Thursday, November 24, 2016

CS Wealth Report 2016: Average Pakistani 20% Richer Than Average Indian

Average Pakistani adult is 20% richer than an average Indian adult and the median wealth of a Pakistani adult is 120% higher than that of his or her Indian counterpart, according to Credit Suisse Wealth Report 2016. Average household wealth in Pakistan has grown 2.1% while it has declined 0.8% in India since the end of last year.

Source: Credit Suisse Wealth Report 2016

Here are the key statistics reported by Credit Suisse:

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 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 in India or about 20% higher.

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

Inequality: 

Median wealth data indicates that 50% of Pakistanis own more than $1,180 per adult which is 120% more than the $608 per adult owned by 50% of Indians.

The Credit-Suisse report says that the richest 1% of Indians own 58.4% of India's wealth, second only to Russia's at 74.5%. That makes India the 2nd biggest oligarchy in the world.

The CS wealth data, particularly the median wealth figures,  clearly show that Pakistan has much lower levels of inequality than India.

World Bank Report:

A November 2016 World Bank report says that Pakistan has successfully translated economic growth into the well-being of its poorest citizens. It says "Pakistan’s recent growth has been accompanied by a staggering fall in poverty".

Rising incomes of the poorest 20% in Pakistan since 2002 have enabled them to enhance their living standards by improving their diets and acquiring television sets, refrigerators, motorcycles, flush toilets, and better housing.

Another recent report titled "From Wealth to Well Being" by Boston Consulting Group (BCG) also found that Pakistan does better than India and China in translating GDP growth to citizens' well-being.

One particular metric BCG report uses is growth-to-well-being coefficient on which Pakistan scores 0.87, higher than India's 0.77 and China's 0.75.

Big Poverty Decline Since 2002:

Using the old national poverty line of $1.90 (ICP 2011 PPP) , set in 2001, the percentage of people living in poverty fell from 34.7 percent in FY02 to 9.3 percent in FY14—a fall of more than 75 percent. Much of the socioeconomic progress reported by the World Bank since 2000 has occurred during President Musharraf's years in office from 2000-2007. It has dramatically slowed or stagnated since 2010.

Source: World Bank Report Nov 2016

Using the new 2016 poverty line of $3.50 (ICP 2011 PPP),  29.5 percent of Pakistanis as poor (using the latest available data from FY14). By back casting this line, the poverty rate in FY02 would have been about 64.3 percent.

Pakistan's new poverty line sets a minimum consumption threshold of Rs. 3,030 or $105 (ICP 2011 PPP) per person per month or $3.50 (ICP 2011 PPP) per person per day. This translates to between Rs. 18,000 and Rs. 21,000 per month for a household at the poverty line, allowing nearly 30% of the population or close to 60 million people to be targeted for pro-poor and inclusive development policies—thus setting a much higher bar for inclusive development.

Multi-dimensional Poverty Decline:

UNDP report released in June 2016 said Pakistan’s MPI (Multi-dimensional poverty index) showed a strong decline, with national poverty rates falling from 55% to 39% from 2004 to 2015. MPI goes beyond just income poverty.

The Multidimensional Poverty Index uses a broader concept of poverty than income and wealth alone. It reflects the deprivations people experience with respect to health, education and standard of living, and is thus a more detailed way of understanding and alleviating poverty. Since its development by OPHI and UNDP in 2010, many countries, including Pakistan, have adopted this methodology as an official poverty estimate, complementing consumption or income-based poverty figures.

Rising Living Standards of the Poorest 20% in Pakistan:

According to the latest World Report titled "Pakistan Development Update: Making Growth Matter" released this month, Pakistan saw substantial gains in welfare, including the ownership of assets, the quality of housing and an increase in school enrollment, particularly for girls.



First, the ownership of relatively more expensive assets increased even among the poorest. In the bottom quintile, the ownership of motorcycles increased from 2 to 18 percent, televisions from 20 to 36 percent and refrigerators from 5 to 14 percent.

In contrast, there was a decline in the ownership of cheaper assets like bicycles and radios.



Housing quality in the bottom quintile also showed an improvement. The number of homes constructed with bricks or blocks increased while mud (katcha) homes decreased. Homes with a flushing toilet almost doubled in the bottom quintile, from about 24 percent in FY02 to 49 percent in FY14.

Dietary Improvements for the Poorest 20% in Pakistan:

Decline in poverty led to an increase in dietary diversity for all income groups.

For the poorest, the share of expenditure devoted to milk and milk products, chicken, eggs and fish rose, as did the share devoted to vegetables and fruits.

In contrast, the share of cereals and pulses, which provide the cheapest calories, declined steadily between FY02 and FY14. Because foods like chicken, eggs, vegetables, fruits, and milk and milk products are more expensive than cereals and pulses, and have lower caloric content, this shift in consumption also increased the amount that people spent per calorie over time.

For the poorest quintile, expenditure per calorie increased by over 18 percent between FY02 and FY14. Overall, this analysis confirms that the decline in poverty exhibited by the 2001 poverty line is quite credible, and that Pakistan has done remarkably well overall in reducing monetary poverty based on the metric it set some 15 years ago, says the World Bank.

Summary:

In spite of Pakistan's many challenges on multiple fronts, the country has successfully translated its GDP growth into the well-being of its poorest citizens. "Pakistan’s recent growth has been accompanied by a staggering fall in poverty", says a November 2016 World Bank report.  An earlier report by Boston Consulting Group reached a similar conclusion.

Related Links:

Haq's Musings

Pakistan's Middle Class Larger & Richer Than India's

Pakistan Translates GDP Growth to Citizens' Well-being

Rising Motorcycle Sales in Pakistan

Depth of Deprivation in India

Chicken vs Daal in Pakistan

China Pakistan Economic Corridor


19 comments:

Anonymous said...

World Bank poverty data

Below $1.90 PPP: Pakistan 7.9% India 21.2%

Below $3.10 PPP: Pakistan 43.6% India 58%

http://povertydata.worldbank.org/poverty/region/SAS


Majumdar said...

Brof sb,

If the median Baki is wealthier than our Hindoo counterpart why is:

the hunger index worse for Bakiland than India (33.5 v/s 28.5 GHI score 2016, IFPRI)
the average Baki living shorter than the Indian (66 v/s 68 WHO)

could IEDs explain the difference?

Regards

Riaz Haq said...

Majumdar: "If the median Baki is wealthier than our Hindoo counterpart why is: the hunger index worse for Bakiland than India (33.5 v/s 28.5 GHI score 2016, IFPRI) the average Baki living shorter than the Indian (66 v/s 68 WHO)"

There's considerable body of evidence that raises serious questions about the veracity of WHI & WHO data you quote.

For example:

1. Pakistanis body mass index is higher than that of Indians. Pakistanis are taller and weigh more in spite of similar genes as Indians.


2. A UNDP report released in June 2016 said Pakistan’s MPI (Multi-dimensional poverty index) showed a strong decline, with national poverty rates falling from 55% to 39% from 2004 to 2015. India's MPI is much higher than Pakistan's. MPI goes beyond just income poverty. The Multidimensional Poverty Index uses a broader concept of poverty than income and wealth alone. It reflects the deprivations people experience with respect to health, education and standard of living, and is thus a more detailed way of understanding and alleviating poverty. Since its development by OPHI and UNDP in 2010, many countries, including Pakistan, have adopted this methodology as an official poverty estimate, complementing consumption or income-based poverty figures.

3. Recent World Bank report released in June 2016 says rising incomes of the poorest 20% in Pakistan since 2002 have enabled them to enhance their living standards by improving their diets and acquiring television sets, refrigerators, motorcycles, flush toilets, and better housing.


Decline in poverty led to an increase in dietary diversity for all income groups.

For the poorest, the share of expenditure devoted to milk and milk products, chicken, eggs and fish rose, as did the share devoted to vegetables and fruits.

In contrast, the share of cereals and pulses, which provide the cheapest calories, declined steadily between FY02 and FY14. Because foods like chicken, eggs, vegetables, fruits, and milk and milk products are more expensive than cereals and pulses, and have lower caloric content, this shift in consumption also increased the amount that people spent per calorie over time.

For the poorest quintile, expenditure per calorie increased by over 18 percent between FY02 and FY14. Overall, this analysis confirms that the decline in poverty exhibited by the 2001 poverty line is quite credible, and that Pakistan has done remarkably well overall in reducing monetary poverty based on the metric it set some 15 years ago, says the World Bank.

Majumdar said...

Brof sb,

Are you implying that findings of multilateral agencies like FAO and WHO are less reliable than those of an I-banker? And why does UNDP's HDI consistently put Bakiland lower than India.

Regards

Riaz Haq said...

Majumdar: "Are you implying that findings of multilateral agencies like FAO and WHO are less reliable than those of an I-banker? And why does UNDP's HDI consistently put Bakiland lower than India."

No, I'm not. What I am arguing is that you view and evaluate multiple data sources to reach your own conclusions.

For example, it is hard to believe that hunger is growing in Pakistan (as claimed by IFPRI) at a time when there is "staggering fall in poverty" as reported by the World Bank and UNDP.


It also makes no sense that malnutrition is increasing at a time when diets are experiencing significant improvement and diversity as seen in rising consumption of meat, chicken, dairy products, fruits and vegetables as reported by both private and public sources in Pakistan.


It also seems improbable that Pakistan HDI is lower than India's when India's MPI is so much worse than Pakistan's. This question of discrepancy has been answered OPHI's Sabina Alkire as follows:

Because the AF (Alkire & Foster) methodology is multidimensional, there is a chance it might be confused with the
Human Development Index (HDI), which aggregates across achievements in health, education, and
standard of living. In fact, the two measure very different things. The AF methodology (and its particular
example of the MPI) measures poverty: it identifies who is poor and ignores the data of the nonpoor. In
contrast the HDI is a welfare index based on three marginal distributions that combines the aggregate
dimensional achievements of all people (not just the poor) into one overall score. While the HDI may be
limited in terms of data, dimensions, and methodology, it has helped bring into view people’s
achievements in non-monetary spaces, and made it possible for other categories of multidimensional
measures (such as poverty measures) to be envisioned.

http://www3.qeh.ox.ac.uk/pdf/ophiwp/OPHIWP043.pdf

Shams said...

India's official $ PPP is 10+ % better than Pakistan's $ PPP. In about 90% of Indian cities and villages, that power parity is over 25% better than Pakistan. It is so because India manufactures nearly everything they consume.

Riaz Haq said...

Shams: "India's official $ PPP is 10+ % better than Pakistan's $ PPP. In about 90% of Indian cities and villages, that power parity is over 25% better than Pakistan. It is so because India manufactures nearly everything they consume."

Let me see if I can help educate you little about the subject under discussion.

First, I hope you know the difference between income and wealth. The Credit Suisse report is about wealth, not income.

Wealth accumulates from part of the income that you do not spend on consumption. World Bank's International Comparisons Program (ICP 2011) shows that cost of living in Pakistan is lower than in India. And Pakistan's underground economy is larger than India's.

http://www.riazhaq.com/2014/04/world-bank-icp-2011-calculates-pakistan.html

http://www.riazhaq.com/2012/11/pakistans-gdp-grossly-underestimated.html

As to your claim that "India manufactures nearly everything they consume", let me help you with some facts here:


1. India's manufacturing value added per capita is about the same as Pakistan's. it still sits at a very low 142nd position terms of manufacturing value added per capita, according to the United Nations Industrial Development Organization's Industrial Development Report 2016. Pakistan's manufacturing value added is ranked 146th by the same report.

http://www.riazhaq.com/2016/08/indias-70th-independence-day-is-make-in.html

2. India runs huge trade deficits year after year because it imports bulk of of manufactured products it needs from China and elsewhere.


http://www.riazhaq.com/2010/05/soaring-chinese-imports-worry-india.html


Here's an excerpt of a piece by Indian entrepreneur Jaithirth Rao published by Indian Express:

"Uday Kotak said a few months back, in the course of an interview, that he was amazed that in his new office in Mumbai, not one of the furniture or fixture items were made in India. My friend Rahul Bhasin conducted a similar exercise in his office in Delhi and discovered pretty much the same thing. The carpet is from China, the furniture is from Malaysia, the light fixtures are from China, the glass partition is from all places, Jebel Ali in the Middle East and so on. Kotak went on to add that even Ganesha statues are no longer made in India. They are imported from China."

http://indianexpress.com/article/opinion/columns/how-they-killed-our-factories/

Anonymous said...

This is HILARIOUS---
https://www.washingtonpost.com/world/asia_pacific/pakistan-blast-kills-5-wounds-dozens/2016/11/25/dc220db0-b320-11e6-bc2d-19b3d759cfe7_story.html

The AP story is from "Jalalabad, Pakistan".
It speaks of "Pakistan’s eastern Nangarhar province".

When did Afghanistan become a part of Pakistan? Did the ISI do this?

nayyer ali said...

India has an extraordinarily skewed wealth distribution. In the CS report it has 80 billionaires. Its ratio of billionaires to millionaires is the highest in the world, much higher than in the US or China. I wonder if there is even a single billionaire in Pakistan.
I do think that in general the average Pakistani is better off than the average Indian, primarily because the lower half of the population in India lives in a squalor that just doesn't really exist in Pakistan. Some of this is due to its inherent stratification due to the discrimination faced by Muslims and Dalits and other lower caste Hindus. PAkistan's more homogeneous society (in terms of religion and living standard, it is not homogenous ethnically speaking) allows the vast majority at least a chance to get ahead.
The quaitly of the data is poor, as CS acknowledges. On some measures India has a higher per capita income, but I think that is partially due to the fact that Pakistan has not rebased its GDP calculation in a long while. Is that going to happen soon, and will it have a big effect on the total GDP number?

Riaz Haq said...

nayyar ali: "I wonder if there is even a single billionaire in Pakistan. "

There's at least one living and working in Pakistan---Mian Mohammad Mansha---reportedly worth $2.5 billion. His fortune came from privatization of Muslim Commercial Bank (MCB).

Other billionaires, such as Shahid Khan and Anwar Pervez, are dual citizens who live outside Pakistan.

Some of Pakistan's politicians, including Sharif and Zardari, are alleged billionaires in US$.


nayyar ali: " Is that going to happen soon, and will it have a big effect on the total GDP number?"

It seems likely given the following excerpt from State Bank of Pakistan Annual Report 2014

"In terms of LSM growth, a number of sectors that are showing strong performance; (for example, fast moving consumer goods (FMCG) sector; plastic products; buses and trucks; and even textiles), are either under reported, or not even covered. The omission of such important sectors from official data coverage, probably explains the apparent disconnect between overall economic activity in the country and the hard numbers in LSM."


Economists have long argued that Pakistan's official GDP figures significantly understate real economic activity in terms of both production and consumption.

Pakistan has changed a lot since 2006 in terms of economy and demographics. The World Bank moved Pakistan from a low-income to middle-income country in 2007. Pakistan is much more urbanized and more middle class now than it was in 2006. Pakistan's large scale manufacturing (LSM) sector has changed to respond to meet the rising new product demands of the country's growing middle class consumers. Its time for Pakistan Bureau of Statistics (PBS) to conduct a new manufacturing census and Pakistan Census Bureau to do a population census to paint a more accurate picture of the country's demographics and economy now.


http://www.riazhaq.com/2015/01/state-bank-pakistans-actual-gdp-higher.html

Sort Pal said...

The wealth report is by no means should be followed like an financial bible. The Economist says(November 26th, 2016), "Unlike many studies of prosperity and inequality, this one counts household assets rather than income. The data are patchy, particularly at the bottom and top of the income scale. Furthermore, The Wealth Report 2016 also classifies "wealth data quality" of each country from very good to very poor.

The Wealth report indicates data from Pakistan is of poor quality while that from India it is of fair quality.

Riaz Haq said...

Sort Pal: "The Economist says(November 26th, 2016), "Unlike many studies of prosperity and inequality, this one counts household assets rather than income. The data are patchy, particularly at the bottom and top of the income scale. Furthermore, The Wealth Report 2016 also classifies "wealth data quality" of each country from very good to very poor. The Wealth report indicates data from Pakistan is of poor quality while that from India it is of fair quality."


First, it is called "Global Wealth Databook 2016" for a reason; it looks at wealth and not income.The two are distinct.

Second, The Economist does not dismiss as you are.

Third, no single data point or report can by itself be trusted unless it is corroborated by other data. That's why I shared the World Bank data about the assets owned by people the bottom quintile (20%) income group. It shows that the ownership of relatively more expensive assets increased even among the poorest. In the bottom quintile, the ownership of motorcycles increased from 2 to 18 percent, televisions from 20 to 36 percent and refrigerators from 5 to 14 percent.


http://documents.worldbank.org/curated/en/935241478612633044/pdf/109961-WP-PUBLIC-disclosed-11-9-16-5-pm-Pakistan-Development-Update-Fall-2016-with-compressed-pics.pdf

Riaz Haq said...

Here's The Economist magazine on Credit Suisse wealth report:

http://www.economist.com/news/business-and-finance/21710771-new-analysis-how-worlds-wealth-distributed-you-may-be-higher-up

IF YOU had only $2,220 to your name (adding together your bank deposits, financial investments and property holdings, and subtracting your debts) you might not think yourself terribly fortunate. But you would be wealthier than half the world’s population, according to this year’s Global Wealth Report by the Crédit Suisse Research Institute. If you had $71,560 or more, you would be in the top tenth. If you were lucky enough to own over $744,400 you could count yourself a member of the global 1% that voters everywhere are rebelling against.

Unlike many studies of prosperity and inequality, this one counts household assets rather than income. The data are patchy, particularly at the bottom and apex of the pyramid. But with some assumptions, the institute calculates that the world’s households owned property and net financial assets worth almost $256trn in mid-2016. That is about 3.4 times the world’s annual GDP. If this wealth were divided equally it would come to $52,819 per adult. But in reality the top tenth own 89% of it.

That lucky tenth now includes over 44m Chinese, about 4.4% of the country’s adult population. A far greater number (almost half of China’s adults) cluster in the next three deciles down. Closer to the bottom of the pyramid, there is a similar bulge of Indians in the second and third deciles (with wealth between $30 and $603). Below them, the bottom tenth is a peculiar mix. It is populated by poor countries, where many people have nothing, and rich ones, where people can own very much less than that. It includes a surprising number of Americans (over 21m), whose debts outweigh their assets. But most Americans are much better off. Over 40% belong to the top tenth of the global wealth distribution (and over 18m belong to the global 1%). Some of those railing against the global elite probably do not know they belong to it.

Majumdar said...

Brof sb,

It also seems improbable that Pakistan HDI is lower than India's when India's MPI is so much worse than Pakistan's.

How about flipping the question around? Is it probable that MPI is so far worse for India than it is for Pakiland if its HDI is better? The answer is right out there. The MPI calculation you refer to was done for India on the basis of 2005-06 data while for Pakiland it has been updated for 2013. But HDI has been computed on the same baseline year for both countries.

Regards

Riaz Haq said...

Majumdar: "The MPI calculation you refer to was done for India on the basis of 2005-06 data while for Pakiland it has been updated for 2013. But HDI has been computed on the same baseline year for both countries"

Pakistan has always done better on MPI than India. As to using more recent data, it'll make little difference because the income poverty component of MPI would still be much worse for India. Here's the World Bank data on income poverty:


Below $1.90 PPP: Pakistan 7.9% India 21.2%

Below $3.10 PPP: Pakistan 43.6% India 58%

http://povertydata.worldbank.org/poverty/region/SAS


Income poverty is what reduces people's access to food, health care, education and sanitation in the absence of any real social safety net.

Riaz Haq said...

#Pakistan expects bumper harvest of #cereals #wheat, #rice in 2017 with better prices for farmers http://reliefweb.int/report/pakistan/giews-country-brief-pakistan-30-november-2016?utm_medium=social&utm_campaign=shared&utm_source=twitter.com … via @reliefweb

Favourable prospects for 2017 wheat crop production

Planting of the 2017, mostly irrigated, ‘’rabi’’ (winter) wheat crop is currently underway and will continue until mid-December. Near-average irrigation water supplies in the main wheat-growing areas of Punjab and Sindh provinces are benefitting plantings and early crop development in these areas. However, below-normal rains hindered planting operations in the minor rainfed-producing ‘’barani areas’’, located in the northern parts of Punjab Province.

Current official forecasts put the 2017 wheat output at a record level of 26 million tonnes, 2 percent up from the 2016 bumper output. This forecast rests on expectations that adequate water availability in the main reservoirs will boost plantings, while the good supply of quality seeds, fertilizers and herbicides will increase average yields.

Above-average 2016 summer cereal crops estimated

Harvesting of the 2016 summer (monsoon) season maize and rice crops is almost complete. FAO estimates the 2016 paddy and maize outputs at 10.3 million tonnes and 5.2 million tonnes, respectively, slightly above the previous year’s production. This result follows generally favourable weather conditions during the cropping season, coupled with an adequate water supply for irrigation and good access to fertilizers and other basic inputs.

Rice exports to increase in 2016

FAO forecasts rice exports in 2016 at 4.4 million tonnes, representing a 7 percent increase from the 2015 level, thanks to competitively priced non-basmati supplies.

Wheat exports in the 2016/17 marketing year (May/April) are forecast to increase from the previous year’s low level to 800 000 tonnes, in line with the 2016 overall good output and large carryover stocks.

Prices of wheat and wheat flour strengthened in recent months

Prices of wheat and wheat flour, the country’s main staples, have strengthened in recent months, following seasonal patterns, but remained below their year-earlier levels owing to good availabilities following a bumper 2016 crop.

Food security conditions overall stable but concerns remain in Tharparkar District and northern Pakistan

Overall, the food supply situation is stable following two consecutive years of good harvests and large carryover stocks of the main staples. However, food security concerns remain in some areas, particularly in Tharparkar District and northern Pakistan.

In Tharparkar District (southeastern Sindh Province) and the surrounding areas of Sindh Province, a below-average drought-affected cereal production for the third consecutive year, coupled with losses of small animals, especially sheep and goats, has aggravated food insecurity and caused acute malnutrition.

Food insecurity has been exacerbated by the lingering negative impact of the 2015 floods; the provinces of Sindh, Punjab and Khyber Pakhtunkhwa were most affected. Official assessments reported the loss of lives and severe damage to housing, infrastructure and agriculture. Households in northern parts of the country have also not fully recovered from the impact of the earthquake in October 2015.

The Federally Administered Tribal Areas (FATA) and Khyber Pakhtunkhwa, located in northern Pakistan, are still affected by the return process after the large scale displacement (312 000 families or around 1.9 million people) due to insurgency in FATA. According to OCHA estimates, as of October 2016, over 1.3 million refugees remained displaced in northern Pakistan. These populations rely mainly on humanitarian assistance, including food aid, healthcare and other necessities.

Riaz Haq said...

#Pakistan plans zero hunger, family farming projects http://pakobserver.net/zero-hunger-family-farming-project-on-cards/ … via @Pakistan Observer

The government is in process of preparing a pilot project on National Zero Hunger and Family Farming Programme which would be implemented in most food insecure areas. A specially established National Zero Hunger Cell in Ministry of National Food Security and Research was tasked to prepare the pilot project before launching of larger National Zero Hunger Programme.
Official sources on Monday said in order to initiate the process of preparation of the pilot programme, a national mapping exercise was jointly undertaken by World Food Programme (WFP), Food and Agriculture Organization (FAO) and the concerned ministry to gain better understanding of ongoing programmes relating to school feeding, nutrition support, income generation and family farming support.
The sources said during the mapping exercise it was agreed that provinces would be taken into confidence before finalization of the programme. The programme will be implemented in most food insecure areas, in each of the four provinces of the country, in coordination with provincial governments.
The pilot project will help analyze the effects of the proposed intervention in each province and to incorporate lessons and experiences gathered into a more comprehensive programme.
Answering a question regarding levels of hunger and malnutrition in the country, the sources said the last National Nutrition Survey (NNS) was conducted by Aga Khan University’s Division of Women and Child Health, Ministry of Health and United Nations Children’s Fund (UNICEF).
Ministry of National Health Services is also planning to conduct a National Nutrition Survey in 2017-18 by which latest information will be available. It is also important to mention that during the last three years in Pakistan food items like wheat, rice, maize, potatoes, onion, mango, citrus; palm dates, milk, meat etc. were produced in surplus as per country requirement.
The sources said for revitalization of agriculture, Federal government has taken some steps including Prime Minister’s Kissan Package, concessions of taxes and duties, reduction in prices of fertilizer, enhancement in target of agriculture credit and also guarantee scheme for small and marginalized farmers, reduction of cost of credit, concessional electricity tariff for Agriculture Tube Wells, concession of customs duty for Dairy, Livestock & Poultry Sectors.—APP

Riaz Haq said...

How will #Pakistan economy fare in 2017? #CPEC #IMF #SBP
http://www.khaleejtimes.com/how-will-pakistan-fare-in-2017


Finance Minister Ishaq Dar is claiming that Pakistan's GDP growth will rise to even 5.7 per cent as compared to FY-16.

---

The SBP, the central bank, has just unveiled its SBP Annual Review - 2015-16, which sheds light on most aspects of the country's economy, and previews the microeconomic targets for FY-17 in the light of the actual performance in FY-16.

The GDP growth in FY-17 is set at 5.7 per cent, but the SBP expects it to a range between five and six per cent. "If a higher projection is achieved, it will so for the first time since 2007. It will also a signal that the economy has fundamentally moved up to a higher growth trajectory. The current indications, based on the first four months of FY-17, are that it may not happen because farm output is down and it is not likely to rise in whole of FY-17. The Large Scale Manufacturing industry, which showed a rise of just two per cent in July-September as compared to the target of the planned target of six per cent," said Dr Hafeez Pasha, the former Finance Minister of Pakistan, who currently heads Karachi-Pakistan based Institute of Business Administration (IBA).

With limited growth in sectors like industry, trade, exports and banking but construction and real estate going up, and if the present trends continue, "the GDP growth rate is unlikely to exceed four per cent. This is substantially below the SBP projection of five to six per cent growth rate," Dr Pasha said.

The government's inflation rate target is six per cent while the SBP projects it at 4.5 to 5.6 per cent in FY-17. The actual inflation in the first four months, July-October, it was four per cent. "As such, the inflation rate projection by SBP of some increase in the rate of inflation appears to be valid," Dr Pasha also said.

The SBP expects the current account deficit in the range of 0.5 to 1.5 per cent of the GDP in FY-17, while the government puts it at around 1.5 per cent. This optimism is based on the revival of exports by five per cent. In fact, exports in the first four months of this fiscal have declined by six per cent and home remittances sent by Pakistanis working overseas are down by one per cent. The current account deficit has widened by 6.3 per cent, and already has reached 0.6 per cent of GDP.

But, where is progress and prosperity ending up? This stark question stems from the independent research and analysis that clearly confirmed this week that poverty in Pakistan is, in fact, rising, despite all claims by the government and multilateral institutes about economic progress and growth.

Christine Lagarde, managing director of the IMF, endorsed the official view of the pro-poor analysts, during her visit to Pakistan this week. But, addressing bankers and economists, Lagarde asked Pakistan to do more for the poor. She said: "Although more than 1.5 million poor households are now benefiting from targeted social assistance than three years ago, more efforts are required to end the agonies of the poor."

"Applauding other good efforts of Prime Minister Nawaz Sharif's government, Lagarde pointed out that power outages have gradually decreased and the financial performance of the power sector is strengthening. A country-wide strategy to improve the business climate is being implemented," she said at a joint press conference with Finance Minister Ishaq Dar. She also urged Pakistan that "corruption or the perception of corruption can only be eradicated through honesty, transparency and accountability."

Riaz Haq said...

Not everyone buys the claim that #India's cash ban will make it more #digital. #Demonitization #Modi http://bloom.bg/2g0gx2U via @markets

After first selling India’s cash ban as a strike against corruption, Prime Minister Narendra Modi has since pushed a tantalizing side benefit.

The move to eradicate 500 rupee ($7.3) and 1,000 rupee notes, representing 86 percent of currency in circulation, would also force hundreds of millions of cash-dependent Indians to use more online payments and bank accounts. That could be a key growth driver in years to come, boosting tax receipts as the black economy is turned white and increasing bank deposits that can be used for lending.

“There is no reason we cannot move towards a cashless India,” Modi said Nov. 27, reinforcing Finance Minister Arun Jaitley’s earlier assertion that the cash ban “will take India towards a cashless economy."

But on the streets in New Delhi, it’s not quite turning out that way.

Deepak Kumar, a 22-year-old security guard who earns 7,500 rupees a month, tried to open an account with a New Delhi branch of the State Bank of India after receiving his salary in old notes. The bank refused, telling him to return in January, he said.

“They said we’re only looking after our customers, we don’t have time to add new customers,” Kumar said, adding he wouldn’t try to open an bank account again. “This cashless thing is good for big people, but for small people like us, it doesn’t mean anything."

Such anecdotes are fueling doubts the demonetization move will lead to a substantial shift to online or mobile payments, particularly among the vast population of poor Indians who lack the necessary bank accounts.

India’s Cash Chaos by the Numbers: Guide to Banknote Revamp

Cash dependent

Problem is, while e-commerce is booming, India remains one of the most cash-dependent countries in the world.

Just over half of the nation’s adults have bank accounts, a precursor to using digital payments. Roughly 98 percent of all transactions are in cash, with 11 percent of consumers using a debit card in 2015, while most retailers don’t accept cards.

In the days after Modi’s Nov. 8 announcement, digital payment companies such as Paytm Mobile Solutions Pvt. Ltd. lauded the move in newspaper ads and said digital payments usage was up. But most new customers will likely be wealthier urbanites, said Saksham Khosla, a research analyst at the Carnegie Endowment for International Peace India.

“I’m very doubtful that this will lead to any meaningful financial inclusion," Khosla. "It does seem a little tacked on. They’re trying to find more and more uses for demonetization than may have originally been intended."

Flip-Flops: U-Turns Blight Modi’s Cash Ban, Leaving Indians Outraged

Part of the problem is the poor penetration of banks in India’s villages -- there are only 18 ATMs per 100,000 citizens in India, according to the World Bank, compared to 129 in Brazil. Additionally, just 22 percent of Indians use the Internet “at least occasionally” and only 17 percent have a smartphone, according to a Pew Research Center report.