Wednesday, January 18, 2017

Comparing Median Income & Wealth Data For India & Pakistan

Top 1% of Indians own 58% of wealth in India, according to a recent report by Oxfam as published by Wall Street Journal.  The report said the global average for wealth ownership of the top 1% is 51%.

Source: Oxfam



The income and wealth concentration in the hands of the richest top 1% skews the average per capita incomes and makes the material well-being of average citizen look better than it is.  The best way to measure how well or poorly an average citizen is doing is to look at the median income and wealth, not the average or mean. The median income reflects how much the person at the 50th percentile of the income distribution earns, giving us a better picture of the well-being of a “typical” individual in a given country. Similarly, median wealth represents how much wealth a person at the 50th percentile of the wealth distribution has accumulated.

Median Incomes in South Asia:

Centre for Global Development has estimated 2014 median incomes of countries around the world. Here's what it reported for India and Pakistan:

 Pakistan: Median Income per capita: $,1204.50, Median Household Income: $6,022.50 Mean (Average) per capita $4,811.31

India Rural: Median per capita $930.75 Median Household $4,653.75 Mean (Average) per capita $5,700.72

India Urban: Median per capita $1295.75 Median Household $6,478.75 Mean(Average) per capita: $5,700.72

It shows that India's urban median income is slightly higher than Pakistan's median income. However, India's rural median income is significantly lower than Pakistan's.  It should be noted that 70% of India's population lives in rural areas, much higher than Pakistan's 61%, according to the World Bank.

Using India's Census figures of 30% urban and 70% rural population, the median per capita income for all of India works out to $1,040.25, about 15.8% lower than Pakistan's median per capita income of $1,204.50.

Source: Bloomberg

Median Wealth in South Asia:

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




Summary:

Median per capita income in Pakistan is 15.8% higher than in India, according to the World Bank PovcalNet figures. Median per capita wealth in Pakistan in Pakistan is 120% more than in India, according to Credit Suisse Global Wealth Report 2016.  The median figures reflect the financial situation of the people at the 50th percentile of the income and wealth distributions in each country.

The income and wealth concentration in the hands of the richest top 1% skews the average per capita incomes and makes the material well-being of average citizen look better than it is.  The best way to measure how well or poorly an average citizen is doing is to look at the median income and wealth, not the average or mean. Median income and wealth figures in South Asia show that average Pakistanis are better off economically than their counterparts in India.

Related Links:

Haq's Musings

Credit Suisse Global Wealth Report 2016

Pakistan's Middle Class Larger and 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

49 comments:

Neal said...

The flaws become very apparent if you look at the full report and its results rather than tunnel visioning into two countries

Riaz Haq said...

Neal: "The flaws become very apparent if you look at the full report and its results rather than tunnel visioning into two countries "

I have quoted data from at least 3 different reports issued by three different organizations: Credit Suisse, Oxfam and the Center for Global Development, research wing of the World Bank.

Which report do you have a problem with? Or do you dislike any report that reflects poorly on India?

Neal said...

Yet Indians are expected to live longer, half their babies die in their 1st year compared to Pakistan and incidence of malnourishment and child stunting is much lower in India.

If you read up on how disjointed and haphazard income data is gathered in developing countries compared to health and literacy data, you would understand better why this strange discrepancy exists.

Riaz Haq said...

Neal: "Yet Indians are expected to live longer, half their babies die in their 1st year compared to Pakistan and incidence of malnourishment and child stunting is much lower in India."

I guess your poor education prevents from understanding the difference between average and median.

Average is skewed by a few high data points but the median reflects the mid-point which divides populations in two halves.

Riaz Haq said...

The Income Of The Average Indian Is Significantly Lower Than The Average Income Of India

http://swarajyamag.com/economy/the-income-of-the-average-indian-is-significantly-lower-than-the-average-income-of-india

"As Charles Wheelan writes in Naked Statistics: “The mean, or average, turns out to have some problems in that regard, namely, that it is prone to distortion by “outliers”, which are observations farther from the center.”

So basically, the Ambanis, Adanis, Birlas and Tatas, of the world, essentially India’s rich, push up the average income of India i.e. the per capita income. As Wheelan writes: “The average income...could be heavily skewed by the megarich.”

In this scenario, the average income does not give us a correct picture. Further, it is safe to say, that the income of the average Indian is lower than the average income of India.

At this point it is important to introduce another term i.e. the median. As Wheelan writes: “The median is the point that divides a distribution in half, meaning that half of the observation lie above the median and half lie below.”

Hence, the median income is the income of the average Indian. Given this, the median income is the right representation of the income of the average Indian. This is because the rich outliers (the Ambanis, the Adnanis, the Tatas and the Birlas) are taken into account. Data from World Bank shows that the top 10 percent of India’s population makes 30 percent of the total income. And this pushes up the per capita income."

nayyer ali said...

The problem of wealth inequality is much worse in societies that have intense social stratification, and less so in more homogeneous societies. Pakistan is an example of the latter, while India is the preeminent example of the former. The intense discrimination against Dalits, Muslims, and other lower castes creates a deeply unequal economy, hence a much lower median income.

Riaz Haq said...

Nayyer Ali: " The problem of wealth inequality is much worse in societies that have intense social stratification"

Agreed.

A 2011 World Bank report titled "Perspectives on poverty in India : stylized facts from survey data"
discusses various causes of high poverty and higher inequality in India, particularly discrimination against certain castes and tribes who make up most of the poor. It describes exclusion based on caste (SC or scheduled caste) and tribes (ST or scheduled tribes) and describes it as follows:

The Hindu hierarchy is said to have evolved from different parts of the body of Brahma—the creator of the universe. Thus, the Brahmans, who originated from the mouth, undertake the most prestigious priestly and teaching occupations. The Kshatriyas (from the arms) are the rulers and warriors; the Vaishyas (from the thighs) are traders and merchants. The Shudras, from the feet, are manual workers and servants of other castes. Below the Shudras and outside the caste system, lowest in the order, the untouchables engage in the most demeaning and stigmatized occupations (scavenging, for instance, and dealing with bodily waste).

Similarly, the scheduled tribes are also referred to as the Adivasis. .... we use the terms SC and ST, as these are standard administrative and survey categories. In the text we use the terms Dalits and Adivasis or tribals interchangeably with SCs and STs, respectively.

http://documents.worldbank.org/curated/en/103691468041447795/Main-report

Mayraj said...

fyi

http://fusion.net/story/380433/oxfams-davos-wealth-inequality-wrong-misleading/


What Oxfam’s misleading stat gets wrong about inequality

Riaz Haq said...

Mayraj: " What Oxfam’s misleading stat gets wrong about inequality"

Credit Suisse Global Wealth Report 2016 puts the wealth of India's top 1% at 58.4%, pretty close to what Oxfam does.

The share of the top 1% is up from 53% last year. In the last two years, the share of the top 1% has increased at a cracking pace, from 49% in 2014 (when Modi became PM) to 58.4% in 2016.

http://www.livemint.com/Money/MML9OZRwaACyEhLzUNImnO/The-richest-1-of-Indians-now-own-584-of-wealth.html

Anonymous said...

While India has higher per capita income than Pakistan, why is the median income lower?

https://www.quora.com/While-India-has-higher-per-capita-income-than-Pakistan-why-is-the-median-income-lower

I’m not familiar with data on the distribution of income in India or Pakistan. The distributional data I know come from household surveys on consumption expenditure: India’s National Sample Survey and the Pakistan Social and Living Standards Survey. Both countries conducted surveys in 2011-2012, so that’s probably the best point comparison.

Based on those survey data, as summarized in the World Bank’s PovcalNet data set, both the mean and the median of household survey consumption per capita were higher in Pakistan than in India in 2011-2012. The estimated median consumption figure for India is computed as a weighted average of the urban and rural medians, based on population.

According to these data, mean consumption per capita in India was about 89% of that in Pakistan, while median consumption was about 86%. Stated differently, median consumption in India was 77.8% of mean consumption, while in Pakistan the ratio was 80.4%. The fact that India’s median is proportionally lower than its mean reflects the somewhat higher degree of inequality in India, as reflected in the Gini coefficients: 35.2 in India versus 30.9 in Pakistan. If there are data that show that India’s mean income is higher but median income is lower than in Pakistan, that would also reflect the higher degree of inequality in India.

At this point you might be wondering, how could Pakistan have higher mean consumption than India, when its GDP per capita is well below India’s when measured at PPP? (India $5,730 versus Pakistan $4,701, both figures from 2015.) The answer is that India has a much higher savings rate: 29.8% versus 9.0% in Pakistan. That higher savings rate helps fuel India’s faster growth rate, but leaves less for current household consumption. As a result, household living standards in India currently trail those in Pakistan, but are growing at a much higher rate and will soon overtake those in Pakistan.

Rakesh Kumar said...

I am amazed at efforts by Pakistanis to prove that avg pakistanis is richer than Indian. If that is the case, how come in sales of all middle class aspirational items like car, air travel, iphones, ipads, India is far ahead of Pakistan. MNCs make a bee line for india for sales to its millions of middle class, not rich. After all how many cars can the same rich buy again and again.

My theory is that Pakistanis believe in this to cover up their failures and indulge in feel good. As Ghalib said it "khayal acha hai"

Rakesh Kumar said...

For Pakistanis: The world is moving towards judging an economy not by GDP numbers (which can be easily fudged), but by micro indicators like car sales, travel business etc. I believe every country fudges its numbers, with China probably right at top.

In those indicators Pakistan is quite poor. That does not mean things can not change in future.

Riaz Haq said...

RK: " For Pakistanis: The world is moving towards judging an economy not by GDP numbers (which can be easily fudged), but by micro indicators like car sales, travel business etc. I believe every country fudges its numbers, with China probably right at top."


Talking about fudging, world's top economists including India's ex Central Banker believe Modi is fudging India's GDP.

http://www.riazhaq.com/2015/04/indias-new-gdp-figures-modi-takes-bs.html

You are wrong to talk about shift to micro indicators like car sales, business travel as the new trend.

The biggest issue right now facing policymakers, business executives and economists is growing inequality that my post addresses.

Here's an excerpt from a Guardian report on World Economic Forum 2017:

The WEF’s annual global risks report – culled from 700 experts – found that rising income and wealth disparity, and increasing polarisation of sectors of society, were ranked first and third among the underlying trends that will determine the shape of the world in the next decade.

https://www.theguardian.com/business/2017/jan/11/inequality-world-economy-wef-brexit-donald-trump-world-economic-forum-risk-report

Jon Copeland said...

"Give me a point of view and I can surely back it up with a statistic."

Someone famous said that.

You have to look at education, health, economic opportunity and such factors in addition to income to make a true assessment.

Riaz Haq said...

JC: "You have to look at education, health, economic opportunity and such factors in addition to income to make a true assessment. "

I agree.

There are indicators that do that.

Such as

1. Inclusive Development Index (IDI) on which Pakistan ranks 56 , well above India at 60, among 79 developing economies.

Inclusive Development Index (IDI) is based on 12 performance indicators. In order to provide a more complete measure of economic development than GDP growth alone, the index has three pillars -- Growth and Development, Inclusion and Intergenerational Equity, and Sustainability.

http://www3.weforum.org/docs/WEF_Forum_IncGrwth_2017.pdf


2. Multidimensional Poverty on which Pakistan does better than India in South Asia.

The MPI brings together 10 indicators, with equal weighting for education, health and living standards (see table). If you tick a third or more of the boxes, you are counted as poor.

"India is home to over 340 million destitute people and is the second poorest country in South Asia after war-torn Afghanistan...In South Asia, Afghanistan has the highest level of destitution at 38%. This is followed by India at 28.5%. Bangladesh (17.2%) and Pakistan (20.7%) have much lower levels" Colin Hunter, Center for Research on Globalization

http://www.riazhaq.com/2014/10/multi-dimensional-poverty-index.html


3. Intergenerational Economic Mobility:

A 2012 study of 22 nations conducted by Prof Miles Corak for the Organization for Economic Cooperation and Development (OECD) has found income heritability to be greater in the United States, the United Kingdom, Italy, China and 5 other countries than in Pakistan.

Corak calculates that the intergenerational earnings elasticity in Pakistan is 0.46, the same as in Switzerland. It means that a difference of 100% between the incomes of a rich father and a poor father is reduced to 46% difference between their sons' incomes. Among the 22 countries studied, Peru, China and Brazil have the lowest economic mobility with inter-generational elasticity of 0.67, 0.60 and 0.58 respectively. The highest economic mobility is offered by Denmark (0.15), Norway (0.17) and Finland (0.18).

India's IGEL is 0.61 for non-SC/ST households, according to Viktoria Hnatkovska.....meaning that 100% difference in incomes rich and poor fathers' is reduced to 61% difference between their sons, compared to much lower 46% difference in Pakistan,


http://www.riazhaq.com/2012/11/pakistan-offers-higher-economic.html

Riaz Haq said...

Pakistan’s per capita income has marginally grown to $1,561 but targets to increase investment and savings – the two most critical economic indicators after national output goal – have been missed again during the outgoing fiscal year.

The government’s inability to increase investment as percentage of total size of national economy is probably the biggest failure after it failed to achieve outgoing fiscal year’s gross domestic product (GDP) target of 5.5%.

Per capita income: A Pakistani now makes $1,513 a year

Missing of the targets on savings, investment and GDP growth also puts a question mark over the acclaimed structural reforms introduced under the $6.2 billion International Monetary Fund bailout package.

Pakistan has one of the lowest investment and savings rates in the region and the world, obstructing progress towards a sustainable and inclusive economic growth path.

Slow progress on the China-Pakistan Economic Corridor due to lack of political vision and usual bureaucratic inefficiency also pulled back investments.

Sources said in dollar terms the per capita income has grown by only 2.9% to $1,561 – up $44 in the outgoing fiscal year 2015-16. Despite a marginal increase in per capita income, the country continues to be in the league of low middle-income countries. It needs to enhance per capita income to $4,000 to be labelled a middle-income country.

Pakistan faces Rs3.3 trillion revenue black hole, says IMF

In rupee terms, there was a 5.8% growth in per capita income that increased to Rs162,568.

To arrive at the per capita income figure, the Pakistan Bureau of Statistics – the government’s statistical arm – estimated about 2% growth in the country’s population that reached 193.56 million this year. It then divided the total national income with the number of people and arrived at per capita income of $1,561.

In absolute terms, the PBS has estimated addition of about five million people in a single year.

Like the previous year, in the current fiscal year too the federal government has again failed to deliver on the two most critical economic indicators. It missed the targets of investment and savings with wide margins.

The investment-to-GDP ratio slipped to 15.2% against the target of 17.7%, said the sources. The ratio was lower than last year’s revised rate of 15.5%. Savings remained almost stagnant at 14.5% of GDP, shy of the target of 16.8%.

http://tribune.com.pk/story/1108913/par-performance-pakistans-per-capita-income-rises-slightly-1561/

Riaz Haq said...

Reports prepared by the World Bank (WB) have revealed that the per capita income of Indians is often more than the per capita income of the average Pakistani.
Using the globally accepted Purchasing Power Parity or PPP method to analyze and compare the per-capita income of various nations, reports prepared by the World Bank found that every Indian earns around USD 5,630, while a Pakistani earns around USD 5,090.
A closer look at the statistical evidence provided in these WB reports reveals that one U.S. dollar is equal Pakistani Rupees 10.4.56, while one U.S. dollar is equivalent to Indian Rs.67, and therefore, an Indian earns 54,000 Pakistani rupees more than his Pakistani counterpart or Indian Rs 36,100 more than what a Pakistani individual earns in a year.

http://indianexpress.com/article/india/india-news-india/indians-per-capita-income-is-more-than-pakistanis-world-bank-report-2868430/

Anonymous said...

Even if we forget the statistics, every foreign writer who has visited India and Pakistan has come to the same conclusion that the poverty level in Pakistan is much lower than in India.

To me, the funny part is that both countries are only above Sub-Saharan Africa in the UN-HDI index but are always trying to show that we are better than the other.

2016 has proved one thing, India is irrelevant for Pakistan. We should put our house in order and ignore India totally.

G. Ali

Anonymous said...

Even if we forget the statistics, every foreign writer who has visited India and Pakistan has come to the same conclusion that the poverty level in Pakistan is much lower than in India.

Because savings/gdp and investment/gdp and tax receipts/gdp is 2X+ of Pakistan.PAkistan is financing current consumption at the expense of future capacity.

Also the vast bulk of Indian investment is domesticaly financed 600 billion vs 50 billion FDI thus immune to foreign exchange risk.

In Pakistan not only is the investment financed from abroad CPEC etc but even the government functioning is dependent on foreign aid.

These are facts which cannot wished away.

India is on a completely different league/trajectory than Pakistan.

Riaz Haq said...

Anon: "India is on a completely different league/trajectory than Pakistan"

I agree.

India is enriching a few at the expense of many. The share of the top 1% is up from 53% last year. In the last two years, the share of the top 1% has increased at a cracking pace, from 49% in 2014 (when Modi became PM) to 58.4% in 2016.

India is the poster child of unequal development as measured by Inclusive Development Index.

India's median per capita income of $1,040 (vs Pakistan's $1,204) is much less than the average per capita income $5,700 (versus Pakistan's $4,811).

India's median per capita wealth of $600 (vs Pakistan's $1,788) is much less than average per capita wealth of $3,835 (vs Pakistan's $4,595)

Median per capita income in Pakistan is 15.8% higher than in India, according to the World Bank PovcalNet figures. Median per capita wealth in Pakistan in Pakistan is 120% more than in India, according to Credit Suisse Global Wealth Report 2016. The median figures reflect the financial situation of the people at the 50th percentile of the income and wealth distributions in each country.

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.

Anonymous said...

"These are facts which cannot wished away."

Please tell that to the millions of people in India who commit suicide every year. I am sure that would be happy to hear that their children may not have anything to eat or drink, have no hope for the future and they may have to commit suicide tomorrow, but at least their country has less foreign debt.

Or maybe they don't count because after all they are from lower casts.

When we look at statistics, why do we ignore the fact the India's suicide rate is 10 time higher than Pakistan? The poverty level in Pakistan is lower, the middle class is bigger.

The mere fact that Indians get so upset whenever facts are mentioned is proof that all is not well in the lala land.

G. Ali

Jyotsna S, MBA said...

The automotive industry in India is one of the largest in the world with an annual production of 23.96 million vehicles in FY 2015-16. The automobile industry accounts for 7.1 per cent of the country's gross domestic product (GDP). The Two Wheelers segment, with 81 per cent market share or 19.4 million vehicles, is the leader of the Indian Automobile market, owing to a growing middle class and a young population.

Question: If not the middle class, who is buying these vehicles?

(In comparison, Pakistan automotive industry is 11.98 times smaller with annual production of 200,000 motor vehicles and 1.8 million two wheelers).

Riaz Haq said...

Jyotsna S, MBA: "Question: If not the middle class, who is buying these vehicles?"


Vehicle ownership rate in both India and Pakistan is extremely low at 18 per 1000 persons that translates into 1.8%.

Do you think these 1.8% represent middle class in either country? I don't think so.

http://www.nationmaster.com/country-info/stats/Transport/Road/Motor-vehicles-per-1000-people

Suresh said...

With due respect, I think the scooter/motor bike sales are made by middle class. Also, vehicle purchase is a household purchase not a individual one in a country like India

Riaz Haq said...

Suresh: "I think the scooter/motor bike sales are made by middle class."


In spite of the fact that the motorcycles are driven almost exclusively by men in Pakistan, 43% of Pakistanis report owning a motorcycle, according to Pew, petty close to 47% of Indians reporting owning a motorcycle.


http://www.pewresearch.org/fact-tank/2015/04/16/car-bike-or-motorcycle-depends-on-where-you-live/

Anonymous said...

Riaz Haq, please stop polluting the India minds with facts. Remember this is the nation that was using aeroplanes thousands of years and were travelling intergalacticaly?
G. Ali

Riaz Haq said...

The (World Bank) report ( The State of Social Safety Nets 2015) – which identifies India as a “lower middle income group” country – finds that all other BRICS countries, except China, spend a higher proportion of funds on social safety net. Thus, Brazil spends 2.42 per cent, Russia 3.30 per cent, China 0.70 per cent, South Africa 3.51 per cent, and South Africa 3.51 per cent of GDP.
Interestingly, even the two of India’s neighbours – Pakistan and Bangladesh – spend a higher proportion on social safety net, 1.89 per cent and 1.09 per cent.
The report says, “Despite having fewer resources for social safety nets, some lower-income countries allocate considerably more funds than the 1.6 percent average for developing countries”.

http://www.counterview.net/2016/02/india-poor-spender-of-social-safety-net.html

http://documents.worldbank.org/curated/en/415491467994645020/pdf/97882-PUB-REVISED-Box393232B-PUBLIC-DOCDATE-6-29-2015-DOI-10-1596978-1-4648-0543-1-EPI-1464805431.pdf

Riaz Haq said...

#India has been a post-truth society for years. #Modi #Trump #alternativefacts http://theconversation.com/india-has-been-a-post-truth-society-for-years-and-maybe-the-west-has-too-71169 … 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...

India is the second most unequal economy in the world, according to an Oxfam report released recently at the World Economic Forum. Oxfam India CEO Nisha Agrawal tells Himanshi Dhawan that demonetisation has only aggravated this inequality with no significant long-term benefits.

http://blogs.timesofindia.indiatimes.com/the-interviews-blog/57-billionaires-control-70-of-indias-wealth-india-is-second-most-unequal-economy-after-russia/

Oxfam’s new report ‘Economy for 99%’ claims that since 2015, eight men own the same amount of wealth as the poorest half of the world. In India, the richest 1% control 60% of the total wealth. Your comments?
In 2016, India is the second most unequal economy after Russia. Inequality is fracturing our economy and the reality is that today 57 billionaires control 70% of India’s wealth. Even International Monetary Fund recently warned that India faces the social risk of growing inequality. As per IMF, India’s Gini coefficient rose to 51 by 2013, from 45 in 1990, mainly on account of rising inequality between urban and rural areas as well as within urban areas.
India is currently too dependent on a regressive tax structure of indirect taxes and should move towards a more progressive taxation system that raises more tax revenues from the wealthy to fund more public expenditures on health and education to create a more equal opportunity country.
What have been the reasons behind this growing inequality? Would you say successive governments have failed to address the concerns of the 99%?
Over the last 25 years, the top 1% has gained more income than the bottom 50% put together. Far from trickling down, income and wealth are being sucked upwards at an alarming rate. Like many other countries, in India too policies have not focussed on raising the incomes of the poorest. India’s liberalisation in the early 1990s has seen an explosion in inequality since it created opportunities in a few high end sectors such as banking, IT, telecom and airlines that only created a handful of jobs for the highly skilled and educated. Not many policy reforms have happened either in agriculture or labour intensive manufacturing that could have created millions of jobs and raised incomes of the poor. Furthermore, not much effort has been made to raise more revenues and spend on basic education and health so that the poor could benefit from the opportunities being created.

Riaz Haq said...

Can, #religion, #caste be banned from #India's politics? #BJP #congressparty #Modi #Hindu #Sikh #Dalit #Muslim

http://www.aljazeera.com/indepth/opinion/2017/01/india-supreme-court-ban-politics-170127131816254.html


India is a nation of caste and religion. It is a nation where caste is policy. Upper caste policy is to move upwards, while lower castes continually struggle in their lowly status.

Everything that happens here is based on caste. At every stage of our life caste becomes important. We are unable to understand what is going on in the country if we disregard caste. We also see Justice T S Thakur, who delivered the court ruling, through the eyes of caste because the surname, Thakur, also represents a caste.

When caste is so integral in our society how can we separate caste and religion - a solid foundation - from politics and elections?

There are three main parties in India today: the Congress Party, the ruling Bharatiya Janata Party (BJP) and the Communist Party. The Congress and BJP are outwardly "secular" parties. The BJP promotes itself as the party for Hindus, and on caste issues it says it is "secular". However they choose to self-define, if we search further, we find that the soul of these parties is brahminical, i.e. belonging to the highest caste.

The prominence of caste also applies to politics before India's independence. Priestly Brahmins who controlled the Bania caste - which had close business connections with them - have unjustly benefited from the new political reality, and that is why India's politics is called Brahmin-Bania politics.

-----------

In the first days of this year, in a landmark ruling, the Supreme Court of India banned political candidates from seeking election on the basis of caste, religion and language. On the surface, this ruling seems to be appealing to secular voters, upholding the secular values of the constitution and implementing the principles of democracy.

But it also seems to be contradicting a 1995 Supreme Court ruling which considered "Hindutva" (Hindu nationalism) and "Hinduism" a "way of life", rather than an ideology that belongs to a certain caste or religion. The court has been silent on reviewing the Hindutva issue.

There has been praise from seculars on the ruling and respect for the judiciary has further increased among ordinary people. But while the verdict is indeed an important new development, there are still questions about its practicality because caste, like religion, remains an integral part of Indian society.






Riaz Haq said...

#Pakistan’s Middle Class Soars as Stability Returns - WSJ. #economy #middleclass
https://www.wsj.com/articles/pakistans-middle-class-soars-as-stability-returns-1485945001

Pakistan, often in the headlines for terrorism, coups and poverty, has developed something else in recent years: a burgeoning middle class that is fueling economic growth and bolstering a fragile democracy.

The transformation is evident in Jamil Abbas, a tailor of women’s clothing whose 15 years of work has paid off with two children in private school and small luxuries like a refrigerator and a washing machine.

For companies like the Swiss food maker Nestlé SA, such hungry consumers signal a sea-change.

“Pakistan is entering the hot zone,” said Bruno Olierhoek, Nestlé’s CEO for Pakistan, saying the country appears to be at a tipping point of exploding demand. Nestlé’s sales in Pakistan have doubled in the past five years to $1 billion.

Although often overshadowed by giant neighbors India and China, Pakistan is the sixth most-populated country, with 200 million people. And now, major progress in the country’s security, economic and political environments have helped create the stability for a thriving middle class.

An unpublished study last year that measured living standards, from Pakistani market research firm Aftab Associates, found that 38% of the country is middle class, while a further 4% is upper class. That’s a combined 84 million people—roughly equivalent to the entire populations of Germany or Turkey.

Such households are likely to have a motorcycle, color TV, refrigerator, washing machine and at least one member who has completed school up to the age of 16, the study found. Official figures show that the proportion of households that own a motorcycle soared to 34% in 2014 from 4% in 1991, and a washing machine to 47% from 13% over that same period. These trends are also attracting international business.

In December, Royal FrieslandCampina NV, a Dutch dairy company, paid $461 million to buy control of Engro Foods, a Pakistani packaged milk producer in a country where most milk is sold unpasteurized from open milk containers.

“What we see is consumer spending is rising and a middle class coming up,” said Hans Laarakker, Engro’s new chief executive.

Late last year, China’s Shanghai Electric Power agreed to pay $1.8 billion for a majority of Karachi’s electric supply company; Turkish electrical appliance maker Arçelik paid $258 million for a Pakistani appliance maker, Dawlance, saying Pakistan has an “increasingly prosperous working and middle class”; and French car maker Renault SA said it was seeking to set up a plant in Pakistan.

Meanwhile, during the past three years, deaths from terrorist attacks have fallen by two-thirds, as the army battles jihadists. Economic growth reached an eight-year high of nearly 5% in the past financial year, and China has begun a multibillion-dollar infrastructure investment program. The Karachi stock market rose 46% last year and continues to soar.

------

In the developing world, the ability to purchase durable goods such as motorcycles—which itself can lead to new opportunities in employment, education and leisure—is generally viewed as an indicator of a middle class lifestyle. Motorcycle purchases soared in Pakistan to 2 million a year now from 95,000 in 2000, leading Honda Motor Co. to double its production capacity there. Buyers of Honda’s cheapest motorcycle typically earn between just $200 and $300 a month, which would put them well below the poverty line in the West, but here that gives them disposable income.

“All these big companies globally, if they’re not looking at Pakistan, need to look at Pakistan, because it’s a huge consumption economy emerging,” said Saquib Shirazi, chief executive of Honda’s Pakistan joint venture.

Riaz Haq said...

#Pakistan's PAK ETF up 41.6% in a year. PAK still cheap on P/E basis with rising corporate earnings. http://www.investopedia.com/news/why-pakistan-etf-perky-pak/ …

Pakistan is among the frontier markets that are moving higher, but before jumping into the Global X MSCI Pakistan ETF (PAK), investors should evaluate the risks involved with a market such as Pakistan and the reasons Pakistani stocks are surging.

PAK, the lone exchange trade fund (ETF) listed in the U.S. dedicated to Pakistani equities, is up 41.6% over the past year. That performance is more than 1,500 basis points ahead of a widely followed frontier markets index, in which Pakistan is one of the largest country weights.

While frontier markets are often viewed as less desirable destinations for investors' capital than emerging markets, the reality is frontier economies have some advantages, including lower correlations to developed and emerging equities and, in some cases, less volatility.

With those advantages in mind, investors mulling a position in PAK should note Pakistan's time as a frontier market is limited. Last year, index provider MSCI said Pakistan become part of the widely followed MSCI Emerging Markets Index in May. That announcement was made just seven years after Pakistan was promoted to frontier status from the standalone classification. It also makes Pakistan the first country since Qatar and the United Arab Emirates in 2014 to earn the frontier-to-emerging promotion.

The promotion of Pakistan to emerging markets status means that active fund managers that benchmark to the MSCI Emerging Markets Index will have to buy Pakistani stocks to stay in-line with that index. With that promotion already widely known, Pakistani equities, including some of the 38 found in PAK, could already be soaring in anticipation of the frontier-to-emerging switch.

Several members of the KSE 100, Pakistan's benchmark equity index, have more than doubled over the past six months, including some financial services names. That sector represents over a third of PAK's weight. Materials and energy stocks combine for 46% of the ETF's lineup.

Although news of Pakistan's emerging markets promotion has been well telegraphed, Pakistani stocks still are not expensive. The KSE 100 trades at an earnings multiple of just under 11, a slight discount to the MSCI Emerging Markets Index. However, valuations on Pakistani stocks have been steadily rising since the third quarter.

Investors willing to wager on a further upside for PAK can take heart in knowing that earnings growth for Pakistani stocks is outpacing the relatively modest increase in the KSE 100's price-to-earnings ratio while also topping earnings growth for the broader emerging markets universe.



Read more: Why The Pakistan ETF Is Perky (PAK) | Investopedia http://www.investopedia.com/news/why-pakistan-etf-perky-pak/#ixzz4Yfr2dBw2
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Riaz Haq said...

#Tesco products launched in #Karachi #Pakistan for sale at Alpha Supermarkets | Business - http://Geo.tv https://www.geo.tv/latest/131228-Tesco-products-launched-in-Pakistan …

The launch of Tesco Label products at Alpha Supermarkets in Pakistan was announced by the British High Commissioner Thomas Drew and Limestone Private Limited at the British Deputy High Commission in Karachi.

According to a statement issued by British Deputy High Commission here on Wednesday, the Tesco PLC is one of the world’s biggest companies and is a British multinational grocery and general merchandise retailer with stores in 12 countries across Asia and Europe.

Tesco products will soon be available at Alpha Supermarkets in Pakistan including food and nonfood items in three categories: Tesco Goodness, Tesco Finest and Tesco Everyday.

British High Commissioner to Pakistan, Thomas Drew, said on the occasion that ‘UK brands- especially those as big as Tesco’ have a real advantage in Pakistan, as British brands are so recognisable already to the many people in Pakistan who have visited the UK.

This is a particularly important year for this to be happening in Pakistan, as we are celebrating 70 years of UK-Pakistan relations.

While we will, of course, be remembering all the things that have linked us over the last 70 years, we are just as focused on the future of our relationship. At the heart of this will be increased trade between our two countries and I hope Tesco’s launch is just the start of a new era of British-Pakistani trade’.

Riaz Haq said...

#China's poor provinces catching up with rich provinces but #poor states in #ndia falling further behind rich states

http://www.thehindu.com/opinion/op-ed/in-india-diverging-incomes-despite-equalising-forces/article17336738.ece

Poorer countries are catching up with richer countries, the poorer Chinese provinces are catching up with the richer ones, but in India the less developed States are not catching up; instead they are, on average, falling behind the richer States. Internationally, growth rates of per capita GDP widened at least since the 1820s with poorer countries growing slower than richer countries, leading to the basic divide between advanced and developing countries characterised as “Divergence, Big Time” by Prof. Lant Pritchett of Harvard University. However, since 1980 this long-term trend was reversed and poorer countries started catching up with richer ones. In stark contrast, there continues to be divergence within India or an aggravation of regional inequality.

What is especially striking is how convergence has evolved over time. In the 1990s, convergence patterns were not dissimilar (Figure 2) across the world, China and India with either weak convergence or divergence. But things really changed for both the world and China in the 2000s; however they did not change for India. This was despite the promise that less developed States such as Bihar, Madhya Pradesh and Chhattisgarh had started improving their relative performance. But the data show that those developments were neither strong nor durable enough to change the underlying picture of divergence or growing inequality. The findings are similar when we use consumption per capita instead of GSDP per capita.

Therefore, the evidence so far suggests that in India, catch-up remains elusive. The opposing results in India versus those in China and internationally pose a deep puzzle. Convergence happens essentially through trade and through mobility of factors of production. If a State/country is poor, the returns to capital must be high and should be able to attract capital and labour, thereby raising its productivity and enabling catch-up with richer States/countries. Trade, based on comparative advantage, is really a surrogate for the movement of underlying factors of production as economist Paul Samuelson pointed out early on. A less developed country that has abundant labour and scarce capital will export labour-intensive goods (a surrogate for exporting unskilled labour) and import capital-intensive goods (a surrogate for attracting capital).


Riaz Haq said...

#Pakistan Is Getting Ahead Of #India, Again via @forbes #StockMarket #EconomicFreedom

https://www.forbes.com/sites/panosmourdoukoutas/2017/02/27/pakistan-is-getting-ahead-of-india-again/#3ddf284ddd9c

After getting ahead of India in equity market performance, Pakistan is getting ahead of India in another indicator: economic freedom ranking.

That’s according to the recent 2017 Index of Economic Freedom ranking, which places Pakistan in 141st position and India at 143th.

Published by the Heritage Foundation, the Economic Freedom report measures such things as trade freedom, business freedom, investment freedom, and the degree of property rights protection in 186 countries.

Pakistan’s lead over India in this ranking may not be big deal to most observers, as it is too narrow to be meaningful. Besides, both countries are ranking too close to the bottom.

Still, Pakistan’s ranking has been consistently outperforming India's in recent years.

Does it really matter to anyone?

Yes, to equity market investors. Gains in economic freedom ranking are usually associated with higher economic growth rates and higher equity markets. And the superior performance of Pakistan’s market over that of India’s might as well be a reflection of it.

----------

Here is a quote from the Pakistan report. “Pakistan has pursued reforms to improve its entrepreneurial environment and facilitate private-sector development. The financial sector has undergone modernization and restructuring.”

And a quote from the Indian report. “The state maintains an extensive presence in many areas through public sector enterprises. A restrictive and burdensome regulatory environment discourages the entrepreneurship that could provide broader private-sector growth.”

Simply put, while Pakistan is trying to place economic growth in the hands of entrepreneurs, India insists to place economic growth in the hands of government bureaucrats.

That’s certainly good news for the future of Pakistan’s economy and equity markets.

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.


http://www.hindustantimes.com/india-news/norway-named-happiest-country-in-the-world-india-among-the-saddest/story-zxfv1HSduc5skZRV8saH1H.html


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.


http://worldhappiness.report/


https://s3.amazonaws.com/sdsn-whr2017/HR17_3-20-17.pdf

Riaz Haq said...

Facets of inequality (in Pakistan) by Sakib Sherani Op Ed in Dawn

WEALTH and income inequality have risen sharply around the world in the past few decades, with data suggesting an acceleration in the trend over the recent past. This state of affairs has occurred despite massive economic prosperity having been generated over the same period of time, which has lifted millions around the globe out of extreme poverty.

However, economic prosperity has not been shared equitably. According to Oxfam, “since 2015, the richest one per cent has owned more wealth than the rest of the planet”. Earlier this year, Oxfam reported that eight of the richest men in the world now owned the same amount of wealth as the poorest half of the world (3.6 billion people).

Between 1988 and 2011, incomes of the poorest 10pc increased by just $65 per person — or less than $3 annually — compared to the incomes of the richest 1pc which grew by $11,800 per person, or 182 times as much. In the US, the situation with regards to income inequality is even more extreme. According to research by the French economist Thomas Picketty, over the last 30 years the growth in the incomes of the bottom 50pc has been zero, whereas incomes of the top 1pc have grown 300pc.

The situation in Pakistan appears to have followed a similar trend. While the Planning Commission has stopped making public statistics on income inequality for the past few years, evidence suggests that the disparity between the richest and the poorest households has increased. According to the Household Integrated Economic Survey (HIES) 2015-16, the share of the top 20pc of households in overall income is nearly 45pc, while for the bottom 20pc the share is slightly less than 9pc — a multiple of 5 times.

Inequality has broader dimensions beyond wealth or income.

While looking at inequality through the prism of income or wealth distribution is instructive, it tells a less than complete story. For a country like Pakistan, the inequality in society is multidimensional — with deep structural as well as institutional roots. The poor and vulnerable are discriminated against, face exclusion and marginalisation in a structured and institutionalised manner. Hence, for a proper understanding of the issue, one has to map the broad areas and extent of ‘non-inclusion’ of citizens, not just the inequitable distribution of wealth/income.

https://www.dawn.com/news/1338328

Riaz Haq said...

The Income Of The Average Indian Is Significantly Lower Than The Average Income Of India

https://swarajyamag.com/economy/the-income-of-the-average-indian-is-significantly-lower-than-the-average-income-of-india

Governor Rajan was right in pointing out that India remains one of the largest poor countries on a per capita basis.

He was right to stress the need to remain on the path to sustained growth.

Median Incomes better depict the incomes of an average Indian than the mean incomes.

In 2013, the median income at $ 616 was around 58 percent lower than the mean income or the per capita income at $1455. This is indeed a great cause of worry.

------------

At this point it is important to introduce another term i.e. the median. As Wheelan writes: “The median is the point that divides a distribution in half, meaning that half of the observation lie above the median and half lie below.”

Hence, the median income is the income of the average Indian. Given this, the median income is the right representation of the income of the average Indian. This is because the rich outliers (the Ambanis, the Adnanis, the Tatas and the Birlas) are taken into account. Data from World Bank shows that the top 10 percent of India’s population makes 30 percent of the total income. And this pushes up the per capita income.

The trouble is that it is not so easy to find median income data in the Indian context. A survey carried out by Gallup in December 2013, put India’s median income at $616. Data from the World Bank shows that India’s per capita income during the same year was $1455.Hence, the median income was around 58 percent lower than the average income or the per capita income. And that is not a good sign at all.



Arif Jameel said...

OK.. I agreed... It is true..But how we measure the industrial development between both Countries? What is the main sources of earning in Pakistan? And many more questions as par Pakistan.

Riaz Haq said...

AJ: "But how we measure the industrial development between both Countries?"

While India now ranks 6th in the world in terms of total manufacturing output, 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.

India's 3% share of the world's total manufacturing output puts it at a distant sixth position behind China's 24%, United States' 17%, Japan's 16%, Germany's 7% and South Korea's 4%.

The UNIDO data shows that India's manufacturing value added (MVA) per capita at constant 2005 prices increased from US$155.73 in 2005 to $168.42 in 2014. However, as percentage of GDP at constant 2005 prices in US$, India's MVA decreased from 15.10% in 2005 to 13.85% in 2014

UNIDO reports that Pakistan manufacturing value added (MVA) per capita at constant 2005 prices increased from US$135.03 in 2005 to $143.84 in 2014. Its MVA as percentage of GDP at constant 2005 prices in US$ decreased from 18.05% in 2005 to 17.41% in 2014.

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


AJ: " What is the main sources of earning in Pakistan? "


Pakistan's GDP comes from Services (55%), Manufacturing (25%) and agriculture (20%).


In terms of employment, about 40% of Pakistanis work in agriculture vs 60% in India.

Pakistani farmers are much more productive in terms of value added than Indian farmers. An Indian farmer commits suicide every 30 minutes, a phenomenon unheard of in Pakistan

Growth of value added agriculture in Pakistan has helped the nation's rural economy. It has raised incomes and reduced rural poverty by creating more higher wage jobs. It has had a salutary effect on the lives of the rural poor in terms of their ability to afford better healthcare, nutrition and education. Doing more to promote value added agriculture can accelerate such improvements for the majority of Indians and Pakistanis who engage in agriculture and textiles and still live in rural areas.

http://www.riazhaq.com/2013/11/indias-agrarian-crisis-farmer-commits.html

Riaz Haq said...

Per Capita Income in dollar terms has witnessed
a growth of 6.4 percent in FY 2017 as
compared to 1.1 percent last year. The per
capita income in dollar terms has increased
from $ 1,531 in FY 2016 to $ 1,629 in FY
2017. Main contributing factors for the rise in
per capita income are higher real GDP, growth,
low population growth and stability of Pak
Rupee.


http://www.finance.gov.pk/survey/chapters_17/overview_2016-17.pdf

Riaz Haq said...

Pakistan ranks 52 among 79 countries ranked by WEF for inclusive development, ahead of India at 60 but behind China at 15 and Bangladesh at 36


http://www3.weforum.org/docs/WEF_Forum_IncGrwth_2017.pdf


Pakistan has lower inequality than India as measured by Gini coefficient.


http://www.indiatimes.com/news/world/india-ranks-60th-among-79-developing-economies-in-the-world-economic-forum-s-inclusive-development-index-269629.html

Riaz Haq said...

Drifting apart: The gap between #India’s richer and poorer states is widening. #Inequality #Modi https://www.economist.com/news/finance-and-economics/21727867-economists-are-baffled-arguing-poorer-states-should-be-catching-up … via @TheEconomist

COUNTRIES find it easier to get rich once their neighbours already are. East Asia’s growth pattern has for decades been likened to a skein of geese, from Japan at the vanguard to laggards such as Myanmar at the rear. The same pattern can often be seen within big countries. Over the past decade, for example, China’s poorer provinces have grown faster than their wealthier peers. India is different. Far from converging, its states are getting ever more unequal. A recent shake-up in the tax system might even make matters worse.

Bar a few Mumbai penthouses and Bangalore startup offices, all parts of India are relatively poor by global standards. Taken together, its 1.3bn people make up roughly the third and fourth decile of the world’s population, with an income per person (adjusted for purchasing power) of $6,600 dollars. But that average conceals a vast gap. In Kerala, a southern state, the average resident has an annual income per person of $9,300, higher than Ukraine, and near the global median. With just $2,000 or so, an Indian in Bihar, a landlocked state of 120m people, is closer to a citizen of Mali or Chad, in the bottom decile globally.

The gap has been widening. In 1990, point out Praveen Chakravarty and Vivek Dehejia of the IDFC Institute, a think-tank, India’s three richest large states had incomes just 50% higher than the three poorest—roughly the same divergence as in America or the EU today, and more equal than in China. Now the trio is three times richer (see chart).

In some rich parts of the world, income gaps between regions have in recent decades been widening. But India’s experience still puzzles economists. Poor regions benefit from technology developed in richer ones—from trains to mobile phones. Workers in poorer places accept lower wages, so firms build new factories there.

The catch-up process ought to be all the faster if barriers to the movement of goods or people are lower. Regions within China have converged rapidly, partly owing to the market, as factories move production inland where wages are cheaper, and partly to government attempts to lift poorer regions by investing heavily in their infrastructure.

Arvind Subramanian, chief economic adviser to India’s government, earlier this year wrote that its states’ divergence is “a deep puzzle”. The brief bout of liberalisation in 1991 probably played a part initially, by unevenly distributing the spoils of more rapid overall economic growth. But that burst of inequality should have self-corrected by now.

One theory blames the states’ divergence on their isolation even in the Indian domestic market, as a result of lousy infrastructure, red tape and cultural barriers. Moving stuff from state to state can be as tiresome as exporting. Internal migration that would generate catch-up growth is stymied by cultural and linguistic barriers: poor northern states are Hindi-speaking, unlike the richer south. Cuisines differ enough for internal migrants to grumble. It is harder to have access to benefits and state subsidies outside your home state.


Mr Subramanian thinks such arguments are overdone. India may not have mass migration on the scale that transformed China, but it is still sizeable, he argues, and has been rising as a share of the population even as convergence has gone into reverse. Inter-state trade is healthy, suggesting suitably porous borders.

Another theory looks at India’s development model. Growth has relied more on skill-intensive sectors such as IT than on labour-intensive manufacturing. This may have stymied the forces of convergence seen elsewhere, Mr Subramanian posits. Perhaps, however low their labour costs, the poorer places lack the skills base to poach jobs from richer rivals.

Riaz Haq said...

The rising number of its billionaires masks #India’s widening income #inequality. #Modi #BJP https://qz.com/1070450 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 (WID.world) 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.

https://qz.com/1070450/the-rising-number-of-its-billionaires-masks-indias-widening-income-inequality/

http://wid.world/document/chancelpiketty2017widworld/

Riaz Haq said...

BBC News - #Inequality in #India is the highest level in 92 years. Top 1% take 22% of income. Top 1% own 58% wealth
http://www.bbc.com/news/world-asia-india-41198638#

New research by French economists Lucas Chancel and Thomas Piketty, author of Capital, the 2013 bestselling book on capitalism and increasing inequality, clearly points to this conclusion.
They studied household consumption surveys, federal accounts and income tax data from 1922 - when the tax was introduced in India - to 2014.
The data shows that the share of national income accruing to the top 1% of wage earners is now at its highest level since Indians began paying income tax.
The economists say the top 1% of the earners captured less than 21% of the total income in the late 1930s, before dropping to 6% in the early 1980s and rising to 22% today. India, in fact, comes out as a country with one of the highest increase in top 1% income share concentration over the past 30 years," they say.

To be sure, India's economy has undergone a radical transformation over the last three decades.
Up to the 1970s, India was a tightly regulated, straitlaced economy with socialist planning. Growth crawled (3.5% per year), development was weak and poverty endemic.
Some easing of regulation, decline in tax rates and modest reforms led to growth picking up in the 1980s, trundling at around 5% a year. This was followed by some substantial reforms in the early 1990s after which the economy grew briskly, nudging close to double digits in the mid-2000s.

Growth has slowed substantially since then, but India still remains one of the fastest-growing economies in the world. The ongoing slowdown - growth was 5.7% in the April-June quarter, the slowest pace in three years - largely triggered by feeble demand, a controversial cash ban, declining private investment and weak credit growth, is a cause for concern.
And the need for fast-paced growth, according to Nobel Prize winning economist Amartya Sen, is "far from over since India, after two decades of rapid growth, is still one of the poorest countries in the world".
From their latest work on income inequality, Lucas Chancel and Thomas Piketty contend that there has been a "sharp increase in wealth concentration from 1991 to 2012, particularly after 2002". Also, they conclude, India has only been really shining for the top 10% of the population - roughly 80 million people in 2014 - rather than the middle 40%.
The economists plan to release the first World Inequality Report, produced by a network of more than 100 researchers in December, where they will compare India's inequality with other countries and suggest ways to tackle it.
Striking transition
They agree that unequal growth over a period of time is not specific to India, but market economies are not bound to be unequal. India's case is striking in the fact that it is the country with the highest gap between the growth of the top 1% and that of the full population. Incomes of those at the very top have actually grown at a faster pace than in China.
The economists contend that the growth strategy pursued by successive governments has led to a sharp increase in inequality. China also liberalised and opened up after 1978, and experienced a sharp income growth as well as a sharp rise in inequality. This rise was however stabilised in the 2000s and is currently at a lower level than India.
In Russia, the move from a communist to a market economy was "swift and brutal" and today has a similar level of inequality to India.
"This shows that there are different strategies to transit from a highly regulated economy to a liberalised one. In the arrays of possible pathways, India pursued a very unequal way but could probably have chosen another path," Dr Chancel told me.

Riaz Haq said...

Are we entering into a "jobless" growth phase in South Asia?

By Dr. Selim Raihan, Professor, Department of Economics, University of Dhaka, Bangladesh, and Executive Director, South Asian Network on Economic Modeling (SANEM).

http://www.thedailystar.net/opinion/economics/are-we-entering-jobless-growth-phase-south-asia-1459387

The relationship between economic growth and employment is an important issue in economics discourse. Promotion of inclusive growth also requires economic growth processes to be employment friendly. The measure that captures the employment effect of economic growth is the "employment elasticity" of economic growth, which is the ratio of percentage change in employment to the percentage change in real gross domestic product (GDP).

We have calculated the employment elasticity with respect to the change in real GDP for the South Asian countries for three different periods from 2001 to 2015. There are mixed patterns among the South Asian countries. During 2001 and 2005, Maldives had the largest employment elasticities (1.39) and Sri Lanka had the lowest one (0.08). India, with a share of 75 percent of the total population in South Asia, had the employment elasticity of only 0.38, one of the lowest in South Asia. Two other large countries, Pakistan and Bangladesh, had employment elasticities of 0.70 and 0.77 respectively.

For the period of 2006-2010, India experienced a drastic fall in employment elasticity to only 0.03 despite the fact that the average GDP growth rate of India increased from 6.6 percent (2001-2005) to more than 8 percent (2006-2010). Over these periods, Bangladesh also had a similar experience where employment elasticity declined from 0.77 to 0.4 in the wake of a rising average GDP growth rate from 5 to 6 percent. While Afghanistan, Maldives, and Nepal also experienced a decline, Pakistan and Sri Lanka could increase the elasticities.

Over the recent period between 2011 and 2015, Bangladesh experienced a further fall in the employment elasticity to 0.28, while India's improvement is meagre (from 0.03 to only 0.09). Despite the slower economic growth rates during this period, Afghanistan, Maldives, Nepal, and Pakistan could increase their employment elasticities. Sri Lanka had a further fall in employment elasticity to only 0.14. During this period, India had the least employment elasticity among all South Asian countries.


The aforementioned analysis points to the concern that two major South Asian countries, India and Bangladesh, experienced a substantial reduction in employment elasticities throughout the periods of high economic growth. While during 2001 and 2005, the annual average job creation in Bangladesh and India were 1.6 million and 11.3 million respectively, in 2011-2015, such numbers declined to 1 million and 3.2 million for Bangladesh and India respectively. Most of the other South Asian countries experienced either volatile, or slow or stagnant economic growth, and therefore, despite a rise in employment elasticities, the actual employment generation in these countries had not been substantial. It is also important to mention that while SDG 8 talks about ensuring "decent" jobs for all, South Asian countries are seriously lagging far behind. In most of the South Asian countries, there are persistent employment challenges such as lack of economic diversification, poor working conditions, low productivity and a high degree of informality. This is reflected by the fact that among the top five countries in the world with very high proportion of informal employment in total employment, four are from South Asia (Bangladesh, India, Nepal, and Pakistan).

Riaz Haq said...

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


http://publications.credit-suisse.com/tasks/render/file/index

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)

https://tribune.com.pk/story/1491353/census-2017-family-size-shrinks/

http://www.riazhaq.com/2017/09/pakistan-impact-of-labor-force.html

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...

Monday, November 20, 2017. Credit Suisse Wealth Report 2017
Indian inequality higher than Pakistan, China, Bangladesh; 92% adults' net worth less than $10,000; of 0.5% plus $100,000

http://www.counterview.net/2017/11/indian-inequality-higher-than-pak-china.html

Giving a scary picture of inequalities in India, the recently-released “Global Wealth Report 2017”, published by Credit-Suisse, a Swiss multinational financial services holding company, headquartered in Zurich, has said that India’s 92% of adults “have net worth less than USD 10,000”, while “a small fraction of the population (just 0.5% of adults) has a net worth over USD 100,000.”
While the 0.5% adult population of India “translates into 4.2 million people” because of its huge population, the report says, “By our estimates, 1,820 adults have wealth over USD 50 million, and 760 have more than USD 100 million.”
A further breakup of wealth among the top echelons reveals that 10% of the adult population has 73.3% of wealth, 5% has 64.1% of wealth, and 1% has 45.1% of wealth.

In absolute numbers, the report says, as of mid-2017, 770,089,000 adult individuals have a wealth range of under USD 10,000, 60,116,000 have a wealth range between USD 10,000 and 100,000, 4,158,000 have wealth range between USD 100,000-1 million, and 245,000 individuals have wealth more than USD 1 million.

Pointing out that “while wealth has been rising in India, not everyone has shared in this growth”, the report’s data show that India’s Gini index – an internationally recognized, most commonly used measure of inequality, with 100% representing maximal inequality – is found to be 83%. By comparison, Pakistan’s Gini index is 52.6%, Bangladesh’s 57.9%, Sri Lanka’s 66.5%, Nepal’s 67.3%, and China’s 78.9%.