh, India and Pakistan

India and Pakistan Compared in 2014

Bangladesh-Pakistan Comparison in 2012

Modi's Superpower Delusions


Anonymous said...

This doesn't,t pass basic logic.India,s savings to GDP ratio is 3times higher.has been for 20 years.

Riaz Haq said...

Anon: "This doesn't,t pass basic logic.India,s savings to GDP ratio is 3times higher.has been for 20 years. "

This Credit Suisse global wealth report uses household survey data which in Pakistan's case shows the actual economy is twice the size of what is officially reported.

M. Ali Kemal and Ahmed Waqar Qasim, economists at Pakistan Institute of Development Economics (PIDE), have published their research on estimates of the size of Pakistan's informal or underground economy.

Kemal and Qasim explore several published different approaches for sizing Pakistan's underground economy and settle on a combination of PSLM (Pakistan Social and Living Standards Measurement) consumption data and mis-invoicing of exports and imports to conclude that the country's "informal economy was 91% of the formal economy in 2007-08".

Jaan said...

Pakistan's middle and upper middle class are generally rich(tax dodgers) compared to its government which begs internationally. Indian people are maybe poorer but their government is filthy rich.

Riaz Haq said...

Jaan: "Pakistan's middle and upper middle class are generally rich(tax dodgers) compared to its government which begs internationally. Indian people are maybe poorer but their government is filthy rich."

Total tax-GDP percentage in Pakistan is 9%. It's 12% in India.

Indian government is not has the same problems as Pakistan govt.

India runs huge twin deficits year after year. Indian borrows heavily to spend and its runs current account deficits.

What helps India is western money inflows in the form of FDI and loans. Indian economy can not survive without it.

Sulekha said...

But then the Hunan Development Index 2015 shows Pakistan drifting below Bangladesh in the low category. Sad because at one stage it was close to India in the medium category.

Mahendra said...

@Riaz. "What helps India is western money inflows in the form of FDI and loans. Indian economy can not survive without it."

So who is interested in making these western inflows and why isn't Pakistan getting these inflows? Also are you saying that companies like Reliance or Tata are near collapse or do you think India is near collapse. Outrageous !

Riaz Haq said...

Mahendra: "So who is interested in making these western inflows and why isn't Pakistan getting these inflows?"

It's a post col war phenomenon where India has become a western favorite. Here's how Indian journalist Pankaj Mishra explains the larger western interest driving this phenomenon:

"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 (India and Pakistan) 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".

Throughout this period, Pakistan has continued to provide higher returns than India in spite of its many post-911 problems. For example, KSE-100 has consistently outperformed Sensex in this period. KSE is among the top performing markets in the world.

nayyer ali said...

Interesting how you have Indians posting on this blog. They get so irritated when India Shining is not so bright in reality.
Pakistan's total wealth is about 15% of India's, about the ratio of population, but because inequality is less, the wealth is more spread around. India has many billionaires, Pakistan has none. I actually see that as a good thing.
Pakistan needs to accelerate its GDP growth rate to 7% and keep it there for 25 years, the nation will then reach the threshold of a developed society. The Chinese investment will ramp up growth, but we need internal reforms to put us on a higher growth path.
India has grown faster than Pakistan in the last 20 years, Pakistan did better prior to that. In the long run India is going to be handicapped by its social structure, with 30% of its population untouchable or low caste, and another 15% Muslim, these groups are socially and economically marginalized preventing India from reaching its potential.

Sulekha said...

India shining was a political slogan - correction #1. Number two, India doesn't care much about Pakistan unless it's a terrorism or a territorial dispute. Number three, economic growth comes mostly from within so yes the CPEC will help but you do have to pay back those loans. Number four, Pakistan's energy is 100% focused on India that they ignore their own dire situation. Just look at an earlier post about HDI and how Pakistan is below Bangladesh!

Haq!s Musings claims to be a "South Asian" blogger. If this was only a Pakistani blogger site then it should be stated that way. I am only interested because he is making comparisons to India - with half truths however. India has many problems and we know that but stop making false comparisons!

Riaz Haq said...

nayyer ali:

I entirely agree with your comment.

As to the Indian posters, what you are seeing is a sanitized sample from all the raw stuff that I receive and have received over the years.

Not sure if you are aware but there are various terms being used to describe Indian trolls these "Modi Toadies" and "Internet Hindus"

Salman Rushdie recently came up with "Modi Toadies". Indian journalist used "Internet Hindus" earlier.

The term "Modi Toadies" caused a storm online in India. It generated amusement for many, but also drew criticism from supporters of the Indian premier.

The rise of the new media and the emergence of the "Internet Hindus", a term coined by Indian journalist Sagarika Ghose, has removed all doubts about many Indians' Pakistan obsession. She says the “Internet Hindus are like swarms of bees". "They come swarming after you" pouncing on any mention of Pakistan or Muslims.

Riaz Haq said...

The growing middle class

THERE is a visible demographic shift in Pakistan. We have been experiencing steady growth in an aspiring middle class and not just in terms of absolute numbers. Despite lacklustre growth during the last decade, the middle class has grown faster than the country’s population and nowhere has its growth and broadening been as sharp as in Punjab, especially central Punjab and the Potohar belt. Both areas are characterised by a less skewed distribution of land holdings and a more educated and skilled labour force.

How do we define ‘middle class’? It is a variable and nebulous term. The numbers or size of this class changes according to an economic or sociological definition. It is inaccurate to generalise, because the middle class is not homogenous in character. Although some values and characteristics are common for all segments that make up this class, there are differing worldviews.

In economic terms, it can be defined on the basis of incomes, consumption, and ownership of select durable assets, say the type of house one has, (all three being linked). A workable definition by the economist is that the middle class refers to people who have approximately one-third of their income available to spend after meeting their basic needs of food and shelter.

In sociological terms, it can be defined by occupation, occupational level, education or self-identification, the latter reflecting a sense of self-ascription: one belongs to the middle class because one envisions a middle-class lifestyle and identity for oneself. It is the class of seekers and strivers putting in the most effort for change in search of a secure future. For instance, they want to educate their girls for better marriage prospects in mobile, upwardly families, which would enable better social connections. For this upward mobility, migration to urban areas is an important strategic move.

Government policies and the nature and level of spending have also influenced the pace of the middle class’s creation. Recent, rapid growth in retail trade has been the most conspicuous outcome of this: new shopping malls and restaurants have emerged even in small towns, spawning a demand for a whole new set of skills, thereby further expanding its size.

In demographic terms, households at the lower end of the scale comprise a third to half the population (although our classification of the top 10pc as ‘the rich’ would be misleading by world standards). They are typically owners of small shops and workshops, middle-sized farmers, petty contractors, semi-skilled industrial and service workers and junior- or mid-level official cadre.

A substantial proportion of them are also beneficiaries of a large range of government handouts and subsidies, including water, fertiliser, higher education, wheat flour, etc. They typically own a refrigerator, more than one mobile phone, a motorbike or a small car. Although their expenditure budgets are stretched, they save for the education of their children and for their retirement.

Those at the upper end are senior government officials, managers of large businesses, bankers, professionals like accountants, tax consultants and architects, large farmers, academics in upmarket private schools and in public and private universities and those providing a whole range of services in the sectors of telecommunication, IT, media and retail and allied services, etc.

They are brand conscious, want material possessions like designer clothes, the latest car models, electronic gadgets, have air-conditioners and can afford some kind of annual vacation.

nayyer ali said...

Ultimately, a strong middle class will transform Pakistan. What we need is a political vehicle for that group to express itself. This is what the AKP did in Turkey. Pakistan's political parties up till now have been personality centered patronage machines. Can a new political party take root, or can the PML transform itself into a party of the Punjabi middle class, in alliance with the business community of Karachi? The latter seems like an easier route, if Nawaz is capable of carrying it out. Imran Khan made some moves in that direction but he is too confused about the Taliban and too little versed in economics to do the job. The PPP has imploded without Benazir and with its incompetent 5 year run in office.
More emphasis on education infrastructure and electricity production needs to happen over the next decade.
Pakistan also needs to abandon its support of the Afghan Taliban and come to terms with Kabul.

Riaz Haq said...

nayyer ali: "Pakistan also needs to abandon its support of the Afghan Taliban and come to terms with Kabul"

Pakistan's support of Afghan Taliban was a response to India's widely-known use of Afghanistan as second front against Pakistan. It's unlikely that Pakistan would completely abandon Taliban support as long as India wages proxy war from there against Pakistan.

US Ex Defense Secretary Cuck Hagel confirmed it when he said, "India has always used Afghanistan as a second front against Pakistan. India has over the years been financing problems in Pakistan".

How does India "finance problems" in Pakistan? Here are some of the ways it does so:

1. India's intelligence agency RAW uses its long and deep ties with the Afghan Intelligence KhAD (Khadamat-e Aetela'at-e Dawlati, also known as the National Directorate) staffed by openly anti-Pakistan agents who are known to support the Pakistani Taliban (TTP). There are reports that the current TTP chief Mullah Fazlullah is being protected by KhAD agents in Afghanistan. Last year, US troops snatched former TTP chief Hakimullah Mehusd's deputy Latifullah Mesud from Afghan intelligence agents. Apparently, Latifullah had been traveling back and forth across the Pak-Afghan border to coordinate attacks inPakistan with the Afghan agents.

2. Before writing and promoting an anti-Pakistan book in India, American analyst and author Christine Fair said this in 2009: "Having visited the Indian mission in Zahedan, Iran, I can assure you they are not issuing visas as the main activity! Moreover, India has run operations from its mission in Mazar (through which it supported the Northern Alliance) and is likely doing so from the other consulates it has reopened in Jalalabad and Qandahar along the border. Indian officials have told me privately that they are pumping money into Baluchistan". Prominent Pakistani Baloch insurgents like Brahamdagh Bugti are also being sheltered by the Afghan security and intelligence establishment along with RAW.

3. Another US analyst Laura Rozen explained India-Taliban nexus as follows: "While the U.S. media has frequently reported on Pakistani ties to jihadi elements launching attacks in Afghanistan, it has less often mentioned that India supports insurgent forces attacking Pakistan, the former (US) intelligence official said. "The Indians are up to their necks in supporting the Taliban against the Pakistani government in Afghanistan and Pakistan," the former (US) intelligence official who served in both countries said. "The same anti-Pakistani forces in Afghanistan also shooting at American soldiers are getting support from India. India should close its diplomatic establishments in Afghanistan and get the Christ out of there."

Riaz Haq said...

Local car sales jump 72% in Pakistan

KARACHI: Local car sales (including light commercial vehicles, jeeps and vans) jumped to 54,812 units in the first three months (Jul-Sep) of fiscal year 2016, up 72% compared to 31,899 units in the same period of last year, according to data released by the Pakistan Automotive Manufacturers Association (PAMA).

It is important to note that in September 2015, despite fewer working days due to Eidul Azha, local car sales rose 45% year-on-year (YoY) to 18,424 units. They, however, declined by 10% month-on-month (MoM).

The overall healthy growth in the auto sector is indicative of an increase in per capita income, lower interest rates and overall recovery of the economy. Car financing is also picking up gradually (currently estimated at 30% versus 5% a few years ago).

To recall, car sales (excluding imported ones) in Pakistan grew at a five-year (FY11-15) compound annual growth rate (CAGR) of 5.3% to 179,953 units. While volumes surged by 31% in fiscal year 2015 (FY15) on the back of the new model of Toyota Corolla, Punjab taxi scheme and an increase in car financing due to 42-year low interest rates in the country also helped.

“We forecast local car sales to grow at 13% in FY16 to reach 203,653 units,” Topline Securities reported on Monday.

Amongst individual companies, Pak Suzuki sales increased by 98% YoY to 33,770 units in 1QFY16 primarily due to the taxi scheme. Volumes declined by 12% MoM.

Indus Motor sold 14,767 units in 1QFY16 compared to 9,862 units in the same quarter last year. In the month of September, Indus Motor’s sales stood at 4,984 units which rose by 6% year on year. On a MoM basis, however, following the trend in Pak Suzuki, Indus sales also decreased by 10%.

Honda Cars sold 6,184 units in 1QFY16 compared to 4,887 units in the same period last year. In September, Honda Cars sold 2,001 units, up by 14% YoY, while remained flat on a MoM basis.

Majumdar said...

Prof sb,

Good news. Pakiland cud be on the cusp of a period of sustained growth esp if MNS continues as the PM and is not harassed by PTI and the Army.


AM India said...

The Indian Middle class population, as per the CS report, is approx 24 mio individuals, while the Pakistani middle class size is approx 7 mio individuals. How is the Pakistani mc larger?

Or is your point simply limited to that of inequality?

As regards per capita, see the data compared with, say 1995, and you will get a true picture of how time has stood still for Pakistan in the last 20 years. You were to be the next South Korea!!!

Anyhow, you have a young population and a viable state, so the future will be better. Its worthwhile focussing on that rather than "clutching at straws" comparisons.

Riaz Haq said...

AMI: "The Indian Middle class population, as per the CS report, is approx 24 mio individuals, while the Pakistani middle class size is approx 7 mio individuals. How is the Pakistani mc larger?"

Just do a little math--24 million is what percentage of India's adult population? And 7 million that of Pakistan's? Read my post again after that.

Sammy said...

Pakistan can forget about any territorial type resolution - forever! One reason - just follow threads on this blog.

Riaz Haq said...

Sammy: "Pakistan can forget about any territorial type resolution - forever!"

The beef murders and Hindu Nationalists' violence are already paving the way for yet another partition of India.

Nigel said...


Pakistan has lot more to worry here. It was already about half its original size despite having a common religion. Ethnicity matters more than religion in the subcontinent and Pakistan failed to take crucial steps which India did with its constitution. Still many issues to be sorted out in India but Pakistan has lot more to worry about.

Riaz Haq said...

Nigel: "Still many issues to be sorted out in India but Pakistan has lot more to worry about. "

Couldn't disagree more, especially now with the rise of the Sangh Parivar and Modi in "secular" India.

To quote US South Asia expert Stephen Cohen of Brookings Institution: "...there is no all-Indian Hindu identity—India is riven by caste and linguistic differences, and Aishwarya Rai and Sachin Tendulkar are more relevant rallying points for more Indians than any Hindu caste or sect, let alone the Sanskritized Hindi that is officially promulgated".

India is larger and far more diverse than Pakistan. It's repeating Pakistan's mistakes during 1980s Zia period by unleashing the demons of religious bigotry and hatred which will be extremely difficult, if not impossible, to bottle up again. It could lead to India's disintegration along its multiple fault lines of caste, religion, region, languages etc.

Riaz Haq said...

Ex CM of #India occupied #Kashmir Farooq Abdullah: People in Valley will think (Quaid-e-Azam) #Jinnah was right.

Former J&K Chief Minister Farooq Abdullah said on Monday that people in Kashmir may start to think that Mohammad Ali Jinnah was right about his two-nation theory.
“The trend that has started, it is the most difficult phase for the people of Kashmir… I am afraid that people in Kashmir will start to think that Quaid-i-Azam Jinnah was right about his two-nation theory,” he said, referring to the recent incidents in Dadri, Udhampur, Mumbai and today’s attack on MLA Engineer Rashid in New Delhi.
Targeting Prime Minister Narendra Modi, Abdullah said he should worry more about the country than about the Bihar elections. “I warn you that this country belongs to everyone. The day you start to think it only belongs to you, you should be ready to see this country fragmenting into pieces,” he said.
“PM should know that he is not the PM of only one community. He is the PM of 1.3 billion people. He should stand up. Instead of fighting the Bihar elections, he should think of how to save Hindustan from such elements,” said Abdullah.
“Very serious action must be taken if you want to uproot these elements,” he said. “If you wait, this spark will turn into a fire that will be beyond control,” he added.
“What you did in Dadri or anywhere else, India is not this. Today, these people have tarnished the image of India, not only in India but across the world. India, today, feels threatened by these elements,” he said.
“I have to say with regret that Muslims, all the minorities are living in danger. They are scared. They feel threatened — for their lives, for the lives of their children,” said Abdullah. “This didn’t happen earlier. This didn’t happen during Vajpayee’s time.”

Riaz Haq said...

Situation in #India #Punjab Evokes Memories of 1984 Anti-#Sikh Violence. Scriptures desecrated. … via @HuffPostRelig

This past week, tensions have escalated in Punjab. Due to media censorship, we have little information about what is actually happening on the ground, but here is what we are hearing and seeing so far.

A religious faction publicly desecrated the Sikh scripture. Sikhs responded by organizing peaceful protests. These protests were marred when police opened fire on the protestors. Chaos ensued, and after the dust settled, at least two were dead and many more were injured. The government responded by calling in the Indian Army and ordering a media blackout.

While this story is painfully harrowing, for Sikhs across the world the events of this week feel eerily familiar. The government's decision to rely on military force, along with its enactment of media censorship, reminds Sikhs of the dark days of 1984. During this period about thirty years ago, the government created these precise conditions as part of its setup for a military assault that claimed tens of thousands of lives at Darbar Sahib, the most significant place of gathering for the Sikh community.

The wounds from 1984 are still fresh in the Sikh psyche. The community has not yet healed from the trauma of being targeted in anti-Sikh violence, and the realities of oppression continue to shape how Sikhs around the globe understand themselves today.

I was born in the United States in the summer of 1984, during the height of the anti-Sikh violence in Punjab. I was just a baby while my Sikh brothers and sisters were being targeted in India because of their religious beliefs. Although I was not directly affected by the anti-Sikh violence, the experiences of my community remain an intrinsic part of who I am today. The wounds of 1984 still last with me and never will.

It is the unhealed trauma of anti-Sikh violence that compels Sikhs around the globe to feel dubious about the actions taken by the government this week. The government's push to decrease media transparency and increase military presence is deeply troubling to the Sikh community precisely because it invokes the traumatic memories of 1984 and raises the question of whether such violence could again rear its ugly head.

The lack of media representation is appalling. It makes it difficult to find the facts and trust the sources, but most importantly it keeps the world from seeing and discussing the injustice in Punjab. Credible journalists are not reporting about the situation in Punjab, partially out of fear and partially due to lack of access. As we have seen historically throughout the world, censorship of the media is a standard feature in attacks on minority communities. Infringing on the freedom of the press puts entire communities at risk.

There is much to be said about the current situation in Punjab, and there is so much more to the story that we still need to learn. What we do know, however, is that the current climate in Punjab is tenuous and that the Sikh community has ample reason to feel anxious about being targeted in communal violence. As people who enjoy the basic human rights and privileges, it is our responsibility to speak out and to help ensure that civil liberties are not compromised in Punjab. Until and unless we are able to secure these rights, the situation for minorities in India will continue to worsen and the stage will be set for hateful violence beyond our control.

Majumdar said...

Prof sb,

The panga that is going on in Punjab is between two factions of Sikhs- the Akali Sikhs (Sikh Sunnis) which are backed by the state govt and the Deras (Sikh Mirzais). Neither the Hindoos nor the Central Govt are party to this dispute. Hindus/GOI are no more responsible for this state of affairs as they are in Khatam-e Nabuwwat.


Anonymous said...

Dr. Riaz why are you bringing up the topic of beef ban again and again these are isolated incidents unlike ahmedis in Pakistan who are all the time living in fear.

Riaz Haq said...

Anon: "Dr. Riaz why are you bringing up the topic of beef ban again and again these are isolated incidents "

I disagree.

Look at the larger context of these beef murders. These are being committed under the auspices of the ruling Sangh Parivar which is attempting to impose a nationwide ban on beef. The BJP ministers, including Modi, are either silent or condoning the murders by their rhetoric on the issue.

To quote US South Asia expert Stephen Cohen of Brookings Institution: "...there is no all-Indian Hindu identity—India is riven by caste and linguistic differences, and Aishwarya Rai and Sachin Tendulkar are more relevant rallying points for more Indians than any Hindu caste or sect, let alone the Sanskritized Hindi that is officially promulgated".

India is larger and far more diverse than Pakistan. It's repeating Pakistan's mistakes during 1980s Zia period by unleashing the demons of religious bigotry and hatred which will be extremely difficult, if not impossible, to bottle up again. It could lead to India's disintegration along its multiple fault lines of caste, religion, region, languages etc. Modi's actions are hastening that day.

Riaz Haq said...

Majumdar: "The panga that is going on in Punjab is between two factions of Sikhs-"

It's not established as to who desecrated the Sikh scriptures.

What is known is that the Punjab police and the Indian Army firing at and killing Sikh demonstrators are not Sikh.

Riaz Haq said...

Dadri killing premeditated, says #India's National Commission for Minorities - The Hindu. #beefmurder #Modi #BJP …

“A sacred place like a temple was used to exhort people of one community to attack a hapless family”.

Debunking the notion that the Dadri lynching was an “accident,” the National Commission for Minorities (NCM) says the assembly of a mob that killed Muhammad Akhlaq on September 28 was a “premediated” act of violence.

The NCM is a government-run body with a mandate to safeguard the constitutional rights of the religious minorities.

On October 10, its team visited Bishara village in Dadri district of western Uttar Pradesh to probe the killing.

The report dispels the claim that the assembly of the mob was “spontaneous.” According to the report: “The team feels that a crowd of large numbers appearing within minutes of the announcement from the temple’s loudspeaker and at a time when most villagers claimed they were asleep seems to point to some premeditated planning.”

Since Union Minister Mahesh Sharma concluded that the incident was an “accident,” the report challenges the notion, saying: “A sacred place like a temple was used for exhorting people of one community to attack a hapless family.” Therefore, calling it an accident would be an “under-statement.”

On the night of September 28, the priest of the temple made a loud announcement that the remains of a slaughtered cow were found near Akhlaq’s house. Hearing that, a mob broke into Akhlaq’s house, accusing him of eating and storing cow meat, and killed him instantly.

The NCM team has expressed concern at the growing vigilantism in western Uttar Pradesh. It perceives the ongoing moral policing in the region as a “malaise” which is “spreading fast.” Picking holes in the functioning of the police, the report says intelligence-gathering “is no more occurring in the rule book of the authorities. It has to be revived with utmost sincerity.”

Anonymous said...

"It's not established as to who desecrated the Sikh scriptures." Obviously they were paid agents of Pakistan. Another useless tactic successfully blocked.

Lastly about beef, Saudi Arabia and China has stricter restriction on personal freedom than India yet they are doing fine. I dont know what you are trying to imply by bringing "beef" issue. Even if some of the Muslim liberties are curtailed it will have no impact on over all Indian growth story. It will be another stupid thing which no one cares about. Certainly not the west and rest is shit which India does not need to care about.

Jamshed Lokhandwala said...

I read your Bio and you claim to write about South Asia. However, I see a tendency to cherry pick or spin articles into creating a positive image of Pakistan and highlight or manufacture a negative image of India. If it is meant for Pakistan then your contrived narrative will be welcomed but rest of the world not very much. Each country has people who don't agree with their government policies or are dissatisfied with them; however, I rarely see any mention of those people from Pakistan! For example Haqqani, Houdbhoy, Ahmed Rashid, Hasan Nasir and the like.
Bottom line a very unbalanced viewpoint. Your attempt to make Pakistan look good has the opposite effect

Chandra said...

Riaz Sir,
There seems to be a discrepancy or distortion in your conclusion. The economic Middle Class definition is earnings of $10-$20 for developing countries. Pew Research (pew in a 2011 detailed study shows India edged out Pakistan, 2.6% vs 2.0% in middle class size. Furthermore, Indian middle class has grown faster (1.2% vs 0.9%) and the poor class has decreased faster (15.6% vs 15.2%) when compared to Pakistan.
Additionally it is estimated that this trend will accelerate in the next five years.


Riaz Haq said...

Chandra: "Visit"

I did visit Pew Global and found a July 2015 report " A Global Middle Class Is More Promise than Reality".

It shows the following:

Population Below $2 a day India 19.8% in 2011 down from 35.4% in 2001 vs Pakistan 18.1% in 2011 down from 33.3% in 2001

Median Daily Per Capita Income India $2.96 in 2011 up from $2.39 in 2001 vs Pakistan $2.95 in 2011 up from $2.42 2001

While median daily per capita income is about the same, Pakistan still has lower $2 a day poverty level than India.

Anyone above $2 a day is considered middle class by both ADB and World Bank definitions.

Chandra said...

Riaz Sir,
Note that the discrepancy is the very definition of middle class or middle income. Economists tend to use $10-$20. Here is an excerpt:

A middle-income threshold of $10 follows a
practice that is gaining acceptance among
economists. The same, or virtually the same,
threshold has been applied by the World Bank
(2007, 2015), researchers at the Organization for
Economic Cooperation and Development
(Kharas, 2010), the development community
(Birdsall, 2010; Birdsall, Lustig and Meyer, 2013,
and Dadush and Shaw, 2011) and the private
sector (Court and Narasimhan, 2010). There is
growing consensus that the $10 threshold, which is five times the poverty line used in this study, is associated with economic security and “insulates” people from falling back into poverty.


Riaz Haq said...

Chandra: "Note that the discrepancy is the very definition of middle class or middle income. Economists tend to use $10-$20."

The Credit Suisse wealth report referenced in my post uses wealth, not income or consumption, as criterion for middle class.

Riaz Haq said...

WB projects #Pakistan’s economic growth up at 4.8% in 2015-16 …

The World Bank (WB) has projected Pakistan's economy will grow by 4.5 percent in Fiscal Year 2015-16 (FY16) and then further to 4.8 percent in FY17 supported by strong growth in industry and services, however, the country needs to implement energy and taxation reforms and increase investment.

The WB, in its latest economic outlook report stated that macroeconomic outlook of Pakistan for the next two years projects steady growth recovery-cum-low inflation, supported by fiscal consolidation and an improving external position.

Meanwhile, investment is expected to increase to 15.4 percent of Gross Domestic Product (GDP) by FY17 on account of operationalisation of China Pakistan Economic Corridor (CPEC) related projects, added the report.

Though, WB realizes that a mild recovery is underway, economic stability has largely been restored and key external risks are lower in Pakistan, but, some challenges may upset the projected growth as the slowdown in China, if protracted, could have adverse effects on investment and trade, and Pakistan may not have the ability to absorb external shocks in the absence of strong buffers.

Furthermore, WB mentioned in the report that realization of tax revenue targets largely hinges on steady implementation of tax reform agenda. Fiscal consolidation may also be negatively affected by delayed implementation of the government's privatisation agenda.

Moreover, for the economy to accelerate in the long run, key growth constraints like electricity shortages, cumbersome business climate, complex trade regime, low access to finance and security situation need to be addressed.

According to the report inflation is projected to stay low in view of low commodity prices, exchange rate stability and a prudent fiscal policy. The Pakistan's current account deficit is projected by the WB to increase slightly to 1.0 percent of GDP by FY17 but will remain manageable.

So far, remittances originating from Gulf countries have not been affected by the decline in oil price and are expected to stay robust in the near term. Exports are projected to contract in the first year owing to tapered global demand and then grow marginally the following year. Imports, however, are projected to post moderate growth due to CPEC-related investments and higher domestic demand. Fiscal consolidation is projected to continue over the medium term based on strong tax revenue efforts as well as gradual phasing-out of energy-related subsidies and of contingent liabilities on loss making state-owned enterprises.

Resultantly, the fiscal deficit is expected to decline to 3.5 percent of GDP by FY17. The reduced need for deficit financing should facilitate provision of bank credit to the private sector, leading to increased economic activity, the world financial institution concluded.

Widespread corruption and weak accountability have been long-standing problems, but there have been some improvements, especially in transparency and citizens' access to recourse for maladministration. Such improvements include the adoption of strong legislation on Right to Information in some provinces (KP and Punjab), the publication of increased budgetary information, and the growing role of ombudsman institutions - at both the federal and provincial levels - in resolving citizens' complaints of maladministration.

In terms of outcomes, there are some signs that petty corruption might be declining. The most recent Global Barometer Survey by Transparency International (2013) reports that 34 percent of citizens had paid a bribe in the past year - compared to 49 percent in the 2011 survey. Most survey respondents in Pakistan identified the police and the public administration as the most corruption affected institutions, followed by political parties.

Perceptions of corruption in public services such as education, health care, and the judicial system were considerably lower.

Milan said...

Is Pakistan lagging behind? IMF data in $PPP per-capita for past, current and future.

Bangladesh 848
India 1177
Pakistan 1800 (65% higher than India, 110% higher than Bangladesh)

Bangladesh 2592
Pakistan 4133 (8% lower than India, 62% higher than Bangladesh)
India 4494

2020 IMF estimate
Bangladesh 5248
Pakistan 6225 (45% lower than India, 19% higher than Bangladesh)
India 9207


Riaz Haq said...

Milan: "Is Pakistan lagging behind? IMF data in $PPP per-capita for past, current and future."

The latest ("present") per capita PPP incomes are as follows:

2014 IMF

Bangladesh $3,391
Pakistan $4,749
India $5,808

Pakistan is 47% higher than Bangladesh and 18% lower than India.

This is already almost half way through the decade.

No one knows what the future holds, least of all IMF which has been so wrong for so long in its predictions.

The large investment brought in by China-Pakistan Corridor may well determine what happens to incomes in Pakistan.

Riaz Haq said...

French Economist-Author Thomas Piketty to #India’s "Hypocritical" "Self-Serving" Elite: ‘Learn From History’

After he fled to the authors’ lounge, Mr. Piketty told me that he found the elite of India “hypocritical” for urging their government to address inequality by pouring resources into economic development, like building infrastructure or helping selected industries. This is self-serving, he says, and only increases the gap between the rich and the poor. In his opinion, governments should find the means to invest more in social welfare, like primary education and health care.

Before the world wars, he said, “the French elite used to say the same things that the Indian elite now say, that inequality would be reduced with rising development.” But after the wars, he said, the French began to see that direct investment in welfare was the way forward.

“I hope the Indian elite learn from the stupid mistakes of the other elites,” he said. “Learn from history.”

India is just emerging from what many regard as a catastrophic experiment in a type of socialism, the sort that economists like Amartya Sen, the Nobel laureate, say was not socialism in the first place, because it neglected health care and primary education. What the Indian elite learned from that history was to fear and loathe the idea of the welfare state.

In 1991, India reached the nadir of an economic crisis that forced it, in exchange for a financial rescue from the International Monetary Fund, to begin liberalizing its economy along the free market lines that were championed then by Washington. In the years that followed, the rich and the educated benefited the most, though the poor are better off today than they were before those changes.

Having prospered in recent decades, the Indian elite have faith in this economic model. But there is also a wide acceptance that India’s inadequate investments in education and health are holding the nation back.

“The problems India is trying to solve are problems other countries are trying to solve,” Mr. Piketty had said during his lecture. “India is trying to solve very complicated problems.”

Riaz Haq said...

Total Household Wealth Mid-2016 : India $3,099 billion Pakistan $524 billion

Wealth per adult:

India Year End 2000 Average $2,036 Median $498.00

Pakistan Year End 2000 Average $2,399 Median $1,025

India Year Mid-2016 Average $3,835 Median $608

Pakistan Mid-2016 Average $4,595 Median $1,788

Average wealth per adult in Pakistan is $760 more than India or about 20% higher

Median wealth per adult in Pakistan is $1,180 more than in India or about 120% higher

Change in Household Wealth since 2015:

India -0.8%

Pakistan 2.1%

Riaz Haq said...

This Is Just How Unequal is #India with top 1% Owning 58% of Wealth. #Modi #BJP … via @WSJIndia

The richest 1% of Indians hold 58% of the country’s total wealth, according to Oxfam India.

The stark inequality in India is worse than the global data put out by the organization, which show that the richest 1% have more than 50% of the total world wealth, Oxfam said.

The anti-poverty advocacy group released a report, “An Economy for the 99%” this week to coincide with the meeting of some of the world’s wealthiest business leaders and most powerful policymakers in Davos, Switzerland.

It said recently improved data on the distribution of wealth, particularly in countries like India and China, indicate that the poorest half of the world has less wealth was previously thought. Oxfam singled out India repeatedly in the report.

It said that companies are increasingly driven to pay higher returns to their shareholders. In India, the amount of profits corporations share with shareholders is as high as 50% and growing rapidly, the report said.

The report said the annual share dividends paid by from Zara’s parent company to Amancio Ortega – the world’s second richest man – are equal to around 800,000 times the annual wage of a worker employed by a garment factory in India.

Oxfam said that the combined wealth of India’s 57 billionaires is equivalent to that of the country’s poorest 70%.

“India is hitting the global headlines for many reasons, but one of them is for being one of the most unequal countries in the world with a very high and sharply rising concentration of income and wealth,” Nisha Agarwal, chief executive of Oxfam said in a statement.

Oxfam said India should introduce an inheritance tax and raise its wealth levies as well as increasing public spending on health and education. It said it should end the era of tax havens and crack down on rich people and corporations avoiding tax.

Riaz Haq said...

#India has been a post-truth society for years. #Modi #Trump #alternativefacts … via @_TCGlobal

India: home of post-truth politics

That was the global context of post-truth politics and its advent in the West. But as the US and UK wake up to this new era, it’s worth noting that the world’s largest democracy has been living in a post-truth world for years.

From education to health care and the economy, particularly its slavish obsession with GDP, India can be considered a world leader in post-truth politics.

India’s post-truth era cannot be traced to a single year – its complexities go back generations. But the election of Narendra Modi in 2014 can be marked as a significant inflection point. Ever since, the country has existed under majoritarian rule with widely reported discrimination against minorities.

India’s version of post-truth is different to its Western counterparts due to the country’s socioeconomic status; its per capita nominal income is less than 3% of that of the US (or 4% of that of the UK). Still, post-truth is everywhere in India.

It can be seen in our booming Wall Street but failing main streets, our teacher-less schools and our infrastructure-less villages. We have the ability to influence the world without enjoying good governance or a basic living conditions for so many at home.

Modi’s government has shown how key decisions can be completely divorced from the everyday lives of Indian citizens, but spun to seem like they have been made for their benefit. Nowhere is this more evident than with India’s latest demonetisation drive, which plunged the country into crisis, against the advice of its central bank, and hit poorest people the hardest.

Despite the levels of extreme poverty in India, when it comes to social development, the cult of growth dominates over the development agenda, a trend that Modi has exacerbated, but that started with past governments.

The dichotomy of India’s current post-truth experience was nicely summed up by Arun Shourie, an influential former minister from Modi’s own party. He disagrees with the prime minister, just as many Republicans share sharp differences of opinion with President Trump.

Shourie said the policies of the current administration were equal to his predecessors’ policies, plus a cow.

...there is an argument to be made that the US and the UK have been living in denial of facts and evidence for years. In 2003, after all, both the countries went to war in Iraq over the false notion that Saddam Hussein was harbouring weapons of mass destruction.
Major social change does not happen within the space of a year. Yet, to a large number of observers around the world, the “post-truth” phenomenon seemed to emerge from nowhere in 2016.

Two key events of 2016 shaped our understanding of the post-truth world: one was in June, when Britain voted in favour of leaving the European Union. The other was in November, when political maverick Donald Trump was elected the 45th President of the United States of America. Trump’s administration spent the third day of his presidency speaking of “alternative facts”, and making false claims about the size of the crowds that had attended his inauguration.

For the rest of the world, the importance of both Trump and Brexit can best be gauged by understanding that they happened in the USA and in the UK. The UK was the key driving force of the world from the 19th century until the second world war, the US has been ever since. The US and the UK often have shared a similar point of view on many global geopolitical developments, as strategic allies or by virtue of their “special relationship”.

Riaz Haq said...

World Happiness 2017 ranks Pakistan well ahead of the rest of SAARC nations. Nepal's at 99, Bhutan at 97, Bangladesh at 110, Sri Lanka at 120, India at 122 and Afghanistan at 141 among 155 nations surveyed.

Norway moved from No. 4 to the top spot in the report’s rankings, which combine economic, health and polling data compiled by economists that are averaged over three years from 2014 to 2016. Norway edged past previous champ Denmark, which fell to second. Iceland, Switzerland and Finland round out the top 5.

Studying happiness may seem frivolous, but serious academics have long been calling for more testing about people’s emotional well-being, especially in the United States. In 2013, the National Academy of Sciences issued a report recommending that federal statistics and surveys, which normally deal with income, spending, health and housing, include a few extra questions on happiness because it would lead to better policy that affects people’s lives.

The entire top ten were wealthier developed nations. Yet money is not the only ingredient in the recipe for happiness, the report said.

In fact, among the wealthier countries the differences in happiness levels had a lot to do with “differences in mental health, physical health and personal relationships: the biggest single source of misery is mental illness,” the report said.

“Income differences matter more in poorer countries, but even their mental illness is a major source of misery,” it added.

Another major country, China, has made major economic strides in recent years. But its people are not happier than 25 years ago, it found.

The United States meanwhile slipped to the number 14 spot due to less social support and greater corruption; those very factors play into why Nordic countries fare better on this scale of smiles.

“What works in the Nordic countries is a sense of community and understanding in the common good,” said Meik Wiking, chief executive officer of the Happiness Research Institute in Copenhagen, who wasn’t part of the global scientific study that came out with the rankings.

The rankings are based on gross domestic product per person, healthy life expectancy with four factors from global surveys. In those surveys, people give scores from 1 to 10 on how much social support they feel they have if something goes wrong, their freedom to make their own life choices, their sense of how corrupt their society is and how generous they are.

Riaz Haq said...

The rising number of its billionaires masks #India’s widening income #inequality. #Modi #BJP via @qzindia

India is staring at a staggering income-inequality crisis.
A research paper published by French economist Thomas Piketty and Lucas Chancel—based on the latest income tax data—suggests that inequality in India may be at its highest level since 1922, when India introduced the income tax.
The share of national income held by the top 1% of the country’s population has increased dramatically, particularly since the 1980s, the economists say in their paper published on Sept. 05 (pdf).

“The top 1% of earners captured less than 21% of total income in the late 1930s, before dropping to 6% in the early 1980s and rising to 22% today,” the paper says.
Piketty is widely recognised for his work on income inequality, particularly through his bestselling book Capital in the Twenty-First Century. Chancel is the co-director of the World Inequality Lab and of the World Wealth & Income Database ( at the Paris School of Economics.
Their study shows that income inequality was the lowest in the 1970s and 1980s, a period when India was still a government-controlled economy and its GDP growth was quite low.
“Over the 1951-1980 period, the bottom 50% group captured 28% of total growth, and incomes of this group grew faster than the average, while (the) top 0.1% incomes decreased,” their paper says. “Over the 1980-2014 period, the situation was reversed; the top 0.1% of earners captured a higher share of total growth than the bottom 50% (12% vs. 11%), while the top 1% received a higher share of total growth than the middle 40% (29% vs. 23%).”

Last year, a report by Credit Suisse Research Institute said that the top 1% of the country’s population held 58.4% of its wealth, up from 53% in 2015. Within the BRICS group, only Russia’s wealthy controlled more of their country’s wealth. Since 2010, India has added a billionaire every 33 days and Indians’ share in the global billionaires’ club has grown from 1% to 5% over the last 20 years.
Meanwhile, Piketty has also reiterated his demand for more transparency in sharing income tax data. Access to data is crucial in measuring inequality and understanding the distribution of wealth. India used to publish the All India Income Tax Statistics until 2000. In 2016, the income tax department released tax tabulations for the period between 2012 and 2014.

Riaz Haq said...

Rising inequality is a global phenomenon. Oxfam’s briefings paper ‘An economy for the 99%’ reports only eight men today have the same wealth as 3.6 billion of the world’s population. In the last three decades seven out of 10 people living in a country have been facing inequality. Also the report mentions that in the next 25 years, the world will have its first trillionaire.

Besides this, every year economically stagnated countries cost $1,000 billion in the shape of corporate tax evasions. This huge sum can provide education to 124 million children and prevent the deaths of at least six million children globally. On the other hand, global inequality has devastating consequences for low-income countries like Pakistan.

The per capita income of Pakistan is $1,629. Poor families can bear the cost of food, health, shelter, education and other fundamental needs for a year in the country. Meanwhile, Bangladesh — a young country — has seen an increase of up to $1,602 in its per capita income.
Oxfam’s another report titled Commitment to Reducing Inequality (CRI) ranks Pakistan at number 139 out of 152 countries. In spending on education, health and social protection, it is ranked on 146; progressive taxation is ranked at number 98 and labour rights is ranked at number 118.

According to development experts of Pakistan, between 1998-99 and 2013-14 consumption-based poverty fell from 57.9 per cent to 29.5 per cent. Multidimensional poverty that comprises education, health and living standards dropped from 55.2 per cent to 38.8 per cent between 2004-5 and 2014-15. In addition, during 2013-14, the Gini coefficient was 0.41 while in the years 1987-88 it was 0.35. Besides, the richest 20 per cent in Pakistan spend seven times more than the poorest 20 per cent.

Currently, our country is on the trajectory of high economic deficit. This has caused 35 per cent of the people to live below the poverty line, around 22.4 million children are out of school and 45 per cent are stunted. Moreover, women’s unpaid domestic work is not measured in any data. They are not paid equal wages and around 63 per cent youth spends their life impractically.

Income and wealth inequality in Pakistan is from top to bottom. Only 22 persons in the country have billions of wealth and reserves. The rest spend their life in hunger and poverty. Education and health infrastructures are on the verge of collapse. Institutions are rotten. Moral and ethical values are decaying.

In addition, extreme inequalities cause rampant corruption in society, obstruct economic growth, leads to irregular wealth and income distribution, moral and ethical iniquities, and adversely affect labour and human rights. This portrays an intimidating picture of the country’s overall economic scenario.

Civil society organisations, public-sector organisations and INGOs in Pakistan are working more on issues like poverty, gender disparity, water, food, rights, etc. However, so far the root cause of all these issues — inequality — is untouched and undebated.

Undoubtedly inequality is a highly political debate, as it is entrenched in government policies and institutions. However, it needs to be advocated by people, civil society, policymakers and parliamentarians to initiate discourse in the country.

Inequality needs to be controlled now. The CRI index shows that some African countries through spending on education, health and social protection have controlled inequality. The government needs to increase spending on education, health and social protection, and provide equal labour wages for both men and women. The government should revamp and reform the taxation system to bring progressive and just tax systems.

Riaz Haq said...

Average number of adults per household in Pakistan 3.0 (out of 6.45) `vs India 2.5 (out of 4.9)

The average household wealth in Pakistan is $15,522 vs India $14,940

The median household wealth in Pakistan is $10,014 vs India $3,237

Credit Suisse Wealth Report 2017

India Average Wealth Per Capita $5,976 Gini 83% Household Wealth Up 9.9% since 2016

India Median Wealth Per Capita $1295

Pakistan Average Wealth Per Capita $5,174 Gini 52.6% Household Wealth Up 6.3% since 2016

Pakistan Median Wealth Per Capita $3,338

Riaz Haq said...

#India’s Missing #MiddleClass : Multinational businesses relying on Indian consumers face disappointment. #China #Inequality …

For all the talk of wanting to tap the middle class, no firm moving into India thinks it is targeting the middle of the income distribution. India’s mean GDP per head is just $1,700, and 80% of the population makes less than that. Adjust for purchasing-power parity by factoring in the cheaper cost of goods and services in India and you can bump the mean up to $6,600. But that is less than half the figure for China (see chart 2) and a quarter of that for Russia. What is more, foreign companies have to take their money out of India at market exchange rates, not adjusted ones.

Defining the middle class anywhere is tricky. India’s National Council of Applied Economic Research has used a cut-off of 250,000 rupees of annual income, or about $10 a day at market rates. Thomas Piketty and Lucas Chancel of the Paris School of Economics found in a recent study that one in ten Indian adults had an annual income of more than $3,150 in 2014. That leaves only 78m Indians making close to $10 a day.

Meagre market

Even adjusting for the lower cost of living, that is hardly a figure to set marketers’ heartbeats racing. The latest iPhone, which costs $1,400 in India, represents five month’s pay for an Indian who just makes it into the top 10% of earners. And such consumers are not making up through growing numbers what they lack in individual spending power. The proportion making around $10 a day hardly shifted between 2010 and 2016.

Another gauge is whether people can afford the more basic material goods they crave. For Indians, that typically means a car or scooter, a television, a computer, air conditioning and a fridge. A government survey in 2012 found that under 3% of all Indian households owned all five items. The median household had no more than one. How many of them will be anywhere near able to buy an iPhone or a pair of Levi’s if they cannot afford a TV set?

To get in the top 1% of earners, an Indian needs to make just over $20,000. Adjusted for purchasing-power parity, that is a comfortable income, equating to over $75,000 in America. But in terms of being able to afford goods sold at much the same price across the world, whether a Netflix subscription or Nike trainers, more than 99% of the Indian population are in the same league as Americans that count as below the poverty line (around $25,000 for a family of four), points out Rama Bijapurkar, a marketing consultant.

The top 1% of Indians, indeed, are squeezing out the rest. They earn 22% of the entire income pool, according to Mr Piketty, compared with 14% for China’s top 1%. That is largely because they have captured nearly a third of all national growth since 1980. In that period India is the country with the biggest gap between the growth of income for the top 1% and the growth of income for the population as a whole. At the turn of the century, the richest 10% of Indians made 40% of national income, about the same as the 40% below them. But far from becoming a middle class, the latter’s share of income then slumped to under 30%, while those at the top went on to control over half of all income (see chart 3).

Riaz Haq said...

India is one of the world’s most unequal countries: James Crabtree
In an interview with Mint, journalist and author James Crabtree talks about the rapid rise of India’s ultra-rich and the crony capitalism and inequality that have accompanied such concentration of wealth

Mumbai: These days, Vijay Mallya is shorthand for much that is wrong with Indian capitalism—a warning on what can happen when weak institutions allow arrogant billionaire free play. Mallya, unsurprisingly, sees it differently. When journalist and author James Crabtree meets him in London—an encounter narrated in an early chapter of The Billionaire Raj—Mallya describes himself as someone who has been made a scapegoat by a corrupt system. “You can’t weed corruption out of the system completely,” he says. “In India, it’s almost inbred.”

Over the past quarter century, there has been immense reduction in poverty in India. But a richer economy also means more high-profile corruption. This in turn is seen as being closely linked with the rapid rise of India’s tycoons. In 2002, there were five Indians on the annual Forbes list of the world’s billionaires. In 2018, the number has risen to 119. When it comes to billionaire wealth as a proportion of national output, India perhaps ranks only behind Russia. In an interview, Crabtree talks about inequality and crony capitalism in India and their consequences. Edited excerpts:

Do we put inequality on the back-burner, let the Ambanis and Adanis build and create wealth and jobs, or do we focus on inequality now?

I don’t think there’s a contradiction between these things. The problem India faces is that while it has had a good record on basic poverty reduction—much more impressive than it’s given credit for—it has a much worse record on inequality reduction than it’s given credit for. The evidence is right in front of your eyes. Look at Antilla—Mukesh Ambani’s residence in Mumbai, built at an estimated cost of $1 billion—and look at what’s around it. Whether you look at International Monetary Fund research or the work that Thomas Piketty has done, or the World Inequality Report, they all point in the same direction. Which is that India is one of the world’s most unequal countries—probably up there with South Africa or Brazil. It’s more unequal than the successful economies of East Asia and it’s at a very early stage of its development.

So the risk comes from it going on at the same rate over the next 10-15 years. There’s all sorts of new research that suggests that inequality is more damaging than we had thought. That’s true economically and that’s true in terms of human happiness. We are not arguing for red in tooth and claw socialism here. This is simply about more inclusive growth, perhaps a more progressive taxation system than India has now, a support system for people coming out of the fields and into other forms of employment. There is no contradiction between this and being pro-business. Businesses need reasonably skilled, healthy workers after all. So this debate in India where people on the centre-right say, well, we only care about how people on the bottom are doing, the top doesn’t matter, that’s a bit old fashioned now.