Friday, October 29, 2010

Agriculture and Textiles Employ Most Indians and Pakistanis

About 60% of India's workforce is in agriculture. Textile industry is the second biggest employer, accounting for a fifth of India’s exports, and employs almost 10 percent of India’s workforce, or some 35 million people, and has the potential to add another 12 million new jobs --dwarfing the 1-2 million jobs created by the much-heralded IT and BPO sector, according to a World Bank report.

The largest number of people in other South Asian nations are also employed in the agriculture sector, followed by textile manufacturing as the second largest employer.

About 60% of India's workforce is engaged in agriculture, contributing about 16% of GDP, according to published data. Textile manufacturing claims the second largest employment and comprises 26% of manufacturing output. It accounts for a fifth of India’s exports, and employs almost 10 percent of India’s workforce, or some 35 million people, and has the potential to add another 12 million new jobs --dwarfing the 1-2 million jobs created by the much-heralded IT and BPO sector, according to a World Bank report. Even the most optimistic estimates by NASSCOM put the total direct and indirect employment in IT and ITES sectors at 10 million jobs.

The textile sector is crucial to India's economy. The textile industry contributed 4% of India's gross domestic product in the year that ended March 31, and accounted for 13.5% of Indian exports, bringing in $17.6 billion, according to the Wall Street Journal.

With the Indian rupee soaring — up 9 percent against the dollar in the last 16 months, textile exports are down 6.4 percent from a year earlier in the $10 billion Indian clothing industry, according to a recent report in the New York Times.

About 23% of the India's workforce is part of the services sector which accounted for 55% of the GDP in 2007. Within the service sector, the fastest growing segment is business services, contributing about 7% of GDP. It includes information technology enabled services (ITES), information technology (IT), business process outsourcing (BPO) etc. In 2000, it was one third of the total output of services.

Agriculture in Pakistan accounts for 19.4% of GDP and 42% of labor force, followed by services providing 53.4% of GDP and 38% employment, with the remainder 27.2% of GDP and 20% workers in manufacturing sector. Over half of Pakistan's manufacturing jobs are in the textile sector, making it the second biggest employer after agriculture.

The dire situation in India's agriculture sector has been epitomized by over 200,000 farmers' suicides in the last decade. And the rising Indian rupee is now hurting India's textile sector by making its exports more expensive in the world market.

Pakistan's agriculture and textile sectors have also suffered in the last two years. Reduced water flows from India followed by recent floods have adversely affected large swathes of Pakistan's farmland. And the current energy crisis combined with the economic slowdown have hit the textile industry particularly hard. The European Commission, the EU's executive, has recently approved tariff waivers on 75 categories of imports from Pakistan for up to three years, according to a report in the Wall Street Journal. The gesture followed an order by EU leaders wanting to demonstrate they're helping some 10 million Pakistanis left without shelter in the wake of floods.

Pakistan shipped about $4.2 billion of exports to EU last year. About 75% of Pakistani exports to EU are textiles, clothing, leather or related products, and those goods will make up a majority of the roughly $140 million in total extra trade the EU says the deal will generate from eliminating the EU tariffs.

Here is a quick comparison of different sectors of the economy in India and Pakistan in terms of employment and GDP contribution:

Country....Agri(emp/GDP)..Textiles..Other Mfg..Service(incl IT)

India........60%/16% ...........10%/4%.....7%/25%...........23%/55%

Pakistan......42%/20%...........12%/8%......8%/18%...........38%/54%

Assuming India's PPP GDP of $3.75 trillion (population 1.2 billion, nominal gdp $1.3 trillion) and Pakistan's $450 billion (population 175 million, nominal gdp $167 billion)), here is what I calculated in terms of per capita GDP in different sectors of the economy:

India vs. Pakistan: Per Capita GDP $3,125 PPP ($1,083 nom) vs. $2,570 ($955 nom)

Agriculture: $833 PPP ($288 nom) vs. $1,225 PPP ($454 nom)

Textiles: $1,242 ($433) vs. $1,714 ($636)

Non-Textile Mfg: $11,155 ($3,870) vs $5,785 ($2,142)

Services $7,246 ($2,590) vs $3,654 ($1356)

Data shows that the majority of Indians who work in agriculture and textiles are on average 50% poorer than their Pakistani counterparts, as also reflected in the under-$2 a day per capita income figures for 60% of Pakistanis and 76% of Indians.

Agriculture Value Added Per Worker in Constant 2000 US$ (Source: World Bank


It also shows that Indians in manufacturing and services sectors add almost twice as much value as Pakistanis, and produce significantly higher value goods and services than their Pakistani counterparts.

The income range in India is much wider from $883 to $11,155 accounting for the much bigger rich-poor gap relative to Pakistan's relatively narrower range from $1225 to $5,785.

The challenge for India is to improve its farmers' productivity and move some of them into higher value added sectors of the economy.

The challenge for Pakistan is to have its manufacturing and services sectors produce more goods and services of higher value, and continue to migrate more of its farmers into other sectors of the economy.

It's clear that farming and textiles continue to be the most important economic sectors with the biggest impact on the lives of the majority of ordinary citizens of India and Pakistan. And just as the US and EU look after their farmers, it is very important for South Asian governments to protect their farming and textile sectors even as they promote diversification of their economies.

Related Links:

Haq's Musings

Pakistan Textile Industry Report

Pakistan's Farmland Controversy
Peepli Live and India's Farmers' Suicides

Floods in Pakistan
Pakistan's Textile Woes

Agricultural Growth in India, Pakistan and Bangladesh

KPMG Report on Pakistan Economy 2010

India and Pakistan Contrasted
Pakistan's Major Business Sectors
Labor Laws: To Create Good Jobs, Reform Labor Regulations

Foreign Investors Buying Pakistani Farm Land
Is Leasing Agricultural Land to Foreigners a Good Idea?

Pakistan's Sugar Crisis and Dietary Habits

Wheat Research and Development in Pakistan

Pakistan's Water Crisis

Wheat Productivity, Efficiency and Sustainability

Agrarian Reform in Pakistan
Urbanization in Pakistan

Water Scarcity in Pakistan

Pakistan Agribusiness Report 2009

Pakistan to Lease 700,000 Acres to Arab States

Pakistan's Total Arable Land

45 comments:

AKram said...

India's exports is expected to cross USBD 2000 in 2010-11. Can you pls give a breakup of india's export. From what I read India's manufacturing exports of engineering goods like Motorcycles, scooters, Cars, Locomotives, Aircraft Parts is quite impressive.

Riaz Haq said...

Akram: "India's exports is expected to cross USBD 2000 in 2010-11."

$200 billion is the target for India's exports in 2011, according to ADB, about 20% of it in engineered goods, about the same or slightly more than India's textile exports.

Overall, India imports most of its infrastructure machinery (power, telecom, construction equipment, etc) and defense armament and runs huge trade deficits. An example is a recent $10 billion contract by Reliance Power to import power plants from China.

India’s current account deficit tripled in the June quarter as imports soared, raising the spectre of volatile currency when the tide of overseas fund flows turns, according to Times of India.

Interest rate differentials between the domestic market and the developed nations raised the external debt too as companies found it beneficial to borrow in dollars. Widening deficit may make the central bank’s job of ensuring stability in the foreign exchange market, inflation and interest rates tough, economists say.

Current account deficit in the June quarter widened to $13.7 billion, from $4.5 billion in the year earlier, a data released by RBI showed. Current account in the balance of payments measures the net position of a country’s exports and imports of goods and services.

Anonymous said...

Overall, India imports most of its infrastructure machinery (power, telecom, construction equipment, etc)


India imports most of its telecom equipment but produces most of its power,construction equipment.

India has the capacity of producing 15,000MW of power equipment per annum with 10,000 MW pa of additional capacity on line in the next 2 years,due to unexpectantly high growth(9%+)the demand for electricity has shot up and the capacity addition is now 20,000MW pa the chinese equipment import is 5000MW pa to bridge this short fall.Expect very high import tarrifs when the surplus capacity comes on line on one pretext or the other.

India is a net EXPORTER of construction equipment and the sourcing centre for both Caterpillar and Komatsu,other than few niche high end items like tunnel boring machines like the one used in delhi metro construction we are equipment surplus.

As for trade deficit as discussed in your previous funds the net flow of funds is positive which is why our FX reserves are rising.

The $300 bn+ FX reserves let us easily ride over a few quarters of occasional negative fund flow.

Due to Quantitative Easing i.e printing money going on in the West there is a huge amount of cash being pumped in to emerging markets India's problem isn't attracting FII (Sensex crossed 20,000) its restricting FII to prevent rupee appreciation.

Riaz Haq said...

Here's a 2009 SF Chronicle report about the impact of textile downturn in India:

Coimbatore, India — The trouble began far away from the leaky concrete house and stand of banana trees that Sakunthala Radhakrishnan calls home.

In 19 years as a textile worker in southern India, Radhakrishnan saved enough to buy gold jewelry. She sent money to her parents and fattened up her skinny daughter with fancy energy drinks. And she secured for her child a gift she herself never received: an English-language education.

But seven months ago, the better life her family was crawling toward got yanked out of reach. After the U.S. financial crisis erupted thousands of miles away, the textile factory where she and her husband worked closed because orders dried up and credit tightened.

"It's a distant dream since I lost my job," she said. "I suffer mental depression."

Radhakrishnan, 34, and her husband found new jobs as day laborers - she at a smaller textile factory and he as a welder. But their family income has plunged by nearly half, from $160 to $90 a month. Now they could lose their home and have to rely on the government for food.

For years, textile jobs helped tens of millions of Indians like Radhakrishnan clamber onto the bottom rungs of the nation's fast-expanding middle class. Textiles are India's second-largest source of employment, after agriculture, accounting for over 35 million jobs - far more than the 2.2 million in India's high-profile information technology sector.

Now, the global economic meltdown is pushing Radhakrishnan and many others back.

The IMF estimates that the slowdown has already driven more than 50 million people globally into extreme poverty. In India, slowing growth means at least three million people won't be lifted out of poverty this year, and some of the 200 million who live just above the official poverty line could slip below it, according to the U.N. Development Program.

Experts warn the social damage could be long-lasting, as parents scrimp on medical care and pull their children from school.

"This will affect a generation," said Ajay Chhibber, assistant secretary general of the U.N. Development Program in New York. "A girl who drops out of school will be an illiterate mother the rest of her life. ... You had a financial crisis. It's now become an economic crisis. The next phase of this in 2009 will be a social crisis."

Many in the textile belt of south India's Tamil Nadu state have seen their incomes roughly halved, to about $1.50 a day, as factories hit by declining exports and tight credit cut production, are forced to reduce payrolls and eventually close down. Distribution of government subsidized food in the area has shot up, and people are taking out loans and hocking jewelry to meet expenses.

India's public schools are notoriously poor, and many parents work hard to send their children to low-cost private schools that teach English. Now they are pulling them out, cutting off the next generation from what has been the surest ticket to a better life in India: the English language.

During the boom years, textile factories in Tamil Nadu's Coimbatore region could not get enough workers. They sent buses to nearby villages, picking up workers for thrice-daily shifts. In 2005, mills began holding recruitment fairs hundreds of miles away, in Tamil Nadu's impoverished south. Laborers poured in from poor states like Bihar and Orissa. Even on $3 or $4 a day, many built houses and put their children in private English-language schools.

Anonymous said...

Riaz I suggest you focus on the sob stories of the 20 million Pakistanis effected by floods in pakistan than the plight of people in the textiles industry of India.

Besides 2009 was the height of the slowdown of late things have improved but unless demand returns to pre crisis levels in the west ALL textiles industries of ALL countries will be affected not just India.

Anonymous said...

^^ Amen Bro

I think it is kind of an inferiority complex of Pakistan hearts of hearts they know they have failed as a people and a nation so they constantly find faults with India to feel good about themselves.

Anyway the good news is we will in all probability grow faster than China as per IMF this decade starting next year!

This is primarily due to base effect &demographic aging i.e China with per capita income $4000 vis a vis our $1200 will slow down and the dependency ratio will go up dramatically in China due to one Child policy while our dependency ratio has just begun falling.

Hopefully we can be 50% of China by 2025 which automatically makes us the world's third largest economy.

I think we should just focus on this and just ignore Pakistan.

Anonymous said...

Riaz Bhai

http://www.nytimes.com/2010/10/31/world/asia/31china.html?ref=todayspaper

Sanjay said...

Your friend THomas Friedman again pimping for India.

http://www.nytimes.com/2010/10/31/opinion/31friedman.html?ref=todayspaper

Will anybody ever pimp for Pakistan.

Riaz Haq said...

Sanjay: "Your friend THomas Friedman again pimping for India."

Here is what an American traveler-blogger Sean Paul Kelley says about Tom Friedman's India hype:



Alrighty, so now I am in Bangalore, the IT capital of India. It is absolutely nothing like what Tom Friedman depicts in his book. I've taken a boat load of photos to prove it. I'm really beginning to think he flew here in a private jet, was picked up at the airport in a limo with blackened windows, taken to the Infosys and Tata facilities and then the golf courses and his 5 star hotel and then left, without ever once walking the streets of the city or having tea down on the corner.

But I promised not to obsess on him. So that's it for now.

I didn't make it out of Bangalore as I had hoped. Serendipity intervened and I'll be heading to Hampi tomorrow night at 1030. So, I'll make a day of it tomorrow and see what there is to see in the city and then head off to the ruined capital of the Vijayanagar Emperors. More soon.

Riaz Haq said...

Here's an Op Ed by Ananya Mukherjee-Reed on Kerala women, an Indian state with the highest social indicators in India and most of the developing world:

Some 250,000 Kudumbashree women throughout Kerala have come together to form farming collectives which jointly lease land, cultivate it, use the produce to meet their consumption needs and sell the surplus to local markets. Currently, these collectives are farming on an approximate area of 25000 hectares, spread throughout the 14 districts of Kerala. The idea is to increase the participation of women in agriculture, and in particular, to ensure that women, as producers, have control over the production, distribution and consumption of food.

This strategy for involving women in agriculture comes at a very crucial time for Kerala. As in most parts of the world, vast quantities of Kerala's agricultural land has been diverted towards residential and commercial development. At the same time, fall in agricultural prices and rising wages have made farming an unprofitable activity - leading to a continuous fall in food production in the state. It is in this context that Kerala has developed its food security strategy. Unlike the standard approaches to food security; it goes beyond the question of food distribution to the realm of food production. Indeed, as global movements like the Via Campesina have been trying to assert, unless the production of food is enhanced and the real producers of food have control over the food economy, there can be no food security.

As I travelled through Kerala, it seemed to me that Kudumbasree farmers are emerging as key actors in this attempt to rejuvenate the agrarian economy. They are bringing back land for agricultural production through their collective organisation. Slowly but surely, the connections between local livelihoods, local markets and local consumption are being reinvigorated. As I travelled, my intention was not so much to ‘assess' Kudumbashree, but to understand what the experiments might mean concretely to its protagonists.

For most of the 250 women I have met so far, farming is a not new vocation. But for some, this is the first time they are working for an income. For others, this marks a very important transition from their role of an agricultural labourer. "Earlier we were just labourers. Now we have hope," says Savitri, a landless dalit woman in Palakkad district. The 'hope' that she speaks of comes from her new role as a 'producer' and farmer. Now she works for herself and her group, on the land they have collectively leased. "As a labourer, I knew there was only work, only hard labour and nothing to gain at the end," she says. In Idukki district, I met several women who have given up working as wage labourers since they have taken up farming. There is much enthusiasm for expanding their farming activity, although land remains scarce.

Anonymous said...

^^

I think as India develops farming should be concentrated in 2-3 states like Punjab and UP/Bihar.

The rest of the country should be industrializd and the agro output should be in cash crops etc from there.Farms being converted to factories is a good thing and should be celebrated.

satwa gunam said...

@riaz

Positive side of the statistics is that the service sector of india does more value added service than pakistan as in india 23% contributes 55% and 38% constitute 55%

Emerging middle class has created job opportunities for nanies and permanent house maid who in turn are getting well paid.

Riaz Haq said...

gunam: "india does more value added service than pakistan as in india 23% contributes 55% and 38% constitute 55%"

The more productive 23% in India's services sector constitute a much smaller population than the 70% of Indians in agriculture and textiles who are much less productive than their counterparts in Pakistan...so the vast majority of Indians continue to suffer from extreme poverty, hunger and disease.

About 60% of India's workforce is in agriculture. Textile industry is the second biggest employer, accounting for a fifth of India’s exports, and employs almost 10 percent of India’s workforce, or some 35 million people, and has the potential to add another 12 million new jobs --dwarfing the 1-2 million jobs created by the much-heralded IT and BPO sector, according to a World Bank report.

The largest number of people in other South Asian nations are also employed in the agriculture sector, followed by textile manufacturing as the second largest employer.

About 60% of India's workforce is engaged in agriculture, contributing about 16% of GDP, according to published data. Textile manufacturing claims the second largest employment and comprises 26% of manufacturing output. It accounts for a fifth of India’s exports, and employs almost 10 percent of India’s workforce, or some 35 million people, and has the potential to add another 12 million new jobs --dwarfing the 1-2 million jobs created by the much-heralded IT and BPO sector, according to a World Bank report. Even the most optimistic estimates by NASSCOM put the total direct and indirect employment in IT and ITES sectors at 10 million jobs.

The textile sector is crucial to India's economy. The textile industry contributed 4% of India's gross domestic product in the year that ended March 31, and accounted for 13.5% of Indian exports, bringing in $17.6 billion, according to the Wall Street Journal.

satwa gunam said...

@riaz

India is using the funds for the benefit of poor in various government scheme but the unfortunate part is the corrupt politician

Anonymous said...

the 70% of Indians in agriculture and textiles who are much less productive than their counterparts in Pakistan...

Then how do you explain India's much higher yield/hectare(double) vis a vis Pakistan if Indians are less productive?

Anonymous said...

.so the vast majority of Indians continue to suffer from extreme poverty, hunger and disease


Even pakistan according to your statistics is only very slightly better as per 2008 data and based on past 2 years of chaos its reasonable to believe slightly worse than India right now on most if not all parameters.

Anonymous said...

gunam: "india does more value added service than pakistan as in india 23% contributes 55% and 38% constitute 55%"

You can't compare India and Pakistan with these figures riaz has put up.

That 23% of India contributes 55% of GDP vs 38% in Pakistan does not tell us anything.

Output/Input is the measure of efficiency in which our services and industry is superior to even China.The ROI from investments in India both as per profits/cap ex and appreciation of shares is 45% and 120% greater than China respectively.

Agriculture in India on the other hand is very primitive compared to China with yield/hectare 1/3 of China even though we have better quality land.Though it is still 1.5-2 times more productive than Pakistan with its Serf-Feudal rural social structure,minimal investment in hybrid seeds and low fertilizer subsidies vis a vis India.

Riaz kindly substantiate how Pakistani agriculture and textiles industry are more advanced/productive than India's????

Anonymous said...

The key is to move people from areas like agriculture to manufacturing and services industry while keeping the total output of agri same on higher. Just extrapolating from Haq's numbers,

Country..Agriculture(per capital GDP)...Textiles...Other Mfg.....Services

India........ 820.82 ......... 1,231.22 ..... 10,993.07 ........... 7,360.58

Pakistan...... 1,222.26 ........ 1,711.17 ...... 5,775.19 ........... 3,647.49

This shows that per capita GDP in Manufacturing and Services sectors in India is almost double of that in Pakistan clearly highlighting the avenues that India should target for growth and work force migration, where as in areas of Agriculture and Textiles, its higher in Pakistan.

Riaz Haq said...

anon: "Then how do you explain India's much higher yield/hectare(double) vis a vis Pakistan if Indians are less productive?"

The only way to explain your claim is that Indian farming is probably more manually intensive and employs a lot more farm workers to get the extra yield that you claim.

The average productivity data shows that Pakistani farmers averaging $1225 output per capita are about 50% more productive than average Indian farm worker producing $883 per capita.

Riaz Haq said...

anon: "The key is to move people from areas like agriculture to manufacturing and services industry while keeping the total output of agri same on higher. Just extrapolating from Haq's numbers"

I agree and I think you are pretty close in terms of per capita output in various sectors.

Assuming India's PPP GDP of $3.75 trillion (population 1.2 billion) and Pakistan's $450 billion (population 175 million), here is what I calculated in terms of per capita GDP in different sectors of the economy:

India vs. Pakistan:

Agriculture: ($833 vs. $1,225)

Textiles: ($1,242 vs. $1714)

Non-Textile Mfg ($11,155 vs $5,785)

Services ($7,246 vs $3,654)

It shows that Indians in manufacturing and services sectors add more value and produce higher value goods and services than their Pakistan counterparts.

The income range in India is much wider from $883 to $11, 155 accounting for the much bigger rich-poor gap relative to Pakistan's range from $1225 to $5,785.

Riaz Haq said...

@ swastyk et al:

In both agriculture and textile sectors where 70% of Indians and 54% of Pakistanis work, the productivity and incomes of Pakistanis are 50% higher than their India counterparts.

Assuming India's PPP GDP of $3.75 trillion (population 1.2 billion) and Pakistan's $450 billion (population 175 million), here is what I calculated in terms of per capita GDP in different sectors of the economy:

India vs. Pakistan:

Agriculture: ($833 vs. $1,225)

Textiles: ($1,242 vs. $1714)

Non-Textile Mfg ($11,155 vs $5,785)

Services ($7,246 vs $3,654)

It shows that Indians in manufacturing and services sectors add more value and produce higher value goods and services than their Pakistan counterparts.

The income range in India is much wider from $883 to $11, 155 accounting for the much bigger rich-poor gap relative to Pakistan's range from $1225 to $5,785.

So the bottom line is that the majority of Indians are 50% poorer than their Pakistani counterparts, as also reflected in the under-$2 per capita income figures for 60% of Pakistanis and 76% of Indians.

Anonymous said...

As India demonstrates, having the largest number of poor people is not the same as being the poorest country. That’s unfortunate, because being the poorest country has advantages.

Well by that logic if you take out the top 400mn of China's 1.4 billion population the bottom 1 billion have comparable per capita incomes to that of Nigeria.

Hint:They aren't found in Shanghai and other glitzy cities.


So...

Riaz Haq said...

anon: "Well by that logic if you take out the top 400mn of China's 1.4 billion population the bottom 1 billion have comparable per capita incomes to that of Nigeria."

There is no evidence or data to support your claim about China's poverty.

OPHI 2010 country briefings on India and Pakistan contain the following comparisons of multi-dimensional (MPI) and income poverty figures:

India
MPI= 55%,Under$1.25=42%,Under$2=76%,India_BPL=29%

Pakistan
MPI=51%,Under$1.25=23%,Under$2=60%,Pakistan_BPL=33%

Lesotho MPI=48%,Under$1.25=43%,Under$2=62%,Lesotho_BPL=68%

China
MPI=12%,Under$1.25=16%,Under$2=36%,China_BPL=3%

Among other South Asian nations, MPI index measures poverty in Bangladesh at 58 per cent and 65 per cent in Nepal.

Nigeria's poverty figures are MPI=64%, Under$1.25=64%, Under$2=84%, Nigeria_BPL=34%

Clearly, the poverty situation in Nigeria is worse than China or India or Pakistan.

Riaz Haq said...

Here is a news report on UNDP findings released today:

India lags behind its neighbours, Pakistan and Bangladesh, on human development indices like life expectancy at birth and mean or average years of schooling, a United Nations Development Programme (UNDP) report released Thursday said.

Titled "Real Wealth of Nations: Pathways to Human Development", the report had a global launch and was released at the UN in New York by UN secretary general Ban Ki-moon.

While India is ranked 119 on the Human Development Index (HDI) among 169 countries -- above Pakistan and Bangladesh which are ranked 125 and 129, respectively -- it lags behind the two on certain development indices.

According to the report, life expectancy at birth in India is 64.4 years, while in Pakistan it is 67.2 years. In Bangladesh, life expectancy is 66.9 years.

Similarly, mean years of schooling in India is 4.4 years while in Pakistan and Bangladesh it is 4.9 and 4.8 years respectively.

Sri Lanka, which is ranked above India on HDI at 91, also fares better than India on the two indices. Its life expectancy at birth is 74.4 years and mean years of schooling is 8.2 years.

On some positive note, in terms of growth of income, India is considered one of the top 10 countries. China is on the top position in this index.

Finance Ministrys chief economic advisor Kaushik Basu, who was present at the India launch of the report, said: "India has a lot of catching up to do. There is scope to do so much better."

Riaz Haq said...

Here is an excerpt fom an interesting Op Ed by a Korean commentator Ha-Joon Chang published in the Guadian that exposes the hypocisy of "Washington Consensus" pushed by the West and IFIs like the IMF on developing nations:

An obvious place to look for inspiration is the recent history of the host country. In my lifetime Korea has lived through one of the greatest development miracles – half a century ago, its annual per capita income was around £50, less than half that of Ghana at the time. Today, it stands at £12,000, putting it on a par with Portugal and Slovenia. How was this possible?

Korea of course did things that most people agree are important for economic development, such as investment in infrastructure, health and education. But on top of that, it also practised many policies that are now supposed to be bad for economic development: extensive use of selective industrial policy, combining protectionism with export subsidies; tough regulations on foreign direct investment; active, if not particularly extensive, use of state-owned enterprises; lax protection of patents and other intellectual property rights; heavy regulation of both domestic and international finance.

The G7 was always remarkably reluctant to recommend these "heterodox" policies and insisted that the "Washington consensus" package of opening up, deregulation and privatisation was the right recipe for everyone. When confronted with the Korean case, Washington consensus supporters tried to brush it off as an exception. However, the history of take-offs in most of the G7 countries – especially Britain, the US, Germany, France and Japan – is far closer to the Korean model than is commonly thought. The "unorthodox" policies used by Korea and almost all of today's rich countries need to be seriously considered in any discussion on development options.

Will things change with the launch of the G20 development agenda? An examination of the Korean government's proposals suggests we can only muster cautious optimism. Korea today wants the G20 to focus on a lengthy shopping list of development issues: infrastructure; private investment and job creation; education; greater access to rich country markets by poor countries; more inclusive finance; building resilience to financial or weather shocks; food security; governance. That is a pretty good start. The Koreans reject the "one size fits all" approach of previous decades in favour of what they call a "dynamic iPhone model" – a set of development apps for every occasion, drawn from successful approaches in different countries.

Riaz Haq said...

Here are excerpts from a recent NY Times report on persistently high levels of poverty in India:

In Mumbai on Nov. 7, President Barack Obama told a group of students that India was no longer a “rising power,” but rather an “already risen” power. He celebrated an economy that “has risen at a breathtaking rate.”

Three days earlier, in New York, the United Nations released the 20th edition of its Human Development Report, a publication that has in many ways become the authoritative measure of poverty and deprivation.

India ranked 119th of 169 countries. The nation’s eight poorest states contain as many poor as the 26 poorest African countries combined. In terms of life expectancy and even gender inequality, India rates below its neighbors of Bangladesh and Pakistan.
-------------

After nearly two decades of economic changes that were to have ushered in an era of prosperity, it is clear that in some ways the nation has been naïve: high growth rates alone cannot cure poverty.

The problem, as Anirudh Krishna, a political scientist at Duke University in North Carolina, and the author of a remarkable new study on poverty, put it to me, is that “poverty in India has become very resilient. The numbers hardly budge.”

Indeed, while official estimates suggest that poverty has declined since the advent of reforms, other recent studies suggest that it is in fact far more widespread than had been thought.

At least three government committees have been formed to count the poor in India. The variance in their findings — ranging from 37.2 percent to 77 percent — suggests not only the prevalence of poverty, but also that its very nature is misunderstood. For all the attention directed at the issue, poverty remains something of a mystery.

Mr. Krishna’s study, published in September as “One Illness Away: Why People Become Poor and How They Escape Poverty,” is in large part an effort to peel away the layers of this mystery. The outcome of a decade of work in five countries, and the result of conversations and surveys with more than 35,000 families, one of its chief goals — and accomplishments — is to flesh out our understanding of economic deprivation.

There are several insights in this book, but one of Mr. Krishna’s more important is that, as he writes, “poverty is not an undifferentiated mass living beneath some theoretical or statistical line.” It is, rather, a constantly churning pool of deprivation, with those who escape being replenished by a new population that has fallen from relative prosperity.

In a 25-year study he conducted in Andhra Pradesh State, for example, Mr. Krishna found that while 14 percent of households escaped poverty, another 12 percent became poor. Overall, there was a 2 percent reduction in the poverty rate, but 26 percent of households had seen their status change.

This understanding of poverty as nonstatic, always in flux, has policy implications. It suggests that welfare programs need to be designed not just to raise people out of poverty, but also to prevent those who are not poor — and thus perhaps off the radar of such programs — from descending into poverty.

In particular, Mr. Krishna’s research highlights the major role played by illness in pushing people over the edge. He writes about “chains of negative events” that lead, through costly hospital bills, unemployment and debt, into economic hardship.

“I am fully convinced that we can’t reduce poverty in India without first doing something about health care,” he said.

Mr. Krishna’s ideas for alleviating poverty are generally convincing. But what is most persuasive about this book is less the policy prescriptions than the nuanced and rich portrait of poverty that informs those prescriptions.
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Riaz Haq said...

Here are some exerpts of a review by Ashok Mitra of Amit Bhaduri's "The Face You Were Afraid to See" as published in Calcutta's Telegraph:

Surely Amit Bhaduri is dead wrong. His recent book bears the title, The Face You Were Afraid to See. The “face” he has in mind is the stark reality of destitution, malnutrition, illiteracy and joblessness which is still the fate of a huge lot of citizens in independent India. The “you” Bhaduri addresses his epistle to are the roughly 10 — at most 15 — per cent of the nation at the top of the social ladder who, thanks to economic liberalization, had never had it so good: industrial tycoons, financial conglomerates, ruling politicians and assorted hangers-on of each of these species, including the media and the so-called intelligentsia. These latter categories, Bhaduri seems to assume, are scared to come face to face with the other India, the India of progressive immiserization and ruthless exploitation. Quite the contrary. For the first time since the British left, the richer layer of society has come to acquire an extraordinary self-confidence. The lurid contrast between how, on the one hand, its members are indulging themselves at spas, shopping malls, five star hotels and golf links and, on the other, the fact that at least 300 million of their countrymen exist at subhuman levels and, perhaps another 300 million or thereabouts, while not exactly starving, are bereft of a minimum of housing, education and healthcare, does not disturb them. The bizarre combination of happenings like India slipping down every year in the human development index constructed by the United Nations even as it attains the dubious distinction of having the largest number of billionaires after the United States of America is taken in its stride. More than half of Mumbai’s population lives in ramshackle jhoparpattys; awareness of this grim fact does not deter a tycoon from building in the city the obscenity of a mansion costing more than Rs 5,000 crore as his residential abode. Consider yet another instance. The loss to the national exchequer because of the 2G spectrum shenanigan, the comptroller and auditor general has estimated, is around Rs 1,80,000 crore. A public distribution programme covering the entire national population, which could reach food to each and every starving citizen of this country, would cost only one-half of that sum. But the powers that be are unwilling to endorse the programme; they even have the effrontery to suggest that public distribution reeks of corruption...
Bhaduri unravels these complex themes with an equal measure of acuity and elegance in The Face You Were Afraid to See. As one who identifies himself with the bottom 90 per cent of the community, he is, however, not satisfied with mere analysis; he is, so to say, stripped for action. And he has his own ideas regarding what activism should consist of. The established political parties, Bhaduri is convinced, are in cohorts with the ruling hegemony. He has equal contempt for the organized trade unions; these are, in his view, interested only in their own narrow interests and ignore such issues as the plight of villagers dispossessed of their cultivable land. He apparently forgets that the trade union movement, too, is itself a victim of the Machiavellian growth model fathered by economic liberalization. Any way, salvation, Bhaduri suggests, lies only in initiatives on the part of civil society groups in different spheres; these will then come together and accomplish the heroic task of smashing to smithereens the conspiracy hatched by corporate bosses and their crony politicians.

Riaz Haq said...

In 2008, the PPP government pushed the procurement price of wheat up from Rs. 625 per 40 kg to Rs. 950 per 40 kg. This action immediately triggered inflationary pressures that have continued to persist as food accounts for just over 40% of Pakistan's consumer price index. According to State Bank of Pakistan (SBP) analysis, cumulative price of wheat surged by 120 per cent since 2008, far higher than the 40 per cent between 2003 and 2007. it is also many times greater than the international market price increase of 22 per cent for wheat in the same period. Similarly, sugar prices have surged 184 per cent higher since 2008, compared with 46 per cent increase during 2003-07.

The transfer of additional Rs. 300 billion to Pakistan's agriculture sector during the current fiscal year 2010-2011 by higher prices of agriculture produce and direct flood compensation to 1.6 million affected families at the rate of one hundred thousands rupees each will boost economic confidence in the countryside. It will generate rural demand for consumer items including consumer durables such as fans, TVs, motorcycles, cars, refrigerators, etc.

Already, the upside of the government policy is that Pakistan's rural economy is being spurred by high crop prices that may help the GDP growth this year and next. Increased farm incomes are whetting the rural households' appetite for industrial and consumer goods in 2011 and beyond.

While it is good to see Pakistan's rural farm economy perk up, it is also important to recognize that the overall national economic outlook can not improve significantly unless the growing budget deficits and rising inflation are brought under control. And this will require the ruling feudal elite to pitch in by paying their fair share of income tax on their rising farm incomes. It is time for them to lead by example.

Riaz Haq said...

Here are a few excerpts from a NY Times story on lagging agriculture in India:

BAMNOD, India — The 50-year-old farmer knew from experience that his onion crop was doomed when torrential rains pounded his fields throughout September, a month when the Indian monsoon normally peters out.
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Mr. Talele’s misfortune, and that of many other farmers here, is a grim reminder of a persistent fact: India, despite its ambitions as an emerging economic giant, still struggles to feed its 1.1 billion people.

Four decades after the Green Revolution seemed to be solving India’s food problems, nearly half of Indian children age 5 or younger are malnourished. And soaring food prices, a problem around the world, are especially acute in India.
------
Critics say Indian policy makers have failed to follow up on the country’s investments in agricultural technology of the 1960s and ’70s, as they focused on more glamorous, urban industries like information technology, financial services and construction.
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Food inflation hits especially hard here because Indians — most of whom live on less than $2 a day — spend a bigger portion of their disposable incomes on food than people in other big, developing economies like China and Brazil.

“This is the worst form of taxation on the poorest of the poor,” said Ashok Gulati, Asia director for the International Food Policy Research Institute.
---------
But experts say the widening gap between agriculture’s anemic supply and the rising demand for food calls for fundamental changes in farming policies.

During the Green Revolution the government invested heavily in rural agriculture, with an emphasis on hybrid seeds, fertilizers and irrigation canals.

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And rural India has far too few temperature-controlled warehouses that could help farmers and the nation build up reserves as a hedge against poor growing seasons.

When Mr. Talele’s vegetables are ready for harvest he immediately takes them to wholesale markets, which are controlled by committees of local traders. “Whatever the market decides, that’s the price we get,” he said.

Indian officials acknowledge that the country needs to increase investment in irrigation, encourage competition in wholesale and retail markets, and provide targeted food subsidies to the poor. And they also have to provide more education and jobs to villagers, so fewer people are forced to live off the land.

Experts say India needs to make changes like some of the ones China made, beginning in the late 1970s, when it started investing heavily in agriculture and eased regulations on farming.

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Riaz Haq said...

Rising crop prices in the US are helping economic recovery in the farm belt and lifting the value of farmland in the Midwest, according to the Wall Street Journal:

Farmland values in much of the Midwest are climbing at their fastest rates since the 2008 boom, the Federal Reserve Bank of Kansas City said Tuesday.

Fueled by rising crop prices, the value of irrigated and nonirrigated cropland across the region known as the 10th District jumped 14.8% and 12.9%, respectively, in the fourth quarter, compared with a year earlier.

The bank's quarterly survey of the region, which covers western Missouri, Nebraska, Kansas, Oklahoma, Wyoming, Colorado and northern New Mexico, found that farmland prices rose for the fifth consecutive quarter since a drop in the third quarter of 2009, when the livestock sector was contracting amid the recession.

The Federal Reserve's regional banks closely track farm real-estate prices because they are a key indicator of the health of U.S. farming, which uses about half of the nation's land. Land is farming's largest asset and source of collateral, which means any increase in value lifts farmers' borrowing power.

The Federal Reserve Banks in Chicago and Minneapolis have yet to issue their quarterly surveys, but their reports are also expected to show that the farm belt is continuing to rebound from the recession more quickly than the general economy, which has been hobbled by high unemployment rates and weak home values.

Farmland prices in the 10th District are generating their biggest gains since the third quarter of 2008, when prices of irrigated farmland jumped 23.4% and prices of nonirrigated farmland rose 21.2%.

Still, it's not clear how long farmland prices can continue to climb so sharply. The Federal Deposit Insurance Corp. has already said it's watching for whether an asset bubble is building. One red flag in Tuesday's report is that cash rental rates for cropland across the 10th District rose only about 6% in the fourth quarter, far too little to justify such a big increase in land prices.

As a result, some farm bankers across the region are beginning to tighten their standards on real estate loans.

"Bankers in the survey were starting to raise questions about the sustainability of farmland values" and "paying closer attention to their loan-to-value ratios," said Brian Briggeman, an economist at the Omaha branch of the Kansas City Fed.

Farmland prices are heavily influenced by crop prices, which were climbing until the financial crisis and recession popped the commodity-price bubble in late 2008. Led by wheat, U.S. crop prices resumed their upward climb in June 2010 amid harvest problems in places such as Russia, and then the U.S. corn belt, as demand was recovering in the world's emerging economies.

The prices of corn and wheat grown in the Midwest are about double what they were a year ago, while cotton prices are up 155%. Soybean prices have climbed 50%. Those high commodity prices are giving farmers more money to spend on land, as well as attracting the interest of outside investors looking for an inflation hedge at a time when the cost of borrowing money for buying real estate is low.

The U.S. Agriculture Department said Monday that it expects net farm income, a widely followed barometer of the U.S. agriculture sector's profitability, to climb 19.8% this year to $94.7 billion, which would be the second-highest inflation-adjusted figure for net farm income in 35 years.

Riaz Haq said...

Here's some UNCTAD data on cotton production and consumption in the world:

In 2007, cotton was grown in 90 countries. In 2006/07, the four main producing countries were China, India, the USA and Pakistan and accounted for approximately three quarters of world output. If we added Uzbekistan and Brasil, six countries would account for 83% of world cotton production. This concentration in cotton production, which appears to increase for several years, has to be put into perspective by considering the impact of domestic policy reforms in the largest cotton producing countries, as well as climatic and sanitary contingencies.
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The main cotton producing economies also account for a large part of consumption. According to ICAC data, China, the United States, India, and Pakistan as a whole have accounted for approximately more than 55% of global cotton consumption over the period 1980 to 2008. Their overall consumption has risen considerably in volume (see figure below). For example, consumption multiplied by 3 in China and by more than 3 in India. Pakistan has had the largest increase in volume (which multiplied by 6 between 1980 and 2008) in order to responde to export-driven demand for textiles.

Riaz Haq said...

Overview of Livestock, Dairy, Fisheries & Poultry Sectors in Pakistan:

1 Dairy Sector
With an estimated 33 billion litres of annual milk production from 50 million animals, managed by
over 8 million farming households, Pakistan is the 5th largest milk producing country in the world
Livestock sector contributed approximately 53.2 percent of the agriculture value added and 11.4
percent to national GDP during 2009 – 10
The milk economy in terms of value is over 27% of the total Agriculture sector
Additional potential of 3 billion litres of milk, with a growth rate faster than any other sector
Of the total 33 billion litres of milk produced, 71% is rural based and 29% is urban based
Of the total production, around 3% is processed and marketed through formal channels
40% Supply and Demand gap exists in Pakistan.

2 Livestock Sector
Livestock sector contributed approximately 53.2 percent of the agriculture value added and 11.4
percent to national GDP during 2009?10.
Gross value addition of livestock at current factor cost has increased from Rs. 1304.6 billion
(2008?09) to Rs. 1537.5 billion (2009?10) showing an increase of 17.8 percent as compared to the
previous year.
The population growth, increase in per capita income and export revenue is fuelling the demand for
livestock and livestock products.
Pakistan earned USD717 million from leather exports in FY09 and a meagre USD96 million from meat
exports.
Poultry sector is one of the organized and vibrant segments of agriculture industry of Pakistan.
This sector generates employment (direct/indirect) and income for about 1.5 million people.
Poultry meat contributes 23.8 percent of the total meat production in the country
The meat demand for Pakistan Domestic market is growing at a rate of 2.73% for Beef, 2.90 % for
mutton and 6.10 % for poultry.
This domestic demand is growing to meet the population growth, human need for protein and
calcium, migration of population from rural to urban and the fluctuating growth due to per capita rise
in income.
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3 Fisheries Sector

During the period July?March 2009?10 the total marine and inland fish production was estimated
952,735 Million tons out which 667,762 Million tons were marine production and the remaining catch
come from inland waters.
A number of sites have been earmarked on an area of 20,000 acres of land in Districts Thatta &
Badin along the coast.
Immense potential exists to start commercial scale fish/shrimp farming in Sindh.

4 Poultry Sector
Poultry is an important sub – sector of agriculture and has contributed enormously to food production by
playing a vital role in the domestic economy.
Poultry industry can broadly be divided into three
groups, viz. hatchery, poultry farming and feed sectors. This sector generates employment and income
for about 1.5 million people in Pakistan. Its contribution in agriculture growth is 4.81% and in Livestock
growth is 9.84%, whereas, the total poultry meat contributes to 23.8% of the total meat production in
the country.
Pakistan, with a population of 170 Million people, has gone through a sizeable growth in the production
of poultry meat and eggs. Per capita availability went up from 23 in 1991 to 46 eggs in 2009 and poultry
meat availability increased from 1.48kg to 2.88 kg during the same period. In our Country per capita
consumption of meat is only 7 KG and 60-65 eggs annually. Whereas developed world is consuming 41
KG meat and over 300 Eggs per capita per year. According to Industry sources there is capacity of 5,000
Environmental Control Houses in Pakistan and currently only 2,500 houses are working.
The total Poultry population in Pakistan is approximately 610 Million.

Riaz Haq said...

Here are some excerpts from an Op Ed in The Hindu on growing disconnect between mass media and mass reality:

•The mass reality in India (which has over 70 per cent of its people living in the rural areas), is that rural India is in the midst of the worst agrarian crisis in four decades. Millions of livelihoods in the rural areas have been damaged or destroyed in the last 15 years as a result of this crisis, because of the predatory commercialisation of the countryside and the reduction of all human values to exchange value. As a result, lakhs of farmers have committed suicide and millions of people have migrated, and are migrating, from the rural areas to the cities and towns in search of jobs that are not there. They have moved towards a status that is neither that of a ‘worker' nor that of a ‘farmer.' Many of them end up as domestic labourers, or even criminals. We have been pushed towards corporate farming, a process in which farming is taken out of the hands of the farmers and put in the hands of corporates. This process is not being achieved with guns, tanks, bulldozers or lathis. It is done by making farming unviable for the millions of small family farm-holders, due to the high cost of inputs such as seed, fertilizer and power, and uneconomical prices.
•India was ranked fourth in the list of countries with the most number of dollar billionaires, but 126th in human development. This means it is better to be a poor person in Bolivia (the poorest nation in South America) or Guatemala or Gabon rather than in India. Here, some 83.6 crore people (of a total of 110-120 crore) in India survive on less than Rs.20 a day.
•Eight Indian States in India are economically poorer than African states, said a recent Oxford University study. Life expectancy in India is lower than in Bolivia, Kazakhstan and Mongolia.
•According to the National Sample Survey Organisation, the average monthly per capita expenditure of the Indian farm household is Rs.503. Of that, some 55 per cent is spent on food, 18 per cent on fuel, clothing and footwear, leaving precious little to be spent on education or health.
•A report of the Food and Agriculture Organisation of the United Nations shows that between 1995-97 and 1999-2001, India added more newly hungry millions than the rest of the world taken together. The average rural family is consuming 100 kg less of food than it was consuming earlier. Indebtedness has doubled in the past decade. Cultivation costs have increased exorbitantly and farming incomes have collapsed, leading to wide-scale suicides by farmers.
•While there were 512 accredited journalists covering the Lakme India Fashion Week event, there were only six journalists to cover farmer suicides in Vidharbha. In that Fashion Week programme, the models were displaying cotton garments, while the men and women who grew that cotton were killing themselves at a distance of an hour's flight from Nagpur in the Vidharbha region. Nobody told that story except one or two journalists, locally.
Is this a responsible way for the Indian media to function? Should the media turn a Nelson's eye to the harsh economic realities facing over 75 per cent of our people, and concentrate on some ‘Potemkin villages' where all is glamour and show business? Are not the Indian media behaving much like Queen Marie Antoinette, who famously said that if people had no bread, they should eat cake.
No doubt, sometimes the media mention farmers' suicides, the rise in the price of essential commodities and so on, but such coverage is at most 5 to 10 per cent of the total. The bulk of the coverage goes to showing cricket, the life of film stars, pop music, fashion parades, astrology…

http://www.hindu.com/2011/06/04/stories/2011060455071000.htm

Riaz Haq said...

Here's the intro to an interview of Smita Narula, faculty director of the Center for Human Rights and Global Justice at New York University Law School, co-author of the report, "Every Thirty Minutes: Farmer Suicides, Human Rights and the Agrarian Crisis in India" as published by Democracy Now on Indian farmers plight:

A quarter of a million Indian farmers have committed suicide in the last 16 years—an average of one suicide every 30 minutes. The crisis has ballooned with economic liberalization that has removed agricultural subsidies and opened Indian agriculture to the global market. Small farmers are often trapped in a cycle of insurmountable debt, leading many to take their lives out of sheer desperation. We speak with Smita Narula of the Center for Human Rights and Global Justice at New York University Law School, co-author of a new report on farmer suicides in India.
---
SMITA NARULA: Good morning.

AMY GOODMAN: Talk about this report that you are just releasing today.

SMITA NARULA: Our major finding for this report is that all the issues that you just described are major human rights issues. And what we’re faced with in India is a human rights crisis of epic proportions. The crisis affects the human rights of Indian farmers and their family members in extremely profound ways. We found that their rights to life, to water, food and adequate standard of living, and their right to an effective remedy, is extremely affected by this crisis. Additionally, the government has hard human rights legal obligations to respond to the crisis, but we’ve found that it has failed, by and large, to take any effective measures to address the suicides that are taking place.

AMY GOODMAN: I mean, this number is unbelievable. Thirty—every 30 minutes, an Indian farmer commits suicide?

SMITA NARULA: And that’s been going on for years and years. And what these intense numbers don’t reveal are two things. One is that the numbers themselves are failing to capture the enormity of the problem. In what we call a failure of information on the part of the Indian government, entire categories of farmers are completely left out of the purview of farm suicide statistics, because they don’t formally own title to land. This includes women farmers, Dalit, or so-called lower caste farmers, as well as Adivasi, or tribal community farmers. In addition, the government’s programs and the relief programs that they’ve offered fail to capture not only this broad category, but also fail to provide timely debt relief and compensation or address broader structural issues that are leading to these suicides in the country....

http://www.democracynow.org/2011/5/11/every_30_minutes_crushed_by_debt

http://www.chrgj.org/publications/docs/every30min.pdf

Riaz Haq said...

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

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

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

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

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

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

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

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

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

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

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

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

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


http://www.washingtonpost.com/world/asia-pacific/government-report-says-15-people-commit-suicide-every-hour-in-india/2011/10/28/gIQAVFGWOM_story.html

Riaz Haq said...

Here's a Daily Times story on Karachi Textile Expo 2012:

The textile sector is likely to fetch more than $45 million export orders during three-day 9th Textile Asia 2012 International Exhibition, textile experts said Saturday.
During previous international event in 2011, Pakistan fetched more than $31 million worth of orders for different categories of textile products, they added.
Adviser to Prime Minister on Textile Dr Mirza Ikhtiar Baig inaugurated the 9th Textile Asia 2012 event at Karachi Expo Centre.
It is the largest annual textile and garment machinery show of textile industry of Pakistan.
This year more than 276 exhibitors from 39 countries representing 369 international brands are participating in the event.
Besides a large number of textile sector’s representatives along with 271 foreign delegates are attending the exhibition.
The demand for textiles in the world is around $18 trillion, which is likely to be increased by 6.5 percent. China is the leading textile exporter of the world’s total exports of $400 billion.
Export of China stands at $55 billion, Hong Kong $38 billion, Korea $35 billion, Taiwan $16 billion, and Indonesia and Pakistan $14 billion.
Pakistan has emerged as one of the major cotton textile product suppliers in the world market with a share of world yarn trade of about 30 percent and cotton fabric about 8.0 percent, having total export of $13.8 billion, which accounts for only 1.2 percent of the overall share. Out of this cotton fabric is 0.02 percent, made-ups 0.18 percent and garments is 0.15 percent.
Textile sector is the backbone of the country’s economy having 56 percent of total exports and 38 percent job creation in the manufacturing sector. Nearly all the world-renowned brands are manufactured in Pakistan keeping high standard of international quality and competitiveness.
Pakistan is the fourth largest producer of cotton yarn and cloth in the world after China, which is number one besides, Pakistan ranks second in export of yarn and third in export of cloth and fourth largest producer and consumer of raw cotton.
The textile sector in 2011 has registered an impressive growth of 38 percent and it was expected after European Union’s (EU) duty free export of 75 products from Pakistan out of which 65 are textile products, the sector would fetch more than $25 billion export target. The EU facility is initially for two years, extendable for third year after which Pakistan would quality for Generalised System of Preferences (GSP) plus status to export duty free to EU as per revised criteria agreed with EU.


http://www.dailytimes.com.pk/default.asp?page=2012\03\11\story_11-3-2012_pg5_12

Riaz Haq said...

Here's Fiber2Fashion story on Pak textile manufacturers diversifying into retail brands:

For long, several globally renowned apparel brands have been sourcing their fabric and clothing requirements from Pakistan. But, there have been very few Pakistani companies with brands of their own.

However, some companies that are engaged in export-oriented textile manufacturing are now diversifying into retailing through setting up their own apparel brands.

One such example is the Karachi-based ZK Industries, which ventured into retailing of its own branded garments four years ago.

Explaining the reason for his company’s diversification into retail segment, Mr. Younus Muhammad Bashir, Managing Director of ZK Industries, told fibre2fashion, “When we manufactured for others, we were just vendors. As time passed, competition increased and we thought that when we can manufacture for other brands we can have our own brand as well.”

“Till 2008, we were just vendors and we entered into the retail business in January 2009 by opening our first outlet in Karachi. Today, we have seven outlets – six in Pakistan and one in Dubai – and there are few more stores coming up soon,” he informs.

ZK Industries’ retail business is doing well and the company plans to launch more new products. Although the firm’s main business is fabrics, it is venturing into retailing of ready-to-wear garments.

Comparing manufacturing with retail, Mr. Bashir says, “Manufacturing business has a big volume while retail does not have such a volume. Manufacturing has a limited market and you meet limited set of people, and there is no direct interaction with the end consumers.”

“On the other hand, retail has its own charm. Whatever you sell in retail, you are paid immediately in cash for it. Moreover, being in the market and meeting new people everyday aids better idea generation. Being in direct touch with the consumers gives a better understanding of the consumer choices and preferences. The emergence of social media has made retailing even more interesting,” he concludes.


http://www.fibre2fashion.com/news/textile-news/newsdetails.aspx?news_id=110938

Riaz Haq said...

Here is a News story on Pakistan's textile-based exports:

Leading economists and entrepreneurs from other sectors at a discussion program titled ‘What is wrong with Pakistan’s economy?’, regretted the textile-specific approach of Pakistan’s economic planners that had led to the exclusion of other more lucrative sectors like engineering, information technology, mining and fuel, and agricultural products.



“Pakistan should look beyond textiles to ensure sustained exports and economic growth,” they claimed “as textiles, with only a 5.6 percent share in the total global trade, limit the opportunities for broad based growth. And textiles are also the first casualty in a recession.” Engineering entrepreneur Almas Hyder appealed to the government to have a wider vision and make a paradigm shift in its industrial policy. He said that attention should now be focused on sunrise industries like engineering, chemicals, bio-technology, IT, agriculture-livestock and pharmaceuticals.



Almas said that the government should realign its economy as well as its resource allocation to ensure uninterrupted growth. If these sectors had been given equal importance as that given to textiles, it would have shielded the economy from the ups and downs in a global economy. He said that in a recession, the first expense that people cut down on is of clothing, which is the reason that the textile trade has always come under stress in case of a global or regional recession, as the one being witnessed in Europe these days.



Senior Economist Naveed Anwar Khan pointed out that manufacturing and engineering goods account for 67.50 percent of the total global trade, while mining and fuel account for over 12 percent, agricultural products 10 percent and non-ferrous metals 1.8 percent. Instead of giving attention to around 94 percent of the global trade, Pakistan was only concentrating on the 5.6 percent textile’s trade.



He averred that this preference and attention bestowed on this sector, in the form of energy and power, has not paid any dividends as Pakistan’s share in the total global textile trade remained less than 2 percent. And that even Bangladesh, which had entered the textile sector in the early 1990s, had higher textile exports than Pakistan. He summed up that while the textile sector should be facilitated by the state, other sectors should also be given equal importance.



“Value addition in engineering goods is much higher than the value addition in textiles” stated Iftikhar Ali Malik, former president Federation of Pakistan Chambers of Commerce and Industry. He elaborated that auto parts made from plastic, steel or even cardboard fetched a much higher price than the cost of their raw materials. While 70 percent of the input cost was cotton in yarn manufacturing, in a car filter or a plastic or steel auto part, the cost of the card board, plastic or steel was10-20 percent and the value addition was high.



He regretted the fact that the engineering goods manufacturers were not facilitated by the state in the same way as textiles were by them. The added that the engineering industry has a long gestation period and is more entitled to concessional credit than textiles.


http://www.thenews.com.pk/Todays-News-3-114084-Preferential-treatment-of-textiles-decried

Riaz Haq said...

Here's Wall Street Journal story on Indian farmers' dependence on rain:

The southwest monsoon arrives over India mainly via winds from the Arabian Sea. It usually hits the mainland through the southern state of Kerala by late May or early June and then gradually moves north to cover the entire country by mid-July.

The timing, distribution and quantity of monsoon rains are vital to India's agriculture sector and economy. Nearly two-thirds of the country's farmlands are rain-fed, and about 600 million people are dependent directly or indirectly on agriculture. Agriculture accounts for 17% of gross domestic product.

This year, the monsoon arrived late over Kerala. Its progress over the rest of India has been sporadic, and rains have failed to pick up over eastern and northwestern parts of the country.

To date, rainfall is about 17% below the 50-year average, But in northwestern grain bowl states such as Punjab, Haryana and Rajasthan the deficiency has been much worse, with rainfall of 60%-70% below average.

Parts of the western states of Gujarat and Maharashtra and the southern state of Karnataka have also been affected with the rainfall deficiency ranging from 30% to 70%.

How the monsoon gathers momentum as it progresses toward India's mainland varies from year to year. D.S Pai, head of long-range forecasting in the India Meteorological Department, said this year, the build-up of moisture-laden monsoon winds from the Arabian Sea had been weak and had shifted toward the eastern half of the country from the west due to the play of certain sea winds.

El Niño, a weather phenomenon that usually disrupts rainfall in India, is also expected to emerge in September and could further deepen the crisis. Recently, the India Meteorological Department said that rainfall through the monsoon season is likely to be 85% of the long-period average.


http://online.wsj.com/article/SB10000872396390443792604577575323402758832.html

Riaz Haq said...

Here's Express Tribune of disproportionate impact of energy crisis on small textile mills:

The energy crisis has hit Pakistan’s textile industry badly, but not all textile companies are hurt: the largest players are doing just fine, relying on a combination of the advantages of their economies of scale but also government-sanctioned privileges not available to smaller industrial players.

At least part of the reason why the bigger companies are doing better than the smaller ones appears to be the natural advantages that come with being a larger player, such as having a vertically integrated business model.

Kamal Yousaf, CEO of the Kamal Group of Industries, a textile conglomerate based in Faisalabad, says that part of his group’s advantage over smaller rivals in their ability to harness synergies within the group. The weaving, processing and dyeing, garment manufacturing, and trading arms all work as a unit, helping the group weather price hikes in raw material or other issues.

The Nishat Group, meanwhile, benefits from the fact that it owns the fourth-largest bank in the country – MCB Bank – allowing it to avoid cash flow issues and raise capital for efficiency improvement projects. Nishat Textile, therefore, never has a problem in paying wages to its employees and was able to raise Rs1 billion to invest in a 6.2-megawatt power generation unit that runs on biomass. Electricity produced in this manner is expected to be about 6% more expensive than that provided by the grid, but is far more reliable at a time when Punjab’s industry is especially hampered by severe power outages that last several hours a day.

And many larger textile mills are able to purchase large stocks of raw materials that insulate them from price shocks. More than half the cost of producing a piece of clothing is often still the cost of cotton, even for some of the largest players.

Yet at least part of the advantage appears to be built in by the government. One of the biggest reasons why larger textile mills, particularly in Punjab, have been able to do well is that most have installed captive power plants that – despite operating at one-third the efficiency of the grid’s power station – are getting gas supplies to produce power at a marginally lower cost than what they would get from the grid.

However, these captive plants have been getting gas even at the expense of the rest of the grid, meaning that even while the largest and richest textile exporters save a few pennies on their production costs (power accounts for 3% of all costs for the larger firms), all of Punjab is going through massive power outages because the power plants that supply electricity to ordinary citizens and smaller industries are getting less gas, sometimes even no gas.

Meanwhile, smaller textile players have less reliable power from the grid, a supply that is made more intermittent by the fact that the fuel for the grid’s power goes to their larger textile rivals. At the same time, banks charge the smaller players higher interest rates, since they are viewed as bigger risks for not having their own captive power supply.

“The smaller guys cannot afford to run their factories on diesel generators,” said Muzammil Aslam, managing director at Emerging Economics Research....


http://tribune.com.pk/story/426553/while-small-players-get-squeezed-textiles-big-guns-are-doing-just-fine/

Riaz Haq said...

From United Nations Industrial Development Organization (UNIDO):

Pakistan Manufacturing Value Added (MVA):

MVA per capita at constant 2005 prices increased from US$135.03 in 2005 to $143.84 in 2014

MVA as percentage of GDP at constant 2005 prices in US$ decreased from 18.05% in 2005 to 17.41% in 2014

http://www.unido.org/Data1/IndStatBrief/A_Industrial_Performance_MVA_GDP.cfm?Country=PAK

India Manufacturing Value Added (MVA):

MVA per capita at constant 2005 prices increased from US$155.73 in 2005 to $168.42 in 2014

MVA as percentage of GDP at constant 2005 prices in US$ decreased from 15.10% in 2005 to 13.85% in 2014


http://www.unido.org/Data1/IndStatBrief/A_Industrial_Performance_MVA_GDP.cfm?Country=IND

China tops the list of world's 10 largest industrial producers. It is followed by the US, Japan, Germany and South Korea, according to United Nations Industrial Organization (UNIDO).

India ranks 6th in the world in terms of total manufacturing output in 2013, up from 9th place in 2008,

http://economictimes.indiatimes.com/news/economy/indicators/india-jumps-to-sixth-place-in-top-10-manufacturers-list-report/articleshow/51663535.cms

India's manufacturing value added (MVA) per capita of 161.7 in 2013 is among the lowest in the world. It's up from 131.9 in 2008.

In fact India's 2008 MVA per capita of 131.9 was lower than Pakistan's 141.1. Since 2008, Pakistan's MVA per capita has slipped to 139.1 in 2013 while India's has increased to 161.7 in this period.

Bangladesh's MVA per capita has jumped from 82.2 in 2008 to 118.3 in 2013.

On UNIDO’s industrial competitiveness index, most industrialized countries lost ground in the last three years. Among the five most competitive are four high-income countries (Germany, Japan, the Republic of Korea and the United States), along with China ranking fifth. The four are among the world’s most industrialized countries and, with China, account for 59 percent of world MVA.

https://www.unido.org/fileadmin/user_media_upgrade/Resources/Publications/EBOOK_IDR2016_FULLREPORT.pdf

Riaz Haq said...

THE EXPRESS TRIBUNE > BUSINESS
Pakistan’s freelancing industry is thriving

By Parvez IftikharPublished: October 30, 2017

https://tribune.com.pk/story/1544773/2-export-earnings-pakistans-freelancing-industry-thriving/

Minister of State for IT Anusha Rehman, together with Ignite CEO Yusuf Hussain, recently announced the ‘DigiSkills’ Program that “would help the youth of the country to earn a reasonable livelihood as freelancers”.

The country-wide programme to train a million freelancers is ambitious and challenging. A somewhat similar endeavour, called ‘eRozgar’, was launched by Punjab IT Board Chairman Dr Umar Saif earlier this year.

The PITB had announced that it would be running a co-working space to train 10,000 young women and men with the help of experienced freelancers in different parts of Punjab. The MoIT’s programme is much larger in scope covering the entire country, albeit with an online, rather than physical, delivery mechanism. Both, however, appear to be great initiatives.

The biggest freelancing website (Freelancer.com) ranks Pakistan as the 3rd largest country internationally in terms of user numbers. As informed by Helma Kasuma of Freelancer.com, out of 25 million registered users, nearly a million are from Pakistan.

UpWork.com regretted that they do not show their total numbers breakdown by country. But in 2015, a report released by them stated that Pakistan was the 5th biggest country in terms of user numbers, with the US in first place followed by India. Predominantly, employers who hire Pakistani freelancers are based abroad, mostly in USA, UK, and Australia. Thus, freelancing contributes to “export-earnings”. According to some, freelancers from Pakistan earn close to a billion dollars in a year. However, one must hasten to add that this is not based on any proper study or research. Perhaps, the Ministry of IT should embark upon one.


But all these “successes” have so far been achieved without freelancing being recognised as a profession. Enterprising Pakistani young men and women have been doing wonders exclusively on their own – without any opportunities to get trained, or even formally learn from each other.

In order to provide employment to many more Pakistanis, and to increase their earnings, there are numerous important skills that need to be taught (including soft skills like better English). This is where schemes like DigiSkills and eRozgar come in. One hopes that these initiatives will help turn millions of educated countrymen into productive individuals.

Riaz Haq said...

The country’s unemployment ratio stood around 5.8 percent in the country, according to a survey of Pakistan Bureau of Statistics (PBS) on labor force 2017-18.

https://dunyanews.tv/en/Business/473968-Unemployment-ratio-stands-at-5.8-percent-survey


http://www.pbs.gov.pk/sites/default/files//Labour%20Force/publications/lfs2017_18/Annual%20Report%20of%20LFS%202017-18.pdf


http://www.pbs.gov.pk/content/labour-force-survey-2017-18-annual-report


While the ratio of male unemployment stood at 5.1 percent, unemployment ratio in female stood at 8.3 percent.

As per the data released by PBS, agriculture sector provided 38 percent of employment in FY17-18, less than the 42 percent it was providing five years ago.

Industrial sector provided 23.7 percent of jobs in the said period, whereas the ratio was 22.6 percent five years back.

Service sector provided jobs to 37.8 percent, a slight jump from 35.1 percent five years back

Furthermore, literacy rate in country stood around 62.2 percent, with literacy rate for male at 71.6 percent and female at 51.8 percent.

Riaz Haq said...

From Underwear to Cars, #Modi's #India’s #Economy Is Fraying. Underwear sales are down 50 percent, car sales are down 32%. #BJP #Hindutva

https://www.nytimes.com/2019/09/21/business/economy/india-economy-trade.html

When Alan Greenspan ran a consulting firm and wanted to know where the economy was headed, he would often look at sales of men’s underwear as a guide.

Mr. Greenspan, who later served as chairman of the Federal Reserve, believed that when times were tough, men would stop replacing worn-out underwear, which no one could see, before cutting other purchases.

By that measure, India is in a serious slump.

“Sales are down 50 percent,” said Jeffrin Moses, gesturing toward the boxes of cotton briefs and tank tops bulging from the shelves of the Tantex undergarment emporium in Tirupur, the southern city where most of the country’s knitwear is made.

It’s not just underwear. Car sales plunged 32 percent in August, the largest drop in two decades, and carmakers are warning of one million layoffs as shoppers balk at rising prices and struggle to get loans from skittish lenders. Macrotech, a big real estate developer that has teamed up with President Trump on a residential tower in Mumbai, just laid off 400 employees as demand for new housing sinks.

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

The textile industry, which employs about 45 million people and is India’s second-largest employer after agriculture, is emblematic of the country’s distress.

On an afternoon in early September, Tirupur’s market for wholesale, overstock and slightly defective clothing was deserted. Mr. Moses said that store owners and distributors typically traveled across India to place bulk orders for shirts, pants, dresses and fabric before the country’s September-to-November festival season.

“Now, people do not come,” he said.

The region’s spinning mills, which twirl cotton into yarn, are cutting production. Although the world price of cotton has plunged because of the increased American tariffs on Chinese textiles, owners say that yarn prices have also fallen, making it difficult for mills to profit.

“I haven’t seen a slowdown like this,” said Gaurav Gupta, a son of one of Dollar’s founders, as he walked through the company’s plants. “For a customer who used to buy six pairs of garments, now he has come down to probably four.”

Still, Dollar’s Italian-made cutting machines continue to slice colorful sheets of fabric for undershirts and underpants, six days a week. About 100 workers sort the pieces and tie them into bales, ready for contractors who will sew them into finished garments.

Dollar has not laid off anyone yet, although it has cut work hours — and paychecks — by 10 to 20 percent. Mr. Gupta said his factories were switching to making thermal underwear for northern India’s chilly winters, and he hoped that the festival season would mark the beginning of a turnaround in sales.

Sambhu Karwar, a 22-year-old employee who smooths the fabric before it is cut, said the job was better than working in his family’s bakery in eastern India. Dollar pays him a monthly salary of 12,000 rupees, or about $167, and provides lodging and some subsidized food.

“It’s good living here,” said Mr. Karwar, whose brother also works at the factory.

The outlook is bleaker at Siva Exports, a contractor that stitches some of Dollar’s underwear.

Most of the sewing machines in the two-story factory sit idle. Siva’s owner, V. Murugesan, said he had to lay off about three-quarters of his tailors over the last six months after he lost his two biggest clients — clothing brands in Italy and France. He said he could not match the prices they could get in Bangladesh, where wages are far lower.

Riaz Haq said...

Woven together, the rise and fall of southern Pakistan’s Banarsi sari

https://www.arabnews.com/node/1858791/fashion

Banarsi silk was a luxurious hand-woven fabric once made in the city of Khairpur, in Sindh
No official data exists on the history of the industry and the stories are told by the weavers themselves
SINDH: At the Banarsi Silk Weavers’ Colony in the city of Khairpur, in Sindh, 47-year-old merchant Zafar Abbas Ansari was waiting, hoping for a few additional orders of silk Banarsi saris as Eid Al-Fitr approached.
The sari is a garment native to South Asia, where a long piece of cloth is wrapped elaborately around the body — usually in cotton or silk — and worn with a matching blouse.
Although the city does not make Banarsi any longer — it is now made in Karachi, more than 400 km away — customers still come to the city to purchase the fabric.
Inside the deserted 70-year-old market — once a bustling place — Zafar’s shop is among the last three Banarsi shops left. His family is one of the 40 weaver families who brought the industry to Khairpur when they migrated from India in 1952.
“It is almost two decades since Khairpur stopped producing Banarsi saris after the industry’s collapse. However, even today, the brand is popular among customers. They keep demanding Khairpur’s brand,” Zafar told Arab News.
In its heyday, Khairpur’s Banarsi sari was synonymous with luxury, with vendors supplying the fabric not only locally but also exporting to Pakistani families living in the UK and other European countries.
Inside Zafar’s shop, unstitched pieces of colorful saris — the blouse, the petticoat and main sari fabric — are displayed. The shop shows off different varieties of saris, including the traditional katan — a plain woven fabric with pure silk threads — chiffon, as well as synthetic fabrics.
“Banarsi sari has distinction and standing,” Zafar said proudly. “It is worn by royal families because of its grace and elegance. In some families it is an essential part of the bridal trousseau.”

The price of a sari depends upon its type. The most expensive sari fabric available in the Khairpur market currently is worth Rs45,000 ($300) a piece
Khairpur’s Banarsi Silk Weavers’ Colony is named after the city of Banaras in India (now Varanasi) because of the silk weavers who migrated from there.
There are no official records, and the story of the garment comes from the weavers themselves. They say the history of the Banaras sari industry in Khairpur is linked with Ghulam Saddiquah Begum — the wife of Khairpur state’s then ruler, Mir Ali Murad Khan Talpur of the Talpur dynasty.
Saddiquah Begum herself came from Bahawalpur state, and in 1949, the weavers said, during a visit to India’s Hyderabad Deccan, she offered Mohammed Yusuf Ansari — a sari trader from Banaras — the chance to start manufacturing in Khairpur.
She is said to have offered her state’s support for the establishment of the manufacturing units required.
In 1952, about 40 families of the Ansari clan migrated from Banaras to Khairpur and sari manufacturing began on handlooms. Later, the saris were exported to other countries.
Arab News could not independently verify this information.
According to Anjum Sajjad Ansari, grandson of Muhammad Yusuf Ansari and a representative of the Banarsi Silk Weavers’ Association Khairpur, at its peak there were 400 handlooms in Khairpur. Today, not a single handloom remains.
“At Khairpur’s Banarsi Silk Weavers Colony today there are 16 houses of traditional weavers. However only three are involved in this business of selling Karachi-made fabric,” Anjum said.
Like elsewhere, the Banarsi brand was associated with pure silk thread work. Initially, Khairpur used silk imported from China, but later the silk came from Punjab’s Changa Manga as Pakistan developed hatching silkworms and silk fiber producing factories.
The whole family engaged in the manufacturing process, including silk weaving, dyeing, warping, and reeling. It took between two to three days’ work to complete a single sari.