FAQs on India's Massive 34% Defense Budget Hike

Last year, India decided on a massive 34% increase year-over-year in its defense spending. Here are some frequently asked questions and answers about this dramatic move that puts India among the world's biggest spenders on defense.

Q1: How much does India really spend on defense?

A1: On paper, India spends $32.7 billion, about 3% of its GDP on defense, after an increase of 34% for 2010.

In reality, India spends closer to 3.5% of its GDP on defense.

Here's what Col.(Retd) Pavan Nair of the Indian Army has to say about it in a recent guest post on Haq's Musings:

India's own specified limit of 3% has been observed only by excluding several items like the cost of the MoD and the expenditure on military pensions which by itself amounts to 15% of the total defense outlay. Several other items like the Jammu and Kashmir Light Infantry (JAKLI, a regular regiment of the army consisting of thirteen battalions) and the Coast Guard are also excluded. A substantial part of the cost of the nuclear arsenal and allied systems is excluded. All para-military forces including the ones directly involved in border management are excluded. The Parliamentary Committee on Defense spends most of its time on personnel matters and resolving issues of protocol between the service chiefs and the defense secretary. The Committee looks at DE but beyond stating that DE should be pegged at 3% of GDP, it has nothing substantial to contribute. Clearly, parliamentary oversight and control seems to be missing. For several years, DE in aggregate has crossed 3% of GDP.



Pakistan spends about $4.3 billion annually, less than 3% of its GDP, and there has been no real increase year-over-year in 2010. There was a 10.15 per cent nominal increase from Rs 311.303 billion revised defense budget for 2009-2010. In real terms, however, it represents a decrease because inflation in Pakistan exceeds nominal increase in defense. Pakistan’s defense allocation does not include foreign assistance, which is expected add about a billion dollars to defense spending for operations against Taliban insurgents. The aggregate $5.5 billion of military spending by Pakistan accounts for about 3% of its $ 175 billion GDP.

“The war on terror has already cost us over $35 billion since 2001-02. We now face the prospects of incurring huge expenditure on account of counter-insurgency,” according to Pakistan's deputy finance minister Hina Rabbani Khar.

Q2: Doesn't India need to spend more on defense to fight the terrorists in the region?

A2: The military brass in India used the Mumbai attacks in late 2008 to argue for and win a 34% increase in defense budget. But terrorism is just an excuse by Indian military to get large funds and buy expensive cold war era weapons which are useless against the asymmetrical threat from the terrorists any way. It lines the pockets of the arms dealers (and a few corrupt generals and officials) without increasing India's security against potential terror attacks.

The 34% increase can not be explained by Indian military pay hikes either, given India's huge weapons' shopping list and its status as one of the biggest importers of military hardware in the world. The real aim is to intimidate India's neighbors, and assert India's hegemony. But it won't work as long as India has serious challenges of poverty, illiteracy, hunger, social inequity and multiple insurgencies at home by its most impoverished citizens.

Q3: Won't India just grow out of poverty, hunger, illiteracy through rapid economic expansion of its economy?

A3: Over a decade of rapid economic growth in India has done little to help its poor, hungry and illiterate population.

India has miserably failed to use a period of high economic growth to lift tens of millions of people out of poverty, falling far short of China’s record in protecting its population from the ravages of chronic hunger, United Nations officials said recently. In 2008, British Development Minister Alexander contrasted the rapid growth in China with India's economic success - highlighting government figures that showed the number of poor people had dropped in the one-party communist state by 70% since 1990 but had risen in the world's biggest democracy by 5%.

In the context of unprecedented economic growth (9-10 percent annually) and lack of national food security, over 60 percent of Indian children are wasted, stunted, underweight or a combination of the above. As a result, India ranks number 62 along with Bangladesh at 67 in the PHI (Poverty Hunger Index)ranking out of a total of 81 countries. Both nations are included among the low performing countries in progress towards MDG1 (Millennium Development Goals) with countries such as Nepal (number 58), Ethiopia (number 60), or Zimbabwe (number 74).

Ranked at 45 on PHI index, Pakistan is well ahead of India at number 62, and it is included in the medium performing countries. PHI is a new composite indicator – the Poverty and Hunger Index (PHI) – developed to measure countries’ performance towards achieving MDG1 on halving poverty and hunger by 2015. The PHI combines all five official MDG1 indicators, including a) the proportion of population living on less than US$ 1/day, b) poverty gap ratio, c) share of the poorest quintile in national income or consumption, d) prevalence of underweight in children under five years of age, and d) the proportion of population undernourished.

Q4: Why can't India do both: Increase defense spending and reduce poverty, illiteracy, hunger and disease?

A4: Defense spending should not be a sacred cow. Huge increases shouldn't get approved with little or no debate, and there should be much greater oversight of how it's spent.

It needs to be discussed and debated rationally in the parliament and the media.

What I find is that there is more debate and discussion in Pakistan on defense spending than there is in India, in spite of the fact Pakistan is fighting a war against determined insurgents in the North West.

In spite of its many other urgent issues like access to food, education and health care, it's a shame that a huge 34% boost in defense budget got approved in India without much serious discussion. A similar dramatic increase in Pakistan would have elicited howls of protest and loud demands to curtail it.



Q5: Why should there be any discussion or debate in India on defense budgets when there is consensus among all political parties that military spending should increase?

A5: That may be a good explanation of lack of debate, but the size of the increase at 34% year over year should be too big to slide through parliament without much scrutiny. And it's strange that there is no such consensus on similar spending increases on food, health care, education and poverty alleviation where India lags behind many of its neighbors.

In 2008, Indian Planning Commission member Syeda Hameed acknowledged that India is worse than Bangladesh and Pakistan when it comes to nourishment and is showing little improvement.

Speaking at a conference on "Malnutrition an emergency: what it costs the nation", she said even Prime Minister Manmohan Singh during interactions with the Planning Commission has described malnourishment as the "blackest mark".

"I should not compare. But countries like Bangladesh, Pakistan and Sri Lanka are better," she said. The conference was organized last year by the Confederation of Indian Industry and the Ministry of Development of Northeastern Region.

According to India's Family Health Survey, almost 46 percent of children under the age of three are undernourished - an improvement of just one percent in the last seven years. This is only a shade better than Sub-Saharan Africa where about 35 percent of children are malnourished.

Unlike Indian military which got 34% increase this year, there is no one talking about a similar spending increase for human development in a nation that is slipping to lower ranks in human development. In fact, the latest Human Development Report for 2009 shows that all major South Asian nations have slipped further down relative to other regions of the world. Pakistan's HDI ranking dropped 3 places from 138 last year to 141 this year, and India slipped six places from 128 in 2008 to 134 this year.

The total per-capita expenditure on health (central as well as state expenditure) is about a third of the per-capita expenditure on defense in India. This low level of funding is the prime reason for poor health parameters which in turn keeps a large proportion of the population in perpetual debt and poverty. The UN millennium development goals pertaining to mortality rates and poverty are not likely to be achieved mainly on account of poor spending and delivery in the health sector. The allocation for federal spending on health in the current year is Rs 22,641 crores or merely 0.4% of GDP.

Q6: Why Is the Indian defense spending any of this blogger's business?

A6: India's military spending directly affects the entire south Asian region. It increases the threat perception in the neighborhood, particularly when the Indian military brass engages in threatening rhetoric in the midst of its huge arms buildup. It distorts the spending priorities of Pakistan, a smaller neighbor which was invaded and divided by India in 1971.

Recently, Lt-General A S Lamba of Indian Army has been quoted by the Indian media as boasting about a "massive thrust into Rawalpindi to quiet Pakistanis within 48 hours of the start of assault." Indian Army chief General Deepak Kapoor has said India is ready for a “the successful firming-up of the cold start strategy (to be able to go to war promptly) in the multiple fronts against multiple different militias at the same time.” General Kapoor has talked about taking on China and Pakistan at the same time.

India has over 6000 tanks, and it is inconceivable that these tanks will roll over the Himalayas to invade China. These tanks are meant to invade Pakistan in the plains of Punjab and the deserts of Sind. Indian Army has 33 infantry divisions. Twenty-four are on Pakistan borders. It has three armored divisions, all three are positioned near Pakistan borders. There are three mechanized divisions in India, all three are on Pakistan borders.


Related Links:

South Asia Slipping in Human Development

India's Defense Budget: Guns Versus Butter

Indian Military Brass Challenges China and Pakistan

India's Defense Spending: Facts Beyond Figures

Pakistan's Defense Budget

World's Top Arms Importers

PHI Poverty Hunger Index

Has Justice Been Served in Afia Siddiqui's Conviction?

A New York jury has convicted Dr. Aafia Siddiqui of shooting at American soldiers and FBI agents in Afghanistan during her arrest in 2008. The judge, the jury and the entire proceedings focused narrowly on shooting charges, and there was no discussion of how the accused ended up in Afghanistan. The trial has, in fact, raised more questions than it has answered.



The biggest question that remains unanswered is where was Aafia Siddiqui since her disappearance from Karachi in 2003 till the alleged shooting during her arrest in Afghanistan in 2008?

A Harper magazine story from last November, 2009 issue has a detailed report on Aafia Siddiqui's ordeal from 2003 to the start of her trial in 2009. It has multiple conflicting accounts from many sources including Pakistani officials and Aafia's family.

As the Harper reporter Petra Bartosiewicz explains it, "The charges against her stem solely from the shooting incident itself, not from any alleged act of terrorism. The prosecutors provide no explanation for how a scientist, mother, and wife came to be charged as a dangerous felon. Nor do they account for her missing years, or her two other children, who still are missing. What is known is that the United States wanted her in 2003, and it wanted her again in 2008, and now no one can explain why."

Bartosiewicz goes on to add:

The total number of men and women who have been kidnapped and imprisoned for U.S. intelligence-gathering purposes is difficult to determine. Apart from Iraq and Afghanistan, the main theaters of combat, Pakistan is our primary source of publicly known detainees—researchers at Seton Hall University estimated in 2006 that two thirds of the prisoners at Guantánamo were arrested in Pakistan or by Pakistani authorities—and so it is reasonable to assume that the country is also a major supplier of ghost detainees. Human Rights Watch has tracked enforced disappearances in Pakistan since before 2001. The group’s counterterrorism director, Joanne Mariner, told me that the number of missing persons in the country grew “to a flood” as U.S. counterterrorism operations peaked between 2002 and 2004. In that same three-year period, U.S. aid to Pakistan totaled $4.7 billion, up from $9.1 million in the three years prior to the U.S. invasion of Afghanistan. Correlation does not prove causation, of course, but Pakistan’s former president, Pervez Musharraf, did claim in his 2006 memoir, In the Line of Fire, that his country had delivered 369 Al Qaeda suspects to the United States for “millions of dollars” in bounties (a boast he neatly elides in the Urdu edition). It is reasonable to suspect this figure is on the low side.

Aafia Siddiqui’s elderly maternal uncle, Shams ul Hassan Faruqi, a geologist, says almost everyone the reporter spoke to is lying. Faruqi told her an entirely different story. He said Siddiqui showed up at his house unannounced one evening in January 2008, a time when, according to a Pakistani intelligence officer she was supposedly in the hands of the CIA. Her face had been altered, Faruqi said, as if she had undergone plastic surgery, but he knew her by her voice. She said she had been held by the Pakistanis and the Americans and was now running operations for both of them against Al Qaeda. She had slipped away for a few days, though, because she wanted him to smuggle her across the border into Afghanistan so she could seek sanctuary with the Taliban, members of which Faruqi had known from his years of mineral exploration.

Speculation is rife that Siddiqui could have been working as a double agent for at least part of the time she was gone missing. It's possible that she lost trust of her American handlers, which led to her arrest, shooting, and the recent conviction in New York.

The Harper reporter concluded by quoting Afia's sister Fowzia as saying," I’d love it if a real investigator would come and devote himself to the case. You know, really work on it.”

Even the evidence presented on the narrow shooting charges appeared to leave considerable doubt about the guilt of the accused, already labeled "Lady al Qaeda" by some of the American media. The statements by several witnesses were contradictory, and no credible evidence was presented linking the accused to the gun allegedly used by her in shooting. None of the soldiers or the FBI agents was hurt. Only the accused was shot in the stomach during the incident. But these holes did not prevent the jury from reaching a unanimous verdict of guilt.

Here is how a New York based human rights attorney Joanne Mariner described Siddiqui's trial:

A trial's narrative is always tightly circumscribed by the rules of evidence and the demands of relevance. In this instance, however, the constraints of the trial narrative have seemed especially limiting. Not only has the question of whether Siddiqui spent months or years in a secret prison not been thoroughly explored, the fate of her two missing children has not been clarified.

"If You Were in Secret Prisons"

To the extent that claims about a secret prison surfaced at trial, it was largely because Siddiqui herself – sometimes in courtroom outbursts – raised them. Siddiqui's defense lawyers did little to draw out information about Siddiqui's possible CIA detention, and the government clearly wanted the topic to go away.

If Siddiqui's lawyers had wanted to explore the question, they faced two major obstacles. First, the government was uncooperative; it refused to provide any information about the Bush administration's system of secret CIA detention, claiming that such information was classified. Second, Siddiqui did not cooperate with her legal team, leaving them without a possible firsthand source of information.

The issue nonetheless arose on the very first day of trial. Captain Robert Snyder, a US Army officer who was stationed in Ghazni at the time of Siddiqui's arrest, was describing the documents that Siddiqui was said to be carrying when she was arrested.

For much of the morning, Siddiqui had rested her head on the defense table, suggesting that she was not paying close attention to the testimony. But as Snyder began listing the writing on some of the documents –words like "dirty bomb," "lethal radiation," "deadly fallout," "Empire State Building," "Brooklyn Bridge" – Siddiqui suddenly interrupted him, upset.

"If you were in secret prisons," she said, her voice growing louder, "[and] your children were tortured ... " As the judge motioned for her to be removed from the courtroom, she continued: "This is not plans for New York City; I was never planning to bomb it! You're lying!"

The subject came up again the next week when Siddiqui herself was on the witness stand, tense and uncomfortable under grilling by the prosecutor.

During direct examination by one of her defense attorneys, the topic of secret prisons did not arise, but when the prosecutor started to discuss the documents that had allegedly been in Siddiqui's possession, Siddiqui interrupted her.

"If they're in a secret prison, they see their children tortured in front of them ... "

"That's not responsive," the judge ruled, after the prosecutor complained. "Strike the testimony."

"You Told Special Agent Sercer That You Had Been in Hiding for Several Years"

Later in Siddiqui's cross-examination, the prosecutor came up with a very different version of how Siddiqui spent her missing years. Describing Siddiqui's conversations with an FBI agent who spent time with her at Bagram Air Base while she was receiving medical care there, the prosecutor challenged Siddiqui's story of secret detention.

"At Bagram," the prosecutor insisted, "you told Special Agent Sercer that you had been in hiding for several years."

The prosecutor got a chance to develop the story further when Special Agent Sercer, an FBI intelligence analyst, took the stand. Asked whether Siddiqui had discussed her whereabouts during the years before her 2008 arrest, Sercer said that Siddiqui had said she'd been in hiding.

"She would move from place to place," Sercer said Siddiqui had told her. "She married someone so that her name would be changed. She stayed indoors a lot."

Sercer's version of the story coincides with what Siddiqui's first husband, from whom she divorced in 2002, has told journalists. He claims that Siddiqui was seen at her house in the years between 2003 and 2008, and that he himself saw her in Karachi.

A Diversion or a Crime

In his closing argument, the prosecutor dismissed Siddiqui's references to torture and secret prisons, calling them "a classic diversion." The case "isn't about that," he insisted: It's about what happened in a police station in Ghazni, Afghanistan.

What this case shows is that Muslims are currently a despised minority in the West these days. What we are seeing is reminiscent of the McCarthy era Red Scare or the WW II era anti-Japanese sentiments against Muslims in America. Even the US judiciary appears to have been swayed by the current environment, just as it was when the US Supreme Court approved of the internment camps to isolate and hold Japanese Americans during the second world war.

Given the environment of deep suspicion and fear of Muslims, all norms of fairness and rule of law are being ignored in the US when it comes to justice for any one with a Muslim name who gets accused of anything smacking of violence or terrorism.

Here's a video clip of Dr. Amjad Khan, ex-husband of Dr. Aafia Siddiqui, speaking with GeoTV news:



Related Links:

Haq's Musings

Is Afia a Dangerous Terrorist or Innocent Victim?

Musharraf's Economic Legacy

Harper's Story on Aafia

South Asia Review

Case For Resuming India-Pakistan Talks

I believe it is a crazy notion that talking to someone, particularly your adversaries, is a concession. This kind of distorted thinking is the result of the Bush era failed policy of "punishing" your enemies by refusing a dialog. US President George W. Bush is gone, but it appears that the Indian policy of not engaging with Pakistan is guided by with the irrational thinking learned from him.

If the Americans and the Soviets could talk when they had thousands of nuclear warheads pointing at each other during the cold war, surely India and Pakistan can, too.

It must be remembered that the population centers in India and Pakistan are so close geographically (unlike population centers in US and Russia) that any serious miscalculation can lead to a deadly nuclear war with little or no warning, a potential accident whose chances can be minimized by regular communication and discussions between India and Pakistan.

Unfortunately, excuses are dime a dozen, if India wants to pursue its misguided policy of prolonged disengagement. The costs of such a policy could potentially be much much greater than the terrorist incidents that affect Pakistan more than India.

The biggest cost of the policy of confrontation backed up by a massive military buildup by India is already being paid by the most vulnerable Indians whose numbers exceed the poor, hungry and illiterate people anywhere else in the world.

One out of every three illiterate adults in the world is an Indian, according to UNESCO.

One out of very two hungry persons in the world is an Indian, according to World Food Program.

Almost one out of two Indians lives below the poverty line of $1.25 per day.

And yet, India spends $30 billion on defense, and just increased the defense budget by 32% this year.

Here are some more recent comparative indicators in South Asia:

Poverty:

Population living under $1.25 a day - India: 41.6% Pakistan: 22.6% Source: UNDP

Underweight Children Under Five (in percent) Pakistan 38% India 46% Source: UNICEF

Life expectancy at birth (years), 2007 India: 63.4 Pakistan: 66.2 Source: HDR2009

Education:

Youth (15–24 years) literacy rate, 2000 to 2007, male Pak istan: 80% India 87% Source: UNICEF

Youth (15–24 years) literacy rate, 2000 to 2007, female Pak istan 60% India 77% Source: UNICEF

Economics:

GDP per capita (US$), 2008 Pak:$1000-1022 India $1017-1100

Child Protection:

Child marriage under 15-years ; 1998–2007*, total Pak istan - 32% India - 47% Source: UNICEF

Under-5 mortality rate per 1000 live births (2007), Value Pakistan - 90 India 72 Source: UNICEF

In spite of the grim statistics above, India is ranked the fourth biggest military spender in terms of purchasing power parity.

The poverty and hunger situation in Pakistan is only a bit less serious than in India. It is also in Pakistan's best interest to focus on developing its people and its economy rather than engaging in confrontation with its neighbors.

Given the ugly realities of South Asia, it is high time for India to respond to Pakistan's overtures, as argued in the following Op Ed by a sane Indian Siddarth Varadarajan in The Hindu newspaper:


When the Angels who rule India say they favour dialogue and peace with Pakistan but then fear to tread, is it any surprise that fools would rush nin to destroy that virtuous path? We will never know whether somebody from our shadowy security establishment whispered something dark and fanciful in the ears of the owners and managers of the Indian Premier League as they went in for the player auction last week and if so, for whom he was batting.

Certainly, the manner in which every Pakistani cricketer was boycotted despite the initial expression of interest by the teams smacks of considerations other than sports, business or common sense. Most of all, the decision betrays such a poor understanding of the geographies of market development, brand building and soft power that its net effect will be to undermine India’s interests in the widest possible sense.

My own view is that the boycott was not ordered or engineered by the Government of India or any of its agencies acting on instructions from the top. But that does not free our leadership from the vicarious responsibility of needlessly perpetuating a bilateral vacuum that has produced one of the most spectacular self-dismissals sub-continental cricket — and diplomacy — have ever seen.

In the face of a popular backlash across the border, the Ministry of External Affairs rightly noted that the government had nothing to do with the IPL selection. But instead of expressing regret over an outcome that it played no direct role in producing, the MEA statement threw a heap of salt on the wounded national pride of all Pakistanis. “Pakistan,” the Ministry smugly declared, “should introspect on the reasons which have put a strain on relations between India and Pakistan and adversely impacted on peace, stability and prosperity in the region.”

If anything, a little introspection on the Indian side may have been equally appropriate, since some senior Ministers — including P. Chidambaram — later went out of their way to say the exclusion of Pakistani cricketers was indeed unfortunate. Apart from reflecting badly on India, the insulting exclusion has allowed reactionary, extremist elements in Pakistan to seize the moral high ground. And it has pushed Pakistani public opinion and civil society further into the embrace of those who would like to perpetuate a climate of hostility with India and who have more than a soft spot for terrorism.

When terrorists from the Pakistan-based group, Lashkar-e-Taiba, attacked Mumbai in November 2008, Prime Minister Manmohan Singh decided not to repeat the mistake the Vajpayee government made in December 2001 of cutting off transport and people-to-people relations as part of its strategy of coercive diplomacy. Dr. Singh’s advisers knew they were dealing with a fractured polity and society across the border. They knew India needed a differentiated approach that would help isolate those elements in the Pakistani establishment with connections to jihadi organisations while strengthening those who had realised the damage state sponsorship of extremism was inflicting on Pakistan itself.

Within this framework, suspension of official dialogue was seen as a way of putting pressure on the Pakistani military and the Inter-Services Intelligence directorate, a strange conclusion given that the army and the ISI were never too hot on talks in the first place and used the resulting tension to rally the nation behind them. The civilian leadership, which managed to get a reluctant establishment to accept that the Pakistani soil had indeed been used to plan 26/11, needed the limited resumption of dialogue to strengthen itself for the larger domestic battle against military dominance and jihadism. The arrest of senior LeT operatives should have occasioned some let up from India, at least by the time their trial got under way last year. But the hysterical cries of sell-out which greeted the July 2009 Sharm el-Sheikh summit stayed the Manmohan Singh government’s hand. As for civil society, New Delhi believed it would be possible to push ahead with people-to-people relations despite the freeze that had set in at the official level. Subsequent events have shown that belief to be slightly misplaced. The problem was not with the willingness of Pakistani businessmen, cricketers, artists and others to engage with India but the corrosive effect the suspension of dialogue would have on the capacity of the Indian system to use soft power to its advantage.

The IPL fiasco is one example of the negative externalities generated by the lack of official contact between the two governments. But there are others. During the India International Trade Fair in 2009, several container loads of Pakistani products got held up in lengthy customs clearance procedures. Needless to say, this petty if unscripted harassment of traders and exhibitors from across did nothing to enhance India’s national interest. This year, many Pakistani publishers and book distributors have been unable to obtain visas for the Delhi book fair.

Instead of people-to-people relations influencing official relations in a positive way, the freeze in official ties has inevitably begun to cast a chill on all forms of interaction. Businessmen, who should be looking to exploit opportunities for mutual gain, have become infected with the same hard-line pathology that our security establishment suffers from. Last year, the Federation of Indian Chambers of Commerce and Industry Task Force on National Security and Terrorism came up with a report so strident and hawkish that it provoked an unhelpful backlash from traders in Pakistan. Among the “hard options” the FICCI task force said India could take against Pakistan in the event of another major terrorist attack were “surgical” strikes, covert retaliation inside Pakistani territory, the blocking of imports, all-out assault and “leveraging the water issue” to pressure Pakistan.

Like nature, the relationship between the two countries abhors a vacuum. India held back the tide of dialogue in the hope that Pakistan would permanently dismantle the infrastructure of terror on its territory and a more fertile ground for bilateral progress results. The strategy might have worked up to a point but diminishing returns set in a long time ago. Today, India is acting as if the continuing suspension of dialogue is buying it security and that the resumption of dialogue would be a concession to Pakistan. In fact, dialogue is nothing other than a mechanism for advancing one’s own goals. In the hands of a skilled diplomatic establishment, dialogue, even on a range of difficult issues and disputes, can be used selectively to harvest gains. New Delhi has talked to Islamabad for decades about Kashmir without conceding an inch of territory and there is no reason to fear what might happen if talks are resumed. Especially if the same dialogue process also allows bilateral trade to increase beyond the current annual level of $2 billion and allows Indian soft power to create a wider constituency for peace and good relations in Pakistan.

It goes without saying that Pakistan needs to do more to demonstrate its willingness to crack down on extremist elements that continue to plan attacks on India. On its part, India needs to realise that engaging with Pakistan will be a more effective way of driving home that point than trading statements and insults every few weeks and refusing to sit down at the same table. A new start must immediately be made with the convening of a meeting of the two Foreign Secretaries. Neither side should stand on ceremony as far as the venue is concerned. Union Home Minister P. Chidambaram should make it a point to visit Islamabad for the Saarc Home Ministers meeting later this month and meet his Pakistani counterpart to review not just the Mumbai case but other subjects of mutual concern. The Saarc summit in Bhutan in April will provide another occasion for bilateral interaction at the Prime Ministerial level though careful preparation is needed to ensure a productive and implementable outcome. In the meantime, a moratorium on sound-bites, especially by those who are not in the loop or in synch with Prime Minister Singh’s thinking, is essential.

Related Links:

India's Sane Voice Warns Indians

India Tops in Illiteracy and Defense Expenditures

UNESCO Education For All Report 2010

India's Arms Build-up: Guns Versus Bread

South Asia Slipping in Human Development

World Hunger Index 2009

Challenges of 2010-2020 in South Asia

India and Pakistan Contrasted 2010

Food, Clothing and Shelter in India and Pakistan

Introduction to Defense Economics

Food, Housing and Clothing in India and Pakistan

Incompetence Worse Than Graft in Pakistan

"It has been my experience that folks who have no vices have very few virtues" is a quote often attributed to Abraham Lincoln, also known as Honest Abe.

I do not entirely agree with Honest Abe, but what does it mean in Pakistan's context, given the extraordinary and often hypocritical incessant demands for honesty by the nation's TV talking heads? Is competence not as big or bigger virtue than honesty? Is it not Utopia to expect angels to rise to leadership positions in a nation that generally scores badly at all levels on corruption indexes? Is it not better to elect and expect greater competence from the leaders in Pakistan? The kind of competence that delivers good governance for the greater good of society?

Since the beginning of Pakistan's existence as an independent nation in 1947, there has been constant repetition of slogans about piety and honesty by invoking the name of Islam, and its early legendary leaders, particularly great Caliphs like Omar. What is often overlooked is that Caliph Omar was not just impeccably honest; the key reason for his tremendous success as a great leader and highly respected ruler was his extraordinary competence in governance. Can we find a leader like Caliph Omar today? I think it's highly unlikely. However, I do think it is possible to find people who are reasonably competent amongst Pakistanis to help lead the nation to a better future.

Looking around at the recent history of successful leaders in the Islamic world, like Malaysia's Mahathir Mohammad and Indonesia's Suharto, there have been serious allegations of corruption and abuse of power against them. And yet, it is their sufficient competence in delivering good governance to their people that has brought great economic success and remarkable human development to their nations, and ultimately a greater measure of competent democratic governance to their highly literate electorates.

Beyond the Islamic world, there are various levels of corruption found in both developed and developing nations. But many of them have made significant strides in recent years, mainly because the leaders whom they have elected have been far more competent those in Pakistan. Even in Pakistan, whenever the military rulers have brought in technocrats and professionals to help develop and execute good policies, there have been periods of rapid growth. It is their competence, not their unassailable honesty, that has helped them deliver significant economic growth.



Pakistan's average economic growth rate was 6.8% in the 60s (Gen. Ayub Khan), 4.5% in the 70s(Zulfikar Bhutto), 6.5% in the 80s (Gen. Zia ul-Haq), and 4.8% in the 90s (Benazir Bhutto and Nawaz Sharif). Growth picked up momentum in the 21st Century under General Musharraf, and from 2000-2007, Pakistan's economy grew at an average 7.5%, making it the third fastest growing economy in Asia after China and India. There were 2-3 million new jobs created each year from 2000-2007, which significantly enlarged the middle class, and helped millions escape poverty.

Unfortunately, there is a troubling history of the democratic process in Pakistan resulting in the election of leaders who are demonstrably both corrupt and incompetent. After surviving the lost decade of the 1990s under such leaders, and then thriving in this decade under a more competent dictator until 2007, Pakistan has once again returned to the bad old days of the 1990s. The economy is stagnating, inflation is high, there are shortages of everything from food to water and power and security, unemployment is rising, and many are slipping back into poverty.

It would be great if Pakistanis can have both competence and honesty in their leaders. However, I would personally insist on competence to deliver good governance as a minimum criterion for leadership positions, if I can't have both.

Here is my incomplete wish list for the kind of competencies desirable in governing Pakistan at this critical juncture in its life:

1. Motivational Competency: The leadership needs to sell a vision of a secure, peaceful, stable and prosperous Pakistan, and motivate the people to work toward achieving it. It's not going to be easy, but strong motivational skills can help inspire the nation, in spite of the deep skepticism and toxic cynicism that pervades the nation's discourse today.

2. Security Competency: What the leadership needs is a comprehensive strategy using a mix of intelligence capability, political dialog, military force and close monitoring to isolate and defeat those who continue to perpetrate murder and mayhem on the streets of Pakistan. Such a policy must be developed, debated, sold to the people, and constantly refined to produce results.

3. Human Development Competency: No nation can achieve greatness unless its human resource potential is developed and utilized to the fullest. It is a challenge that will require a team of committed and competent professionals with the full backing and the resources of the state to build a public-private partnership for mass literacy campaigns and to provide access to food and health care. Beyond that, there will be a serious focus required to build great institutions of higher learning to develop knowledge based economy for the twenty-first century.

4. Economic Competency: There is a need to build a non-partisan economic leadership team with the best available talent and experience in Pakistan. Such a team should be chartered to come up with policies and programs to spur nation's economic growth to create opportunities for the tens of millions of young people, and to generate the national resources for funding ambitious programs in human and economic development of the nation.

Can our current leadership do it? Their past record is not reassuring. However, if they make a serious effort toward it, and start to show some results, I am confident they will find real support for their efforts in Pakistan. Results from good governance by the politicians will be the best guarantee for the survival of democracy in Pakistan.

Related Links:

Haq's Musings

Pakistan's Decade of 1999-2009 in Review

ASEAN Architect Suharto Passes On

NRO and Corrupt Democracies in South Asia

Malaysia National Front Suffers Setback

Musharaf's Economic Legacy

Pakistan's Corruption Indexes

Return to Bad Old Days in Pakistan

Shaukat Aziz's Economic Legacy

Daily Carnage in Pakistan

Creative Financing of Pakistan's Energy Projects

Cash poor and energy-starved Pakistan should consider tapping into the London-based global carbon trading market to fund its renewable energy projects. The carbon market is about $6 billion now, and it is projected to exceed 50 billion dollars after the US joins carbon trading. Here is how I understand it:


Let's take the example of a hypothetical big European company XYZ faced with the problem of large carbon emissions that must be reduced or offset by one million ton under the Kyoto protocol. To satisfy the international treaty requirements, XYZ company has the option of either installing carbon-capture equipment to reduce its emissions by a million ton, or retrofit the plant to cut its carbon emissions or buy carbon offsets from a carbon trader for a project in a developing country like Pakistan that offsets its emissions by a million ton. It is a business decision that often leads companies such as XYZ to fund cost-effective carbon offsets in developing nations by buying carbon credits on the open market. Such carbon offset projects could vary from planting mango orchards in Pakistan to absorb a million ton of carbon, or it could be a hydroelectric dam or a wind farm or solar electricity project that replaces a planned fossil fuel project.

This is not just a fantasy. The carbon offset market is real. Major investment bankers, including Goldman Sachs and Citibank, are already heavily involved in the business through their carbon trading desks in London. And new players, such as Eco securities, are being formed to take advantage of this new opportunity.

The industry to generate and verify carbon offsets has seen explosive growth in recent years largely because of the Kyoto treaty, under which nations agreed to impose limits on carbon emissions. The treaty allows United Nations regulated companies to purchase credits produced from these offset projects to meet a portion of their emissions-reductions targets set by the international program. More than 300 million credits, each representing the equivalent of one metric ton of carbon dioxide, have so far been created, and these credits are traded on commodities markets. In February, 2010 issue of Harper magazine, Mark Shapiro, of Berkeley, Calif.’s Center for Investigative Reporting, says up to 2 billion new credits could be drawn from offset projects if a cap-and-trade program similar to the proposals now before U.S. Congress were to become reality. Though the carbon price is determined by market and it is always changing, the current price is about $20 per metric ton. At this price, the expected 2 billion new credits would create an additional $40 billion global carbon trading market.

There are successful examples of the use of trading to cut acid rain from sulfur emissions in the United States. The program allows polluters to figure out their own way to cut emissions rather than mandating a particular kind of technology to reduce emissions like a scrubber on a power plant, rather than forcing them to stop burning coal. It gives the companies a yearly target.

The proposed U.S. House of Representatives bill cuts carbon emissions by 17 percent in the United States by 2020, and it's up to the corporations to figure out how to do it. They can do it by buying offsets from other companies, or by shutting down coal plants, or by efficiency measures, etc.

Carbon credits trading reinforces the idea that pollution in one part of the world affects all of the inhabitants of the planet. And any measures taken in one part of the world, such as planting of trees or building renewable energy projects instead of fossil fuel based plants, help the entire globe. This realization is expected to help transfer billions of dollars in funds from the rich to the poor nations to deal with the common threat of the global climate change. But these funds will only help those who proactively seek them, and build renewable projects to effectively cut global carbon emissions.

As a signatory of the Kyoto Protocol, Pakistan is eligible to benefit from any project under Clean Development Mechanism (CDM) and exploring carbon credit potential in different industries. Pakistan's ministry of environment is the Designated National Authority for CDM tasked with raising awareness and participation by Pakistani companies in CDM. At least one Pakistani company, Pak-Arab Fertilizers (Pvt.) Ltd., Multan, has earned $ 13 million through the sale of CERs (Certified Emission Reductions) in 2008, the first year of the launch of CDM. The total cost of the project is $18 million, according to a report published in The Nation newspaper.

Several cities, including Islamabad, are launching carbon credit projects such as greenhouse gas emission reduction s from sources ranging from landfills to vehicles. Seoul City in Korea will begin test-operating a carbon emission trading system in April in a bid to reduce greenhouse gas emissions. Malaysia is planning carbon-neutral cities. Asia is the center of a lot of activity with CDM projects registered with the United Nations Framework Convention on Climate Change (UNFCCC).

In neighboring India, Delhi Metro became the first rail network in the world to get a UN certificate for cutting over 90,000 tonnes of carbon dioxide release into the atmosphere. The certification report, given by Germany-based validation organization TUV NORD which conducted an audit on behalf of the UN Framework Convention on Climate Change (UNFCCC), found that the DMRC stopped the emission of 90,004 tonnes of carbon dioxide from 2004 to 2007 by adopting regenerative braking systems in the metro trains. Media reports indicate that India is emerging as the one of the most active seller of carbon credits worldwide, with many of the country's firms investing in green projects. India currently has close to 500 projects registered with the United Nations, second only to China's 680. However, in terms of CERs, India's share is just 11.63 per cent, while China's is 58.75 per cent. The Indian government has approved more than 1,455 CDM projects which can potentially make Rs. 28,000-30,000 crore in export earnings, according to a Rediff report. With only a few dozen CDM projects approved to date, Pakistan is significantly behind India and China in taking advantage of the opportunity offered by Kyoto.

A number of consulting companies, such as Carbon Services and Carbon Asset Management in Pakistan, are claiming to guide clients through the process of selling carbon credits to set up clean energy projects. There have been some allegations that middlemen are ending up with huge chunks of the proceeds from carbon credit sales.

Carbon services has arranged seminars with Pakistan's Ministry of Environment to educate businesses about what CDM is, what projects are being done and what can be done within their countries, according to a report in Computerworld. "We try and bring in examples from India, China, Brazil etc about what their industries have done and disseminate that information to local industries," Omer Malik of Carbon Services told Rabia Garib of Computerworld. "The Ministry of Environment's department that looks after this is Designation National Authorities (DNA) is extremely active and very proactive towards promoting CDM in Pakistan"

This is an opportunity for Pakistani government, businessmen and entrepreneurs to seriously pursue creative ways of financing renewable energy projects in Pakistan, including sales of carbon credits, to effectively deal with the current crippling energy crisis in the country. It is also an opportunity to help reduce the impact of climate change on Pakistan. At 8 feet below sea level, Pakistan's financial capital Karachi shows up on the list of world's mega-cities threatened by global warming. Other South Asian cities likely to come under rising sea water in the next 100 years include Mumbai, Kolkata and Dhaka. And it's not just the big cities in South Asia that will feel the brunt of the climate change. The rural folks in India are already seeing rising crop failures, increasing poverty and frequent farmer suicides.

Addressing a regional conference in Islamabad last year, Dr Rajendra Kumar Pachauri, chairman of the Inter-governmental Panel on Climate Change (IPCC), said Pakistan was witnessing severe pressures on natural resources and environment.

He said: “Climatic changes are likely to exacerbate this trend. Water supply, already a serious concern in many parts of the country, will decline dramatically, affecting food production. Export industries such as fisheries will also be affected, while coastal areas risk being inundated, flooding the homes of millions of people living in low-lying areas.”

“The fact that global warming was unequivocal and there is no scope for scientific questioning, Pakistan faces potential environmental catastrophe,” said Dr Pachauri, who has been awarded the Nobel Peace Prize (on behalf of the IPCC) along with former US vice-president Al Gore.

Pakistan's participation in the carbon market is a win-win for Pakistan and the buyers of carbon credits in the West. It helps Pakistan deal with its energy and climate crises, and helps the western companies meet their goals of cutting global carbon emissions. The best way to make it happen is for the government, educational institutions and industry groups to educate the candidates about going through the United Nations CDM process set up under the Kyoto Protocol.

Related Links:

Going Through the CDM Process

Pakistan's Energy Crisis

Renewable Energy for Pakistan

Pakistan Inks Hydroelectric Power Deals

Carbon Offsets Under Fire

The Politics of Climate Change

Cap and Trade and The New Carbon Economy

Electric Power Crisis Worsens in Pakistan

Light a Candle, Don't Curse Darkness

Social Entrepreneurs Target India and Pakistan

Grameen Shakti Solar For Pakistan

Climate Change Worsens Poverty in India

Carbon Trading: Opportunity For Pakistan

Pakistani Entrepreneurs Survive Downturn

Water Scarcity in Pakistan

Factor AG and Carbon Services Pakistan Presentation

Bhutto Documentary at Sundance Film Festival

The life of Benazir Bhutto (1953-2007) is the subject of a documentary film "Bhutto" by Jessica Hernandez and Johnny O'Hara at a major independent film showcase in the mountains of Utah in the United States. The film compares the glories and tragedies of the Bhutto family with the story of the Kennedys in America.

The two-hour documentary shows her tragic story in the broader context of Pakistan's troubled history since independence in 1947.



The Bhutto family, sitting left to right in back row: Nusrat, Shahnawaz, Zulifiqar Ali, Sanam. In front, Murtaza and Benazir.

Fitting it in two hours "was the most difficult thing -- making sure that we are giving you an enormous amount of information," co-director Hernandez told AFP. "And to make it entertaining was the only way to do that."

The film captures the unusual story of success and failures, and the controversial, feudal legacy of Pakistan's first woman prime minister, with ultra-slick editing, dynamic music and graphics, animation -- to captivate the audience. As "Bhutto" producer Duane Baughman put it, "You mention the name of Bhutto, in Pakistan especially, and you will have no shortage of people who hate her and of people who love her".

"Her legacy will be debated for the generations to come," Baughman told AFP.

Here's a short movie trailer:



Here's another video discussing Benazir Bhutto's Legacy:



Here are some spontaneous reviews of the documentary from viewers at Sundance:



Here's a documentary on Islam narrated by Benazir Bhutto:



Related Links:

Ode to Feudal Prince of Pakistan

Acquittals in Murtaza Bhutto Case

Bilawal Partying at Oxford

Political Dynasties and Assassinations

Grandchildren of Zulfikar Ali Bhutto and Ziaul Haq Speak Out

NRO, Democracy and Corruption in South Asia

Pakistan's Intelligence Failure Amidst Daily Carnage

Zardari Corruption Probe

Karachi Tops List of World's Largest Cities

With rapid urbanization in Pakistan, Karachi has become the world's biggest city with a metro area population of 18 million people, according to Citymayors stats published recently.

Karachi (Urdu: کراچی, Sindhi: ڪراچي, Karāchi) is followed by Mumbai, Delhi, Buenos Aires, Seoul, Jakarta, Manila, Sao Paulo, Shanghai and Istanbul making up the top 10 list. Bangladesh capital Dhaka is at number 12, barely missing a top 10 slot. Of these, Mumbai, Dhaka and Delhi also have the dubious distinction of making Mercer's list of world's dirtiest cities. In another survey, Mercer has ranked Karachi as the fourth cheapest city for expatriates.



The list of the world’s largest cities, by land area, is headed by New York Metro, with a total area of 8,700 square kilometers. Tokyo/Yokohama is in second place with almost 7,000 square kilometers, followed by ten cities from the United States. Mumbai (Bombay), with a population density of almost 30,000 people per square kilometer, is the world’s most crowded city. Kolkata (Calcutta), Karachi and Lagos follow behind.



In 2008, the US based NPR radio did a series on Karachi titled "Karachi: The Urban Frontier". It highlighted the following facts about Karachi:

1. Karachi is built along a natural harbor facing the Arabian Sea, and this central location between the Middle East and India has made Karachi an important trading port for hundreds of years.

2. Karachi encompasses both its old seafront district and a sprawling web of commercial and residential development that covers almost 1,400 square miles. Its contemporary landscape spans skyscrapers, posh golf resorts, congested roadways and sprawling squatter colonies.

3. The Port of Karachi handles 60 percent of Pakistan's cargo, and the Karachi Stock Exchange is one of Asia's most active trading markets (The data for 1999-2009 shows that Karachi share market significantly outperformed Hong Kong, Mumbai and Shanghai markets). The city's main industries include shipping, trade, finance, banking, information technology, manufacturing, real estate, media and education.

4. Like any big city, it has its share of problems. Pollution, crime, corruption and political volatility are just some of the issues confronting the 12 million to 18 million "Karachiites" who call this overcrowded city home. Karachi is 60 times larger than it was when Pakistan was created in 1947. And with the population growing at an annual rate of 6 percent, one of the biggest challenges for city officials is managing the tensions and violence that often flare along ethnic and religious lines.

5. Karachi is growing so fast that estimates of its population range from 12 million to 18 million. The country's financial capital is also a city where about half the population lives in illegal houses.

Here are some figures for Karachi population I received from the editors of citymayors.com:

YEAR Urban Population
1856 56,875
1872 56,753
1881 73,560
1891 105,199
1901 136,297
1911 186,771
1921 244,162
1931 300,799
1941 435,887
1951 1,068,459
1961 1,912,598
1972 3,426,310
1981 5,208,132
1998 9,269,265
2006 13,969,284
2007 14,500,000

Since Karachi population has been growing at about 4-6% a year recently, the 18 million figure for Karachi in 2009 makes sense.

The mayors of the world’s twenty largest cities are each responsible for more people than most national prime ministers. For example, London, ranked 20th in the world, has more residents than nations like Paraguay, Denmark, New Zealand or Ireland, and if Karachi, globally the largest city, was a country it would rank above Greece, Portugal or Hungary. The combined population of the world’s eight megacities - cities with more than 10 million inhabitants - comfortably exceeds that of Germany.



Urbanization is not just a side effect of economic growth; it is an integral part of the process, according to the World Bank. With the robust economic growth averaging 7 percent and availability of millions of new jobs created between 2000 and 2008, there has been increased rural to urban migration in Pakistan to fill the jobs in growing manufacturing and service sectors. The level of urbanization in Pakistan is now the highest in South Asia, and its urban population is likely to equal its rural population by 2030, according to a report titled ‘Life in the City: Pakistan in Focus’, released by the United Nations Population Fund. Pakistan ranks 163 and India at 174 on a list of over 200 countries compiled by Nationmaster. The urban population now contributes about three quarters of Pakistan's gross domestic product and almost all of the government revenue. The industrial sector contributes over 27% of the GDP, higher than the 19% contributed by agriculture, with services accounting for the rest of the GDP.



A 2008 report by UN Population Fund says the share of the urban population in Pakistan almost doubled from 17.4 percent in 1951 to 32.5 percent in 1998. The estimated data for 2005 shows the level of urbanization as 35 per cent, and CIA Factbook puts it at 36% in 2008. An expected positive consequence of the increasing urbanization of society in Pakistan will be the creation of over 100 million strong middle class by 2030, making Pakistan's grass roots democracy more viable and responsive to the needs of the people. This large urban population will not only create a domestic market for goods and services, but it can create a skilled work force that can be the engine of economic growth and source of innovation.

According to the 1998 census, Sindh is the most urbanized province with 49 percent percent of the population living in urban centers. NWFP is the least urbanized province with only 17 percent of its population living in urban areas.

With Pakistan already the most urbanized country in South Asia, Karachi's population has been growing at a rate of over 4 percent a year for decades, according to the editors at Citymayors.com. Karachi now accounts for about 12 percent of the nation's population, and Mustafa Kamal as its mayor is accountable to a larger population than the presidents or prime ministers of many nations of the world. As the nation continues to experience increasing rural-to-urban migration, the jobs of the big city mayors in Pakistan, particularly Karachi and Lahore, are becoming significantly more important and challenging than generally recognized. How these mayors deal with these challenges will largely determine the fate of the nation, in terms of education, health care, housing, transportation, industrial and service sectors' growth, job growth and overall economic activities, as well as the future of democracy.

When visitors see a squatter city in India or Pakistan or Bangladesh, they observe overwhelming desperation: rickety shelters, little kids working or begging, absence of sanitation, filthy water and air. However, there are many benefits of rural to urban migration for migrants' lives, including reduction in abject poverty, empowerment of women, increased access to healthcare and education and other services. Historically, cities have been driving forces in economic and social development. As centers of industry and commerce, cities have long been centers of wealth and power. They also account for a disproportionate share of national income. The World Bank estimates that in the developing world, as much as 80 percent of future economic growth will occur in towns and cities. Nor are the benefits of urbanization solely economic. Urbanization is associated with higher incomes, improved health, higher literacy, and improved quality of life. Other benefits of urban life are less tangible but no less real: access to information, diversity, creativity, and innovation.

In a recent interview published by Wired Magazine, Stewart Brand, "the pioneering environmentalist, technology thinker", and founder of the Whole Earth Catalog focused on the positive aspects of urban slums. Brand also made a counterintuitive case that the booming slums and squatter cities around the major urban centers in the developing world are net positives for poor people and the environment. Brand's arguments make a lot of sense, as long as there are representative city governments responsive to the growing needs of the new and old city residents.

Here's a video clip of Indian environment minister Jairam Ramesh saying "if there was a Nobel Prize for dirt and filth, India would win it hands down":



Related Links:

Karachi Tops Mumbai in Stock Performace
Eleven Days in Karachi
Citymayors website

Pakistan Most Urbanized in South Asia

Karachi: The Urban Frontier

Do Asia's Urban Slums Offer Hope?

Orangi is Not Dharavi

Climate Change Could Flood Karachi Coastline

Karachi Fourth Cheapest For Expats

Karachi City Government

Karachi Dreams Big

Mobile Phones For Mass Literacy in Pakistan

A pilot program in Pakistan has demonstrated the effectiveness of pushing mass literacy through the use of cell phone text messaging capability. The five-month experiment, initiated by United Nations Educational, Scientific and Cultural Organization (UNESCO), targeted 250 females aged 15 to 24 years old in three districts of Pakistan's Punjab province. In this pilot project which successfully concluded last month, the participant who have just completed the basic literacy course, were given a mobile phone each. They received three text messages a day in the local language. They were required to practice reading and writing the messages in their work book and reply to their teachers by text.



The success of this mass literacy initiative augurs well in a country like Pakistan, where the mobile phone penetration is among the highest in the developing world, and the number of mobile subscribers has rocketed from less than 2 million to more than 94 million (58% penetration) from 2002 to 2009.



It is also significant because Pakistan also has the dubious distinction of having the fourth largest number of illiterate adults in the world, after India, China and Bangladesh, according to a recently released UNESCO report. India and Pakistan also have the worst gender gaps in literacy rates, exceeding 22%.



The Daily Galaxy website has reported that a project, called Celedu, is starting its work in some rural villages in India, but hopes to expand far beyond that. Its initial offerings include cellphone-based games and quizzes that can teach basic literacy skills. For example, a child in India can play a game of Snakes and Ladders on the phone by answering multiple-choice questions about which words begin with a particular letter in the Hindi alphabet. Each correct answer allows the child's marker to advance through the game board, providing a fun and competitive approach to learning the written language.

"The biggest disease in India is illiteracy," which affects 400 million people there, says team member Rafael de Cardenas of Sloan. A PC-based version of the program, called Tele Akshar, "has already taught 54,000 women in 300 villages," he says, and the cellphone version should be able to reach far more people, according to Daily Galaxy.



In addition to education and healthcare, access to financial services has been fairly limited in Pakistan, particularly for the rural poor. The total banking sector serves around 6 million borrowers and 25 million depositors, implying a penetration rate of 3.6 percent and 15 percent respectively. In terms of access to microfinance, which means the availability of small loans, micro deposits and micro-insurance services to low income households, the current penetration rate is only 10 percent. In other words, 85 percent of Pakistan's population does not have access to any financial services at all, which inherently creates an uneven and an inequitable economic world, where the majority of people are financially marginalized. This situation drives the poor to rely on informal sources of funding like the unscrupulous moneylender, where the calculus of the relationship works to the detriment of the borrower. Well regulated banking and microfinance sectors are, therefore, absolutely necessary to give hope to the poor in breaking the vicious cycle of dependence and poverty.

Now, a number of telecom operators have now joined hands with financial institutions to extend the reach of financial services to the previously un-served masses, according to Babar Bhatti who operates "State of Telecom Industry" website. A successful example is Easypaisa, a telenor and Tameer Microfinance Bank joint offering that offers quick and easy remittance capability for the migrant workers wanting to send money to their loved ones.

The dramatic growth of cell phone usage in the developing world has created tremendous opportunities to deliver some of the basic ingredients of human development to the people, including education and health care. It has spawned a whole new field of research called "Information and Communication Technologies For Development" abbreviated as ICT4D. The UNESCO female literacy pilot helps establish some credibility for the advocates of ICT4D.

At MIT's Legatum Center, whose director Iqbal Quadir was the founder of Bangladesh's GrameenPhone, improving the delivery of health care in rural areas has been one major focus of their research efforts. Patients in a remote village, for example, now may have to spend a whole day or more traveling to the nearest clinic in order to be tested, diagnosed and receive treatment or a prescription drug for their health problems. But a new open-source software system developed by students who formed a nonprofit company called Moca could provide a faster way, according to a report in Daily Galaxy.

Using a menu of questions downloaded to a cellphone - and, if necessary, a picture taken with the phone's built in camera - a patient can transmit enough information to a doctor or nurse in a remote location to get a preliminary diagnosis, and to find out whether the condition warrants a trip to the clinic or not. "In developing countries, 80 percent of all physicians are in urban areas," while most of the people live in the countryside, according to Moca team member Richard Lu, an MIT graduate student in biomedical informatics.

A GSM Association study conducted by Deloitte and Touche in 2007 estimated that the mobile industry created 220,000 high-paying jobs in Pakistan and accounted for 5% of its Gross Domestic Product (GDP) and approximately 6% of the total taxes collected by the Central Board of Revenue. The study also found that Pakistan’s economy and society is benefiting from rising mobile phone usage and low tariffs, which lowers the cost of doing business and improves productivity, while helping families and friends to connect to each other at home and abroad.



Several studies by ICT4D researchers in Pakistan and other developing nations have concluded that the use of cell phones have helped reduce poverty and improve incomes of small vendors and service providers, such as beauticians, fishermen, taxi drivers, delivery people and small shopkeepers.

As the mobile broadband roll-out with WiMax, 3G and EVDO takes off in Pakistan, the mobile internet can become a reality, opening up vast opportunities for delivering more advanced capabilities for education, health care and business for the ordinary people. The availability of more powerful and inexpensive entry level smart phones and applications will help as well.

One example of telemedicine efforts is a Cisco project in Pakistan, where a trial combines satellite and WiMAX connectivity to mobile units to provide earlier cancer screening to rural patients.

Many critics and cynics have long dismissed the growing use of cell phones in Pakistan as just a waste of time and money. Based on the efforts of ICT4D believers, however, it is becoming increasingly clear that the mobile phone in developing world could prove to be a an extremely useful tool providing a huge boost for human development, productivity and prosperity of the people at the bottom of the pyramid.

Related Links:

Poverty Reduction Through Telecom Access

Pakistan's Telecom Boom

Pakistan Tops Text Message Growth

WiMax Rollout in Pakistan

Mobile Internet in Pakistan

Low Literacy Threatens Pakistan's Future

Gender Gap in South Asia

Mobile Financial Services in Pakistan

Financial Services in Pakistan

Distance Learning in Pakistan

Top 5 ICT4D Trends in 2010

ICT4D in Pakistani Hospital

ITCN Asia 2010 Conference in Karachi

State of Telecom Industry in Pakistan

India Tops in Illiteracy and Defense Spending

I have just published on my blog, Haq's Musings, a guest post by Colonel Pavan Nair, a retired Indian Army officer, a detailed analysis of the Indian defense spending in the context of the nation's growing needs for social spending on food, education and health care. Col Nair prefaces his analysis by lamenting that "defense economics has not been a subject for serious study or debate in Indian academic or military circles. Little or no literature is available with the exception of a few books in the area of defense accounts. Economists and activists have long argued that defense related expenditure needs to be curtailed. Opinion is clearly divided between the developmental lobby and strategic thinkers who wield influence with the political leadership."

Nair then goes on to accept the challenge of defense economics in India by laying out his case with lots of data and sources, and concludes with the following:

Besides external defense, internal security and human-development form a vital part of the overall security and well-being of the nation. Is the rupee being spent wisely? The answer is in the negative both in terms of quantum and efficacy. DE has risen to unsustainable levels in the last decade primarily on account of dependence on imports and nuclearization. There is a trade-off between defense and developmental spending specifically in the area of health which becomes visible in poor human-development parameters like infant mortality rates and child malnutrition. Bangladesh is well ahead of India in these parameters. Internal security has been neglected for too long. There is a need to balance overall expenditure to meet the challenge of the emerging economic and strategic scenario. Force levels need to be reviewed. Like obsolete equipment, obsolete organizations should be dispensed with. The army has become equipment and staff oriented. It also remains manpower-intensive with too few junior officers and a large tail. The Thirteenth Finance Commission could look into aspects of internal and external security to come to a reasonable limit for both. It would also be expedient if the Commission specifies what constitutes defense spending and whether Defense Services Civil Estimates should form part of defense expenditure. DE must be capped at current levels.

I agree with Col Nair's conclusion, and would like to see similar detailed analysis of Pakistan's defense expenditures. Though the problems of poverty and hunger in Pakistan are a bit less serious than in India, Pakistan suffers from high illiteracy and low levels of human development that pose a serious threat to its future.

India has the dubious distinction of being among the top ten on two very different lists: It ranks at the top of the nations of the world with its 270 million illiterate adults, the largest in the world, as detailed by a just released UNESCO report on education; India also shows up at number four in military spending in terms of purchasing power parity, behind United States, China and Russia.

Not only is India the lowest among BRIC nations in terms of human development, India is also the only country among the top ten military spenders which, at 134 on a list of 182 nations, ranks near the bottom of the UNDP's human development rankings. Pakistan, at 141, ranks even lower than India.

India also fares badly on the 2009 World Hunger Index, ranking at 65 along with several sub-Saharan nations. Pakistan ranks at 58 on the same index.

Access to healhcare in South Asia, particularly due to the wide gender gap, presents a huge challenge, and it requires greater focus to ensure improvement in human resources. Though the life expectancy has increased to 66.2 years in Pakistan and 63.4 years in India, it is still low relative to the rest of the world. The infant mortality rate remains stubbornly high, particular in Pakistan, though it has come down down from 76 per 1000 live births in 2003 to 65 in 2009. With 320 mothers dying per 100,000 live births in Pakistan and 450 in India, the maternal mortality rate in South Asia is very high, according to UNICEF.

The reality of grinding poverty in resurgent India was recently summed up well by a BBC commentator Soutik Biswas as follows:

A sobering thought to keep in mind though. Impressive growth figures are unlikely to stun the poor into mindless optimism about their future. India has long been used to illustrate how extensive poverty coexists with growth. It has a shabby record in pulling people out of poverty - in the last two decades the number of absolutely poor in India has declined by 17 percentage points compared to China, which brought down its absolutely poor by some 45 percentage points. The number of Indian billionaires rose from nine in 2004 to 40 in 2007, says Forbes magazine. That's higher than Japan which had 24, while France and Italy had 14 billionaires each. When one of the world's highest number of billionaires coexist with what one economist calls the world's "largest number of homeless, ill-fed illiterates", something is gravely wrong. This is what rankles many in this happy season of positive thinking.

It is time for major South Asian nations to deal with the urgent need for careful balancing of their genuine defense requirements against the need to spend to solve the very serious problems of food, education, health care and human resource development for securing the future of their peoples.

Related Links:

UNESCO Education For All Report 2010

India's Arms Build-up: Guns Versus Bread

South Asia Slipping in Human Development

World Hunger Index 2009

Challenges of 2010-2020 in South Asia

India and Pakistan Contrasted 2010

Food, Clothing and Shelter in India and Pakistan

Introduction to Defense Economics