Sunday, May 7, 2017

Comparing Ownership of Appliances and Vehicles in India and Pakistan

Ownership of consumer durables like computers, home appliances and vehicles is often seen as an important indicator of the size and health of the middle classes in emerging economies. Examples of periodic household surveys used by researchers to measure such data include NSS (National Sampling Survey) in India and PSLM (Pakistan Social and Living Standards Measurement) in Pakistan.

Durables Ownership in India and Pakistan. Source: KSBL

India-Pakistan Comparison:

Dr. Jawaid Abdul Ghani, a professor at Karachi School of Business Leadership, has recently analyzed household surveys in India and Pakistan to discover the following:

1.  As of 2015, car ownership in both India and Pakistan is about the same at 6% of households owning a car. However, 41% of Pakistani household own motorcycles, several points higher than India's 32%.

Appliance Ownership in South Asia. Source: Seeking Alpha

2. 12% of Pakistani households own a computer, slightly higher than 11% in India.

3. Higher percentage of Pakistani households own appliances such as refrigerators (Pakistan 47%, India 33%), washing machines (Pakistan 48%, India 15%) and fans (Pakistan 91%, India 83%).

4. 71% of Indian households own televisions versus 62% in Pakistan.

Durables Ownership Growth in Pakistan. Source: KSBL
Growth over Time:

Dr. Abdul Ghani has also analyzed household data to show that the percentage of Pakistani households owning washing machines has doubled while car and refrigerator ownership has tripled and motorcycle ownership jumped 6-fold from 2001 to 2014.

Income/Consumption Growth in Pakistan. Source: KSBL

Rapid Income Growth:

Rising ownership of durables in Pakistan has been driven by significant reduction in poverty and growth of household incomes, according to Dr. Abdul Ghani's research. Percentage of households with per capita income of under $2 per day per person has plummeted from 57% in 2001 to 7% in 2014. At the same time, the percentage of households earning $2 to $10 per day per person has soared from 42% of households in 2001 to 87% of households in 2014.  The percentage of those earning over $10 per day per person has jumped 7-fold from 1% of households in 2001 to 7% of households in 2014.

Pakistani Middle Class:

Only 5% of Pakistanis in $2-$4 per day per person income group have college degrees. But 20% of those in $4-$10 have college degrees, according to the survey results.

Pakistan Middle Class Profile. Source: KSBL

Credit Suisse Income and Wealth Data:

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

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

GDP Estimates Using Household Survey Data:

Pakistan's GDP calculated from consumption data in PSLM is significantly higher than the government estimates based on production data. The reverse is true of Indian GDP.

M. Ali Kemal and Ahmed Waqar Qasim, economists at Pakistan Institute of Development Economics (PIDE),  explored several published different approaches for sizing Pakistan's underground economy and settled on a combination of  PSLM (Pakistan Social and Living Standards Measurement) consumption data  and mis-invoicing of exports and imports to conclude that the country's "informal economy was 91% of the formal economy in 2007-08". 

Prominent Indian economists Abhijit V Banerjee, Pranab Bardhan, Rohini Somanathan and TN Srinivasan teaching at MIT, UC Berkeley, Yale University and Delhi School of Economics believe that India's GDP estimate based on household survey (National Sampling Service or NSS) data is about half of what the Indian government officially reports as India's GDP. 

Here's a quote from French economist Thomas Piketty's book "Capital in the Twenty-First Century" explaining his skepticism of production-based official GDP figures of India and China:

"Note, too, that the very high official growth figures for developing countries (especially India and China) over the past few decades are based almost exclusively on production statistics. If one tries to measure income growth by using household survey data, it is often quite difficult to identify the reported rates of macroeconomic growth: Indian and Chinese incomes are certainly increasing rapidly, but not as rapidly as one would infer from official growth statistics. This paradox-sometimes referred to as the "black hole" of growth-is obviously problematic. It may be due to the overestimation of the growth of output (there are many bureaucratic incentives for doing so), or perhaps the underestimation of income growth (household have their own flaws)), or most likely both. In particular, the missing income may be explained by the possibility that a disproportionate share of the growth in output has gone to the most highly remunerated individuals, whose incomes are not always captured in the tax data." 

Who is Dr. Jawaid Abdul Ghani?

The PSLM household data cited in this blog post is taken from a recent presentation made by Dr. Jawaid Abdul Ghani at the Karachi School of Business and Leadership (KSBL) where he teaches. KSBL has been established in collaboration with  Cambridge University's Judge Business School. Prior to his current faculty position, Dr. Abdul Ghani taught at MIT's Sloane School of Management and Lahore University of Management Sciences (LUMS). He has a computer science degree from MIT and an MBA from Wharton Business School.


Pakistan has managed to significantly reduce poverty and rapidly grow its middle class since 2001 in spite of major political, security and economic challenges. The foundation for the rise of the middle class was laid on President Musharraf's watch by his government's decisions to invest in education and infrastructure projects that led to the expansion of both human and financial capital. My hope is that the continued improvement in security situation and implementation of China-Pakistan Economic Corridor (CPEC) related projects will bring in higher long-term investments and accelerate Pakistan's progress toward prosperity for all of its citizens.

Related Links:

Haq's Musings

Credit Suisse Wealth Report 2016

Pakistan: A Majority Middle Class Country

Karachi School of Business and Leadership

State Bank: Pakistan's Actual GDP Higher Than Officially Reported

College Enrollment in Pakistan

Musharraf Accelerated Development of Pakistan's Human and Financial Capital

China-Pakistan Economic Corridor


Ravi Krishna said...

ha. Why do Pakis bring their own yardstick to make themselves look better. Worldwide there is only one yardstick to judge auto sales -> Sales of new cars.

India: 3 million per annum
Pak: 180K per annum

Same is true for every high-end middle-class consumables like Ipad, Hi Def TV.

Riaz Haq said...

RK: "Worldwide there is only one yardstick to judge auto sales -> Sales of new cars"

The figures I have quoted from Dr. Abdul Ghani are for total cars owned by households, not sales in a given year.

India has about 250 million households vs Pakistan's 30 million. At 6% of households, it translates into vs 15 million cars in India vs 1.8 million cars in Pakistan. And these 6% households in either country are not "middle class" by any definition. These figures are for family owned cars, not utility vehicles (UVs), taxis and vans commercially owned and operated.

Demand for cars in Pakistan exceeds supply. Over 200,000 cars were produced in Pakistan and another 50,000 imported last year.

And car sales in Pakistan are are now rising faster than in India.

Here's a recent Nikkei Asian Review story on car market in Pakistan:

"Indus Motor, a joint venture between Toyota Motor and local conglomerate House of Habib, is doing well with its mainstay Corolla, reporting that sales grew 11% on the year to 65,000 in fiscal 2016. "The market is so brisk that production can't keep up," said Indus Motor Vice Chairman Toshiya Azuma.

Azuma expects even more growth to come. "Demand in India, our next-door neighbor, is about 4 million cars [including commercial vehicles] a year, so annual sales of about 600,000 cars is well within reach in Pakistan." The country has a population one-sixth that of India."

Farhan Jalil said...

Pakistan may have higher percentage but India's population is bigger therefore it has higher quantity in all categories despite lower percentage.

Riaz Haq said...

The hidden truth behind India’s low refrigerator ownership

Nearly 90% families in China today have a refrigerator. What about India?
The 2016 ICE 360° survey showed that a little less than 30% of Indian families have a refrigerator. At first glance, we may conclude that a fridge is still an aspirational product that doesn’t fit into the majority of Indian families’ budgets. That reasoning however, does not hold up.
The same survey showed that even in the top 20% of the richest Indian families, only six out of 10 families have a fridge. This suggests that constraints other than affordability are at work here that influence households’ decision to buy a refrigerator.
While a threshold level of income is a necessary condition for the purchase of a refrigerator, it is not the sufficient condition.
The 2011 census shows that nearly twice the number of households in rural India own a two-wheeler, which costs much more than a fridge.
This kind of hierarchical pattern in the ownership of a two-wheeler and a fridge in India is unlike in any other major economy.
So Women can Chill
In a March 2017 paper in the Journal of Quantitative Economics (From Income to Household Welfare: Lessons from Refrigerator Ownership in India, by Sowmya Dhanaraj, Vidya Mahambare and Poonam Munjal), this apparent puzzle is explored.
Following a robust statistical methodology and controlling for the impact of a number of other determinants such as regional influences, two factors stood out. One, a refrigerator is unique among all energy-using consumer durables.
Unlike the television or air-conditioner, the decision to purchase a fridge depends not only on the access but also reliability and duration of residential power.
Unlike a TV, a fridge is of little use unless uninterrupted power supply is guaranteed. Nearly 43% of rural households and 13% of urban households in India either do not have access to electricity, or receive electricity for less than eight hours. This makes it a major constraint to buy a durable such as a refrigerator. In fact, only around half of India’s population receives residential power for more than 16 hours a day.
Two, unlike a TV, which is a leisure good, a refrigerator disproportionately benefits women in the family.
As a result, a decision to purchase a consumer durable is also driven by their bargaining and decision-making power within a family. And what would tilt the intra-household bargaining power in favour of women? It is largely the function of the education level of women.

Jyotika said...

India generates enough electricity for its population. Please take a note of that. The problem lies in end user connections and the bureaucracy of it. Gujarat solved that problem by improvising a better metering system and now actually exports excess power.
After PM Modi's election this system is being adopted nationwide and in 5-10 years a dramatic shift will transform electrification in underserved areas.

Riaz Haq said...

In India, washing machines top computers in popularity
A majority of Indian households own a TV while 29% own a refrigerator, according to the ICE 360° survey

Fresh data from a large-scale nationally representative survey conducted this year (2016) shows that the washing machine has become a more popular household asset than the computer in India. The ‘Household Survey on India’s Citizen Environment & Consumer Economy’ (ICE 360° survey) shows that 11% households own a washing machine while only 6% own a computer or a laptop. The survey covering 61,000 households is among the largest consumer economy surveys in the country.

The survey shows a drop in the proportion of computer-owning households compared to the 2011 census, when nearly 10% households reported having either a computer or a laptop (the census did not report data on washing machines). The ICE 360° survey also shows that 10% households reported having an Internet connection, 1% lower than the proportion of households with a washing machine. But the proportion of households where at least one household member reported accessing the Internet (including those who accessed the Internet at work) is significantly higher at 22%.

The survey also shows that a large majority of Indian households owns a TV today. The 2011 census had showed that 47% households have a TV set. That proportion has increased to 65%, according to the ICE 360° survey. As TV becomes a mass market product, the refrigerator may be turning into the kind of aspirational product that the TV once used to be. A majority of the top quintile owns a refrigerator. A majority of the salaried class also owns a refrigerator. Nationally, 29% households own a refrigerator.

Riaz Haq said...

Brisk sales of appliances in Pakistan

The home appliances business is thriving and key market players expect consumer demand to surge as households generally replace their old appliances with newer models.

According to an assessment, almost all concrete houses in first-, second- and third-tier cities, from posh areas to shanty settlements, have fans. The reach of the television is said to be as high as 80pc. In major cities, almost 60pc of households are said to have fridges and washing machines, on average.

And China is reaping the benefit of the changing lifestyle in Pakistan, as the bulk of key components used in home appliances are imported from the Asian giant, leading companies in the business confirmed.

According to the Survey, “In electronic products, air conditioners, deep freezers, electric motors, storage batteries and refrigerators were main contributors (to LSM), growing by 36.12pc, 83.03pc, 20.1pc, 3.2pc and 3.6pc respectively”.

According to latest PBS figures released on March 24, the production of home appliances — including refrigerators, TV sets, air conditioners and sewing machines — rose 10pc to 1.2m units during July-January 2014-15. The production of the most popular products — fridges and deep freezers — was up 15pc to 0.8m units, against 0.7m units during the same period of the previous year.

And the production of television sets — the second most popular category in electronic goods — grew 5pc to 57,000 units during July-January. But air conditioner and sewing machines declined 6pc and 1pc over the period.

Riaz Haq said...

What's the reality behind all the praise for Pakistan's economy?
There is no doubt that Pakistan’s economy has seen qualitative shifts towards increased marketisation and commodification in the past two decades. However, the claims extrapolated from these shifts require further scrutiny

Underpinning much of the coverage is a set of core statistics: the country’s GDP growth rate crossed 4 percent last year, and is expected to surpass 5.5 percent in 2017. The stock market rose by 46 percent in 2016, and is now in line for an upgrade to emerging market status by the middle of 2017. Foreign exchange reserves have grown to a record high of $20 billion, while more inflows are expected via a number of big-ticket energy and transit projects under the $57 billion China Pakistan Economic Corridor (CPEC). Finally, measurements by the United Nations Development Program (UNDP) show multidimensional poverty declining from 55 percent of all households in 2005 to 38 percent in 2015.

Beyond macroeconomic indicators, another factor that has received considerable attention in recent coverage is the country’s growing middle class. One recent piece, published in the Wall Street Journal, cited this burgeoning middle class as the primary fuel behind the twin boon of democratic stability and economic growth.

Depending on the definitions used, Pakistan’s middle class is estimated to be anywhere between 5 to 35 percent of the population. Using income-based methods, the Pakistan Institute of Development Economics (PIDE) finds that approximately 55 million people earn between 75 to 125 percent of the overall median income. Credit Suisse, on the other hand, estimates that 9.7 percent of Pakistan’s adult population, around 7 million people, possess wealth between $10,000 and $100,000. By this measure, Pakistan’s would be the 18th largest middle-class in the world.

In the absence of reliable data on changes in the income distribution, a number of other metrics serve as a useful way to gauge Pakistan’s "middle-class revolution". One of these is the ownership of consumer durables: today, approximately 40 percent of all households own a motorcycle while nearly 60 percent own a television, up from 4 and 20 percent respectively in the early 1990s. Similarly, household ownership of washing machines and refrigerators is now in the mid-40s as well, up from under 20 percent just two decades ago. This expanding market for sale of household appliances, along with its untapped potential, has not gone unnoticed by foreign investors. Late last year, the Turkish consumer goods giant Arcelik entered the Pakistani market through a $240 million buy-out of a local white goods manufacturer.

Similar expansion at the upper-end of the consumer market can be gauged from the sale of passenger cars, which rose from 40,000 units in 2000 to nearly 200,000 in 2016. A considerable portion of this market is now financed through credit, as banking outlays for the purchase of automobiles hit an all-time high of $1.1 billion in 2016, up from $415 million in 2012.

Beyond descriptive statistics, the spatial and visual transformation in Pakistan’s expanding urban centres tell a similar story. Private schools and colleges have cropped up everywhere, offering instruction in the English language as their contribution towards personal enrichment and upward mobility. Similarly, new real estate developments in housing and retail can be found selling profitability and modern amenities to investors and consumers respectively. Advertising campaigns for these projects often rely on some variant of an idealised western lifestyle, clearly playing on, and perhaps in part shaping, the aspirations of a vociferous market.

Anonymous said...

Ravi said: ha. Why do Pakis bring their own yardstick to make themselves look better. Worldwide there is only one yardstick to judge auto sales -> Sales of new cars."

Why is it that every time any time statistic is presented that shows India in a negative light Indians start panicking? Why so much inferiority complex?

G. Ali

Riaz Haq said...

At least one-fourth of urban households in India don't have a separate kitchen, according to recently released data based on the Socio-Economic Caste Census (SECC) carried out by the housing ministry.
The survey indicates how nearly 1.7 crore urban households may be using their single room for cooking food as well.
This fresh data gains importance considering that different studies have shown how air pollution in kitchens has become a major health concern and that too in urban areas where the ambient air is getting increasingly polluted due to vehicular emission and dust.
A recent study published in Elsevier, a journal on environmental research, which assessed people's personal exposure to pollution in Delhi, showed how kitchens can be more polluted than roads.
The study mentioned how urban households, particularly kitchens, could be enveloping people in PM 2.5 pollutants as well.
Other studies across the globe have also shown how kitchen appliances release colourless pollutants. Kitchens also get more polluted when they lack proper ventilation.
In fact, the Pradhan Mantri Ujjwala Yojana (PMUY), launched by PM Narendra Mod, was a big step towards making kitchens smoke-free for women who are often the worst-affected by such pollution.
According to SECC data, while Mizoram has the maximum percentage of such households, Bihar ranks second. In Daman and Diu and Kerala, over 90% households have exclusive kitchens.

Chand Singh said...

Oh please, the world knows the confidence of Indians versus the perennial client state Pakistan

Anonymous said...

"Confidence of Indians", really? The same Indians Clinton called Rodney Dangerfield of international politics, always complaining that they don't get enough respect?

Isn't it time that you guys come back to plant earth?

G. Ali

Rks said...

"The hidden truth behind India’s low refrigerator ownership"- I work for Refrigerator Industry at a senior level and can tell you. India's Refrigerator production is in top 6 world wide. It stands more than 20 Million nos per year. It is growing at 30 % YOY. I am sure it will be in top 3 before 2020. Indians do not prefer to store food in Refrigerator (not even vegetables). They use fresh food daily basis. The only use of fridge is in summer and for cooling water. So penetration is very low.

Anonymous said...

This is very good comparison between India and Pakistan. What we can learn from this is both countries are suffering from acute electricity crisis. Per capita consumption of electricity will determine future growth of both the countries. Pakistan had been doing well for decades till 1990s but after that it seems like India has had a better growth story for the past 20 odd years.
Dr. Riaz what's your forecast for electricity generation and consumption for India and Pakistan for another 20 yrs.

Riaz Haq said...

Household Integrated Economic Survey (HIES) 2015-16

The current round of the HIES covers 24,238 households. It provides important information on household income, savings, liabilities, and consumption expenditure and consumption patterns at national and provincial level with urban/rural breakdown.

Riaz Haq said...

Pakistan Social And Living Standards Measurement

The PSLM Project is designed to provide Social & Economic indicators in the alternate years at provincial and district levels. The project was initiated in July 2004 and will continue up to June 2015. The data generated through surveys is used to assist the government In formulating the poverty reduction strategy as well as development plans at district level and for the rapid assessment of program in the overall context of MDGs. As such this survey is one of the main mechanisms for monitoring MDGs indicators. It provides a set of representative, population-based estimates of social indicators and their progress under the PRSP/MDGs. For Millennium Development Goals (MDGs), UN has set 18 targets for 48 indicators for its member countries to achieve by 2015. Pakistan has committed to implement 16 targets and 37 indicators out of which 6 targets and 13 indicators are monitored through PSLM Surveys. The PSLM surveys are conducted at district level and at Provincial level respectively at alternate years. PSLM District level survey collects information on key Social indicators whereas through provincial level surveys (Social & HIES) collects information on social indicators as well as on Income and Consumption while in specific sections also information is also collected about household size; the number of employed people and their employment status, main sources of income; consumption patterns; the level of savings; and the consumption of the major food items. However, Planning Commission also uses this data for Poverty analysis.

An other important objective of the PSLM Survey is to try to establish the distributional impact of development programs; whether the poor have benefited from the program or whether increased government expenditure on the social sectors has been captured by the better off.

The sample size of PSLM surveys district level is approximately 80000 households and approximately 18000 at Provincial level.

Main Indicators

Indicators on Demographic characteristics, Education, Health, Employment, Household Assets, Household Amenities, Population Welfare and Water Supply & Sanitation are developed at National/Provincial /District levels.

Anonymous said...

So Pakistan where even cities have notorious blackout has more refrigerator ownership? This is strange. Is it because more meat consumption and Indians buy vegies from corner bazars every day?

I doubt power supply has anything to do with this. Either survey was not correct, or something other than power supply issue.

I think Pakistani being more wealthy in general has to with more resources as well. Isn't it true that 50% Pakistan live in Punjab. That is the most resource rich area in subcontinent. How many battles were fought for that land? Also growth wise Pakistan beat india for about 50 years, there itself cumulative effect will be tremendous. Why does Riaz thinks that everybody in India is not aware of Pakistan's relative wealth?

Also is Pakistan like Kerala? I think percentage of Pakistanis per household working abroad must be considerably high. What are the remittance flow in India / Pakistan. I bet Pakistan per person is multiple of India. Kerala has communist ruining industry but somehow average Karalite is richer, more educated and better in every other HDI than most Indians.

Julian said...

IMF and World Bank data shows a better Indian per-capita picture. Of course the question is, what is the size of a household in Pakistan and in India? The corresponding sizes are 6.7 & 4.8 persons or Pakistani household is 40% bigger than an Indian household.

Riaz Haq said...

Julian: "IMF and World Bank data shows a better Indian per-capita picture"

The average in India is heavily skewed by highly unequal distribution of income and wealth in India. Top 1% of Indians own 58.4% of wealth.

Pakistan does significantly better than India when comparing mean income and wealth.

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

As to the household size, the mean in Pakistan is 6.2 person for 2014-15, according to PSLM. Pakistan has a younger population than India.

Riaz Haq said...

One in three households in India owns a two-wheeler
A majority of car owners prefer to use a two-wheeler to reach work, according to the ICE 360° survey 2016

The proportion of car-owning households in the country was 5%, according to the 2011 census data. That proportion has more than doubled, and stands at 11% today as per the ICE 360° survey 2016. The proportion of two-wheeler owners has increased 15 percentage points to 36%, while the proportion of bicycle owners has increased 13 percentage points since 2011 to 58%, the survey shows.

Households in the top quintile account for a majority of the cars and more than a third of two-wheelers in the country. The top 10% accounts for 46% of the cars and 22% of two-wheelers in India. The bottom quintile, which is the poorest 20%, accounts for a majority of the bicycles in the country, as per the survey. Households having a motorcycle or a scooter or a scooty or a moped have been categorized as owning a two-wheeler in this analysis.

Riaz Haq said...

#Pakistan #steel output up 23% in 2016, fastest growth among 40 countries. #India #Iran #Vietnam #Kazakhstan #China

Agha Steel Industries Ltd. is planning Pakistan’s biggest-ever private sector initial share sale this year to help boost output as China funds more than $55 billion in infrastructure projects across the nation and a buoyant stock market spurs investor demand.

The Karachi-based company plans to raise as much as 10 billion rupees ($95 million) selling a 25 percent stake, Executive Director Hussain Agha said in an interview. The sale will be the largest since the 12-billion rupees government stake sale of Habib Bank Ltd. in 2007, the country’s largest IPO yet.

Steel and cement makers in Pakistan are expanding to meet demand as the “One Belt, One Road” trade route financed by China spurs construction. The nation’s economy has grown at about 5 percent annually since 2013, encouraging Agha’s peers including International Steels Ltd. and Aisha Steel Mills Ltd. to lift production.

“You need roads, sky rises and housing,” said Agha. “Pakistan’s steel industry is in an infancy stage and growing at a massive pace -- the whole environment will change.”

Read more: Chinese Largesse Lures Countries to Its Belt and Road Initiative

The company will use the funds for $50 million expansion that will triple output to 500,000 metric tons within two years. Production will then double to a million tons by 2023, he said. Habib Bank has been appointed financial adviser while Arif Habib Ltd. and BMA Capital Ltd. were picked as book runners for transaction.

Pakistan’s steel output grew 23 percent to 3.6 million tons in 2016, the biggest gain among 40 nations, according to the World Steel Association. Agha Steel expects construction-grade steel, such as rebars and wire rods, to grow as much as 12 percent annually for the next three years.

The construction sector expanded 13 percent in year ended June 2016, more than twice the pace in the previous 12 months, according to State Bank of Pakistan’s annual report. Rapid urbanization and rising income levels has left the nation with an annual shortfall of 500,000 homes, according to real-estate developer Arif Habib.

“Real-estate is the main engine for this growth, it has really picked up,” said Ayub Khuhro, chief investment officer of Karachi-based Faysal Asset Management Ltd., which has about 8 billion rupees in stocks and bonds. “The government is also willing to protect companies with anti-dumping measures.”

Riaz Haq said...

IMF estimates that Pakistan's PPP GDP crossed the trillion dollar mark in 2017.

Intl$ 1,059.9 billion (2017, estimate)

Riaz Haq said...

Is #India Lying About Its World Beating #Economy? #Modi #BJP … via @barronsonline

India just announced its October-December GDP figures, supposedly showing it is still the fastest-growing major economy. You should not believe it. Every quarter there are questions about India’s GDP, with this one no exception. But there is a bigger problem: India refuses to publish the full GDP series, so that the world may not be able to trust the Indian government’s claims at all.

Economic growth should be measured by personal or household income. Instead it is measured by GDP, an accounting tool far more relevant for top-down planners than ordinary people. This is hardly India’s fault, but India has done a small bit to make the problem worse.

In January 2015 India revised recent GDP growth figures higher, among other things raising the fiscal year 2013-4 gain from 5% all the way to 6.9%. It is at this point the fastest-growing economy boasts began. Questions about the revision were raised immediately, including by current Indian government officials, because purportedly faster GDP did not fit with many other indicators. (It still does not.)

Since then, however, the new series has become widely used. While the Indian government argues that it better matches global practices, it manifestly fails to do so in an indispensable respect. The back series – the necessary base for calculations of ongoing GDP growth – has not been published more than 2 years later. Technically, we do not know India’s GDP in 2010, or anytime earlier.

The back series was first to be published December 2015, then mid-2016, and now has no apparent due date and will not be complete. The “globally accepted” new approach therefore makes it impossible to assess India’s GDP trajectory, potentially important information for a country aspiring to rapid development.

The best way to proceed in this case was to start from the beginning, applying the new method to a base year as far in the past as possible and generating new data forward from there. The obvious question is how India determined growth when earlier years could not serve as a base? The answer is unfortunately political: the government’s desire to report faster growth trumped accuracy.

It all may sound familiar. India seemingly always has an eye on China. If China pulled a stunt like this, its “world-beating” claims would be roundly ridiculed. India initially had the benefit of the doubt because it is a multi-party democracy with a competitive press. Those are very good reasons, but not good enough. One benefit of an open society is transparency, and the Indian government is being opaque in self-interested fashion.

India had a poor reputation for statistics quality before the GDP revision. It just revised a GDP growth figure from 7.2% all the way down to 6.5% for Q415.There are other, crucial statistics practices, for example concerning rural electrification, that are clearly biased in the government’s favor. In this context, hiding past GDP looks like a continuation of previous behavior.

Most people from pluralist open societies want to see pluralist, open India do well. For now, however, India has the same level of economic credibility as a country like Vietnam (which publishes GDP results even before the year ends). World-beating growth? Maybe. Or maybe poorly founded quasi-propaganda.

Mayank said...

If you don't believe in India's growth then don't invest. Simple. There are plenty who want to locally and internationally.

Riaz Haq said...

Pakistan's finance minister paints a bright economic picture
Ishaq Dar lauds infrastructure and development partnerships as a path to growth

GO YAMADA, Nikkei senior staff writer

Pakistan is determined to funnel more money toward infrastructure, small businesses and the poor, and the government has found an array of international partners to make it happen.

Finance Minister Ishaq Dar recently spoke with The Nikkei about Pakistan's development drive and the federal budget for the coming fiscal year through June 2018, which he said will focus on generating 6% gross domestic product growth.


Speaking about the budget to be announced on May 26, Dar said: "After [achieving] macroeconomic stability, we have fully focused on higher GDP growth that brings a better life to people, better per capita income, job opportunities and fills the gap in infrastructure demand."

Next fiscal year, he said, "our efforts will give [growth] another boost. Some fiscal measures and policies will be introduced."

FUNDING DEVELOPMENT Dar pointed to a recent agreement with the World Bank-affiliated International Finance Corporation to set up a Pakistan Infrastructure Bank.

The bank will provide financing for infrastructure projects undertaken by the private sector, he said, describing the new lender as an "equal partnership by the Pakistan government and IFC for 20% each." Other stakeholders from around the world will account for the rest, he said. The bank is expected to have paid-up capital of $1 billion.

And the infrastructure bank is just one piece of the puzzle. "With partnerships with the U.K.'s Department for International Development and the German government-owned development bank KfW, we have created the Pakistan Microfinance Investment Co.," Dar said. Its three-year business plan calls for boosting the number of "beneficiaries of microfinance from the current 4 million to 10 million."

The government, the U.K. aid agency and KfW are teaming up to create the Pakistan Poverty Alleviation Fund. Pakistan will hold 49% of the fund, with the U.K. and German partners holding 37% and 14%, respectively.

Islamabad has also established the Pakistan Development Fund, which will invest in public-sector projects outside the budget. The government's initial investment comes to $1.5 billion.

As for the economy, Dar said the government is "hoping for over 5% growth" for the current fiscal year, noting that the "World Bank is projecting 5.2% in 2017 and 5.5% in 2018."

Looking ahead, he suggested 6% growth is possible for next fiscal year, and that it could reach 7% the following year. "Our GDP is reportedly underestimated by 22-25%. If [the reported growth rate for] fiscal 2017-18 is 6%, it will be actually 7% or more," Dar said.

According to Dar, an old method of calculating national output is responsible for the discrepancy. "It has to be upgraded," he said. "And businesses, especially small and medium-sized businesses, have not been [brought into] the database on which GDP is calculated over 10 years."

To paint a more accurate picture, Dar said he recently "authorized the World Bank to carry out a study, and they will take one year."

UNDAUNTED BY DEFICITS Although Pakistan has had success containing inflation and attracting foreign direct investment, its fiscal and current-account deficits are a risk factor. Dar, however, disputed that, saying: "The fiscal deficit is not an issue. From fiscal 2012-13 to 2015-16, we cut the fiscal deficit from 8.8% to 4.6% of GDP. This fiscal year, we expect it will be close to 4.1%."

Dar chalked up the deficit to two major budget items. One is infrastructure development. "We see a jump from 600 billion rupees ($5.73 billion) in fiscal 2012-13 to 1,600 billion rupees in fiscal 2016-17."

Riaz Haq said...

China takes ‘project of the century’ to Pakistan
As part of its ‘One Belt, One Road’ project Beijing is pumping $55bn into its neighbour amid doubts over who really benefits

The leak of China’s original proposals for the CPEC agreement in the Pakistan newspaper Dawn this week heightened fears. The terms prioritise the industrial ambitions of the Xinjiang Production and Construction Corps, a quasi-
military organisation vital to Beijing’s oil and security policies which also dominates the agricultural economy of the frontier region of Xinjiang.

Comparing it with the trading organisation that paved the way for British rule in India, the head of a large investment company in Pakistan says: “We have to be careful if we don’t want this to turn into a repeat of the East India Company. If we squander it, it will.”

China wants to complete four main tasks via CPEC: expand the Gwadar port on Pakistan’s south coast, which it financed, built and owns, build a fleet of power plants, construct road and rail links and set up special economic zones where companies can enjoy tax breaks and other business incentives.


In building infrastructure, Beijing is doing for Pakistan what Islamabad has been unable to do for itself, especially as far as power generation is concerned. Peak electricity demand in Pakistan is 6 gigawatts greater than it can generate — equivalent to about 12 medium-sized coal power plants. Blackouts in many parts of the country last for several hours a day.

To meet this shortfall China is expected to spend more than $35bn — about two-thirds of the entire CPEC budget — building or helping to construct 21 power plants, which will be mainly fuelled by coal. The combined 16GW of capacity that they could provide would repair Pakistan’s supply gap twice over.

The building work associated with CPEC has already boosted heavy industry in the country. Arif Habib, one of the country’s biggest business conglomerates, says it is trebling its cement production in anticipation of CPEC.

“China will expand the [economic] pie,” says Ahsan Iqbal, Pakistan’s planning minister. “This project will create new [domestic] demand.”



“The risk is that down the line China will call the shots and that we will pay the price later,” says Syed Murad Ali Shah, the chief minister of Sindh, the province in which Karachi is located. “It is up to us.”

The Chinese plan, revealed by Dawn newspaper to have been delivered in December 2015, has only added to those concerns. It talks about thousands of acres of agricultural land leased out to Chinese enterprises to develop seed varieties and irrigation technology. It would install a full system of monitoring and surveillance in cities from Peshawar to Karachi, with 24-hour video recordings on roads. It would build a national network of fibre-optic cables to boost internet access.

Key to this is the XPCC. Under the plan the Han Chinese economic and paramilitary organisation is mandated to invest in Pakistan as a springboard for economic development around Kashgar, the heartland of 11m Turkic-speaking Muslims known as Uighurs.

Ministers in Islamabad say the document contains proposals originally drawn up by Beijing, but will not say how far the draft agreements, which are still being negotiated, differ from it.


Whatever the concerns in Pakistan that Islamabad is ceding too much power to China, many in the business and political communities argue that the benefits from the infrastructure projects are well worth it.

“Pakistan requires money and money has no colour,” Kimihide Ando, head of Mitsubishi Corp in Pakistan, says.

Others argue that, following the problems with the free-trade agreement, Pakistan’s ministers will be more savvy this time. “The Chinese have taken us for a ride [before] but we have let them,” says Ehsan Malik, chief executive of the Pakistan Business Council. “Given we have made huge mistakes before, hopefully we will learn this time.”

Riaz Haq said...

Economic Survey of Pakistan 2016-17

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


Real GDP growth was above
four percent in 2013-14 and has smoothly
increased during the last four years to reach
5.28 percent in 2016-17, which is the highest in
10 years.


The agriculture sector met
its growth target of 3.5 percent, helped by
government supportive policies and by
increased agriculture credit disbursements.
During 2015-16, the agriculture credit
disbursement was close to Rs 600 billion while
during 2016-17, the target was raised to Rs 700
billion. During July-March 2016-17, the
disbursement was observed to be 23 percent
higher as compared to the previous year. These
developments, along with the Prime Minister’s
Agriculture Kissan Package together with other
relief measures have started yielding positive
The large-scale manufacturing output is
primarily based on Quantum Index
Manufacturing (QIM) data, which show an
increase by 5.06 percent from July 2016 to
March 2017. Major contributors to this growth
are sugar (29.33 percent), cement (7.19
percent), tractors (72.9 percent), trucks (39.31
percent) and buses (19.71 percent). High
growth of sugar is based on production of 73.9Million Tons of Sugarcane as compared to 65.5
million tons last year, which represents an
increase by 12.4 percent.
Large Scale Manufacturing growth has picked
up momentum and posted a strong 10.5 percent
growth in the month of March 2017 compared
to 7.6 percent in March 2016. The YoY growth
augurs well for further improvement in growth
during the period under review.
On average, the LSM growth stood at 5.06
percent during July-March FY 2017 compared
to 4.6 percent in the same period last year. The
sectors recording positive growth during JulMar
FY 2017 are textile 0.78 percent, food and
beverages 9.65 percent, pharmaceuticals 8.74
percent, non-metallic minerals 7.11 percent,
cement 7.19 percent, automobiles 11.31
percent, iron & steel 16.58 percent, fertilizer
1.32 percent, electronics 15.24 percent, paper &
board 5.08 percent, engineering products 2.37
percent, and rubber products 0.04 percent.
Pakistan is bestowed with all kinds of resources
which also include minerals. Pakistan possesses
many industrial rocks, metallic and nonmetallic,
which have not yet been evaluated. In
the wake of the 18th Amendment, provinces
enjoy great freedom to explore and exploit the
natural resources located in their authority, with
the result that they are currently undertaking a
number of projects using their own resources,
or in collaboration with the federal government
or with donors to tap and develop these
The services sector recorded a growth of 5.98
percent and surpassed its target which was set
at 5.70 percent. Wholesale and retail trade
sector grew at a rate of 6.82 percent. The
growth in this sector is bolstered by the output
in the agriculture and manufacturing sectors.
The share of Agriculture, Manufacturing and
Imports in Wholesale and Retail Trade growth
is 18 percent, 54 percent and 15 percent
respectively. The Transport, Storage and
Communication sector grew at a rate of 3.94
percent. Finance and insurance activities show
an overall increase of 10.77 percent, mainly
because of rapid expansion of deposit formation
(15 percent) and demand for loans (11 percent).

Riaz Haq said...

#India's #GDP growth rates overstated by govt, Actual growth closer to 5%-5.5%, not 7.1%: Expert via @economictimesIndia's national accounts on economic growth wrong: Expert

BY PTI | UPDATED: JUN 03, 2017, 01.51 PM IST

Read more at:

"They (India's national accounts) show India's growing at seven per cent a year. But I along with many other economists, I'm afraid don't believe the national accounts. They were redone in 2011," Vijay R Joshi, Emeritus Fellow of Merton College, Oxford and Reader Emeritus in Economics, University of Oxford, told a Washington audience.

Joshi, the author of a book titled 'India's Long Road--The Search for Prosperity' alleged that India's growth rate is back at 5.5 per cent, but the na ..

Riaz Haq said...

Passenger vehicle sales cross 3 million mark in 2016-17

Passenger vehicle sales in India crossed the three million milestone for the first time in 2016-17, with the segment witnessing a growth of 9.23 per cent.

For the fiscal ended March 2017, domestic passenger vehicles (PV) sales were at 30,46,727 units against 27,89,208 in the previous year, according to data released by the Society of Indian Automobile Manufacturers (SIAM).

On the sales performance, SIAM Deputy Director Sugato Sen said the year witnessed the highest sales of passenger vehicles, utility vehicles, motorcycles and scooters.

“In terms of passenger vehicles, we crossed the three million mark for the first time,” Sen told reporters here.

“The growth in PV sales is driven largely by demand for utility vehicles ahead of sedans and hatchbacks,” he added.

Utility vehicles

During the year, utility vehicle sales were at 7,61,997 units against 5,86,576 units in the previous fiscal, a growth of 29.91 per cent.

“This is the highest growth rate achieved by the UV segment after 2013-14 when it grew by 52 per cent,” Sen said.

SIAM Director General Vishnu Mathur said there is a readjustment happening in the Indian passenger vehicle market with demand for utility vehicles rising at a much faster rate ahead of conventional cars.

Car sales

Domestic car sales during the year grew 3.85 per cent to 21,02,996 units from 20,25,097 units in the previous year. This was the lowest growth since 2014-15, when car sales rose 5.09 per cent.

Maruti Suzuki’s Vitara Brezza, Hyundai’s Creta, Renault Duster, Mahindra Scorpio and Ford Ecosport are among the popular SUV models in India at present.

Mathur said the industry has been able to grow despite challenges of ban on big diesel SUVs and cars in the National Capital region and demonetisation.

“As for demonetisation, the impact was for only two months on the PV segment and recovery was quick, but it was prolonged in the two-wheeler segment,” he said.

In 2016-17, market leader Maruti Suzuki India retained its top position in the domestic PV space selling 14,43,641 units, a growth of 10.59 per cent.

Rival Hyundai Motor India was a distant second with 5,09,705 units, up 5.24 per cent followed by home-grown Mahindra & Mahindra in the third spot with 2,36,130 units, down 0.07 per cent.

Tata Motors overtook Honda Cars India to occupy the fourth spot with 1,72,504 units, up 15.45 per cent, while the Japanese rival sold 1,57,313 units during the year, down 18.09 per cent.

Total two-wheeler sales during the year stood at 1,75,89,511 units against 1,64,55,851 in the previous fiscal, up 6.89 per cent.

Motorcycle sales

Motorcycles sales in 2016-17 were at 1,10,94,543 units compared with 1,07,00,406 in the previous fiscal, up 3.68 per cent.

Market leader Hero MotoCorp sold 56,93,681 units during the year compared with 56,03,136 in the previous fiscal, up 1.62 per cent. Rival Bajaj Auto posted sales of 20,01,391 units against 18,98,957 in 2015-16, up 5.39 per cent.

Honda Motorcycle and Scooter India (HMSI) had bike sales of 15,36,055 units last fiscal against 14,94,153 units in 2015-16, a growth of 2.8 per cent.

Scooter sales

Scooter sales in 2016-17 were at 56,04,601 units in comparison to 50,31,678 in the previous fiscal, up 11.39 per cent.

Segment leader HMSI posted 31,89,012 units during the year as against 27,89,537 in 2015-16, up 14.32 per cent.

Chennai-based TVS Motor Co posted a growth of 6.81 per cent in its domestic scooter sales at 8,26,291 units against 7,73,597 units sold in the previous fiscal, becoming the number two player in the category.

Hero MotoCorp dropped to third position with its scooter sales last fiscal at 7,89,974 units compared with 8,18,777 units in 2015-16, down 3.51 per cent.

SIAM said that during 2016-17, commercial vehicle sales grew 4.16 per cent to 7,14,232 units from 6,85,704 a year earlier.

Riaz Haq said...

The retail sector seems to be priming the economic pump. As per latest data released by the Pakistan Bureau of Statistics, the overall output of the large-scale manufacturing (LSM) index grew by 5.69 percent in Jul-May FY17. (For more on LSM going forward, please read “L-S-M!” published August 2).

Among the top-three growth industries in the FY17 LSM index is ‘electronics’ – the other two being ‘iron and steel products’ and ‘automobiles’. Having a roughly 2 percent weight in the LSM index, the electronics industry grew by a recent high of 16.18 percent year-on-year in 11MFY17.

The key electronics items illustrated in the graph have all grown between FY11 and FY16. However, the growth in refrigerators and air-conditioners has been the most prominent. In the more recent period, there is double-digit growth all around, except for the TV sets. During 11MFY17, production of deep freezers grew by 28 percent, refrigerators 24 percent; electric fans 21 percent, and air-conditioners 10 percent, on a year-on-year basis.

In tandem with growth in domestic retail, the production of major electronics items is expected to continue its recent growth run. The middle-class, both its existing members and aspirants, tend to drive the purchases of white goods and electronics. If the economic growth gathers pace, the resulting higher per capita income will push the sales of both lifestyle and convenience products. Already, there is an apparent proliferation of housing schemes in both major and small cities – a sign of upward mobility – that is also a driving factor in appliance sales.

While folks want comfortable lifestyles, not many households currently have that. As per Euro monitor, in 2016, mere 55 percent of households had a washing machine, 43 percent had a refrigerator, 20 percent had a microwave oven, and 16 percent had a deep freezer. There is obviously potential there, more so in rural areas where ownership of household durables is markedly lower than urban areas. Continued flows of remittances and growth in farming incomes are going to be driving forces for electronics sales. But who will feed all that demand? While almost all of the demand for electric fans and refrigerators is being met through local production, the same is not the case for air conditioners, LED TV sets, deep freezers, and washing machines. The domestic players are conscious of the need to invest in product design, functionality, and quality of service. But the price-conscious mass market doesn’t encourage them to really go the extra mile, thus hampering their ability to compete with the imported products.

Riaz Haq said...

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

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

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

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

Ayesha Nawaz said...

I'm a student of Applied Psychology, currently working on my own research. I'm having trouble to find the current classification of monthly income to measure socioeconomic status into the class differences. I need them with authentic reference according to economics survey of Pakistan or Pakistan bureau of statistics. I wonder if you could me help.

Riaz Haq said...

Ayesha: "I'm having trouble to find the current classification of monthly income to measure socioeconomic status into the class differences. I need them with authentic reference according to economics survey of Pakistan or Pakistan bureau of statistics."

I think the best sources of government data on Pakistan you need are:

1. Household Integrated Survey (HIES)

2. Pakistan Living Standards Measurement Survey (PLSM)

3. Economic Survey of Pakistan

Classes like rich, middle and poor are usually defined in terms of household incomes, not individuals.

The data collected is in terms of income quintiles (20%) of households.

You can also see the work of Dr. Jawaid Abdul Ghani of Karachi School of Business on this subject.

Hope it helps.

Riaz Haq said...

#Pakistan Home #Appliance Maker Dawlance Manufactures Its 10 Millionth Unit. Company makes #Refrigerators, #Freezers, #AirConditioners, #Microwave Ovens, Built-in #Ovens, #WashingMachines, Water Dispensers, #Dishwashers, and small #kitchen appliances.

The market-leader in Pakistan’s Consumer-Electronics and Home Appliances market – Dawlance has now achieved another huge milestone, by manufacturing its Ten Millionth unit. Completing its 40 years of excellence, this enterprise is a fully owned subsidiary of Arçelik A.S. – The largest Turkish enterprise and the third-largest manufacturer in Europe.

The Chief Executive Officer of Dawlance – Mr. Umar Ahsan Khan stated that: “Dawlance is the biggest Turkish investment in the economy of Pakistan. Producing its 10 millionth Unit is the strongest evidence of the brand’s reliability. It is an unforgettable moment for us as we enter this new era of consumers’ confidence. The company is thankful to its over 4000 employees, our consumers, stakeholders, distributers, and dealers all over Pakistan, along with everyone else who contributed to the success and growth of the company.”

The Head of Production at Dawlance – Mr. Ameen Ahmed expressed his delight and said; ”We have come a long way since the company’s humble beginning, back in 1980, when a small assembly plant was established in Hyderabad. Today, the company has grown tremendously, operating 3 large-scale manufacturing units in Pakistan. The 10 millionth product is a testament to our passion and commitment, to strengthen Pakistan’s industrial-base and economy.”

Through this resourceful collaboration, the most reliable brand has been established, to offer the highest quality electronics and services to Pakistani consumers. Our most innovative technologies also promise the conservation of energy. Being a socially responsible organization, it generously contributes towards credible initiatives for community-development and other healthy socio-cultural activities, to create more economic opportunities and empower its consumers.

It caters to consumers’ 3 different functions; Food Care, Fabric Care and Home Care with a wide range of appliances including; Refrigerators, Freezers, Air-Conditioners, Microwave Ovens, Built-in Ovens, Hoods and Hobs, Washing Machines, Water Dispensers, Dishwashers, and small kitchen appliances. Consumers can enjoy the ‘Grand Warranty’ on all Dawlance products sold all over Pakistan, without paying additional costs or any registration process.

All Dawlance Refrigerators and Freezers come with a 12 Years Compressor Warranty (including Inverter and non-inverter technology). All its new models of Washing Machines are covered by a 10 Years Motor Warranty.

With the continued focus on customer care and after-sales service, it always exceeds the customers’ expectations. With creating newer technologies, every employee is inspired to ensure compliance with global standards and best-practices at every level.

A nation-wide ‘After Sales network’ provides 24/7 Customer-Care, while Technical-Collaborations with Arçelik’s global plants in Turkey, Russia, Romania, Thailand, and South Africa are also nurturing expertise at Dawlance.

Riaz Haq said...

Private vehicle ownership in Pakistan has risen sharply over the last 4 years. More than 9% of households now own cars, up from 6% in 2015. Motorcycle ownership has jumped from 41% of households in 2015 to 53% now, according to data released by Federal Bureau of Statistics (FBS) recently. There are 32.2 million households in Pakistan, according to 2017 Census.

Riaz Haq said...

Giving a contrasting view, Business Head B2B Solutions, LG Pakistan, Syed Farrukh Raza Alam said sales in July-August of AC, washing machines, TVs, double door fridge, etc were better than last year same period despite 15-20 per cent increase in prices in the last one year. His sales of invertor ACs were also brisk.

According to figures of Pakistan Bureau of Statistics (PBS), production of refrigerators plunged by 24pc to 1.093 million units in FY19 while deep freezer sales soared by 39pc to 186,545 units in FY19.

A sales representative in Karachi of a Lahore based domestic appliances making company said the overall sales of domestic appliances shrank by 20-25pc in the last two months due to high prices.


According to official figures, overall local production of TV sets in FY19 rose by 3.3pc to 380,559 units.

President Karachi Electronic Dealers Association (KEDA), Mohammad Rizwan Irfan said deep freezers and fridge sales recorded steep fall of 50pc in the last two months as prices rose by 15-20pc in the last one year while low slaughtering of sacrificial animals also kept buyers away from the market. He said sale of cooling gadgets were also subdued despite marriage season that runs betweenr Eid and 1st Muharram.

He said CNIC condition and Sales Tax registration process had already caused anxiety among the dealers and manufacturers. Rizwan said many companies had suspended providing domestic appliances after various taxation measures, while many dealers are also not income tax filers.

Riaz Haq said...

Bangladesh, Pakistan and Sri Lanka, all of which suffered from widening current account deficits in 2018, witnessed a reduction in their current account deficits – a much needed boost to macroeconomic stability. Vietnam on the other hand continues to post a current account surplus thanks to rising exports.

Importantly, Asian frontier markets remain under-researched and this trend is continuing given the soft sentiment towards frontier markets. The table below shows the number of sell side analysts covering well-established blue-chip companies within our universe relative to larger emerging markets. In the current environment, many of these companies besides being under-researched are also now being ignored by a large set of investors due to the current sentiment towards frontier markets. The result is that there are a number of bargains available. Furthermore, in line with our policy of being on the ground for research, our team conducted visits in 2019 to Bangladesh, Cambodia, Iraq, Jordan, Kazakhstan, Mongolia, Myanmar, Oman, Pakistan, Sri Lanka, Uzbekistan, and Vietnam. Through this, our team carried out close to 200 one-to-one meetings with company management teams.

Sentiment towards Pakistan remained negative for most of 2019 and the fund rightly had a low weight to the country for most of the year. The Pakistan KSE100 Index had lost −29.5% in USD terms until the end of August 2019. However, this drawdown had factored in most of the negatives such as the currency depreciation, higher interest rates and slower economic growth. With the International Monetary Fund (IMF) deal coming through in the summer, sentiment began to change as it gave investors more confidence on anticipated reforms while the weakened currency and high interest rates brought down imports significantly, helping to lead to a large reduction in the current account deficit. In addition to this, on the fiscal side as well the government was able to reduce its primary deficit and the State Bank of Pakistan kept interest rates unchanged in its policy meetings in September and November 2019 after raising rates aggressively since the beginning of 2018.

With an improving macro environment, the fund began increasing its weight to Pakistan from October 2019 onward as we believe that earnings for most sectors are close to bottoming, if they haven’t already, and the State Bank of Pakistan could begin cutting interest rates from the second quarter of 2020. We therefore believe that cyclical stocks in the auto and cement sectors can do well over the next year as their valuations have corrected significantly over the past two years while their profit margins are also bottoming. The fund has increased its exposure to Pakistani auto and cement companies and this has already helped with performance as the KSE100 Index has rallied by 29% since the end of September 2019 making Pakistan one of the best performing markets globally in the past three months. The fund’s Pakistani holdings have returned 31% in the same time period.

The important point to remember is Pakistan has a population of 200 mln people with very favorable demographics while the stock exchange offers a number of well-established consumption focused names in the auto, consumer staples and pharmaceutical space and more importantly valuations remain very attractive despite the recent run-up in the market.

Riaz Haq said...

52% of households now own a refrigerator in Pakistan

Interesting that KP Urban households report highest proportion among all provincial urban vs rural comparison

Riaz Haq said...

7% Pakistani households own a laptop. Lower proportion of households from Balochistan (2%) report the same. Islamabad (27%) and urban KP (16%) boast highest ownership statistics (Pakistan Social and Living Standards Measurement Survey & Gallup Pakistan)

Riaz Haq said...

India’s middle-class households are culling their armies of domestic helpers amid the Covid-19 pandemic, eliminating a crucial source of jobs and spurring an appliance-buying binge.

Ila Rallan used to have five different home assistants troop through her apartment in Mumbai every day: one cook, three cleaners and one nanny. At the beginning of India’s lockdown, they all returned to their villages. Additionally, her building wouldn’t let in outsiders.

For the first time in her life, she had to do everything around the house without the help of staff.

Other countries have seen a surge in home-improvement spending by people stuck at home. In the U.S., it has led to shortages in refrigerators, kitchen mixers and washing machines. In India, however, this spending is putting people out of work.

Sarita, a maid and cook in Delhi who goes by one name, had worked for the same family for 10 years. When Covid-19 hit, they reduced her salary for two months and then laid her off, even as the lockdown lifted. They were scared to let her into the house. Her former boss now has machines to do the dishes and clean the floor, she says.

“This disease has gone after our jobs as well as our health,” she said. “Machines are replacing humans and walking away with our salaries.”

India has one of the worst coronavirus outbreaks in the world. With more than 8.5 million recorded infections in the South Asian nation, only the U.S. has reported more cases. The country went into the world’s largest lockdown in March and stayed shut for two months. It has since been gradually opening, but people are still restricting their own movements.

The more-affluent families of the country’s middle class have emerged from this forced hibernation more cautious, more independent and more likely to spend on labor-saving equipment they didn’t think they needed before.

Riaz Haq said...

#Pakistan: Pak Elektron’s profits soar. Home #appliance sales to grow 20% in Fiscal 2021. #Refrigerator sales have grown 12% a year over last 3 years. #AirConditioner sales have shown a 5-year CAGR of 64% #middleclass #urbanization Profit by Pakistan Today

First, let us look at appliances. Overall, this segment has done very well: between 2015 and 2018, the division recorded an annual growth of 18%. However, in the last one year, appliance sales were somewhat subdued. The imposition of an CNIC condition on business to business transactions impacted the market, and the Covid-19 related lockdown for between March and May in 2020 did not help (who will buy a new deep freezer in the middle of a pandemic?).

However, during the same period, the interest rate was cut by 625 basis points, from 13.25% to 7%. According to historical data, consumer financing for appliances picks up around six months after a policy rate cut, which bodes well for PEL. It is also good news for the company’s financials, since the company has a debt-to-equity ratio of 57%. The fall in interest rates should translate to savings of Rs600 million in interest costs.

In addition, farmers have more liquidy these days, thanks to a spate of helpful government measures: a cut in the Gas Infrastructure Development Cess (GIDC) on urea bags, a subsidy for fertilizers, a rise in the wheat support price, and distribution of funds under the Ehsaas program. All of this means more cahs flows for farmers on a whole, and more money to spend on nice appliances.

This pent up demand is why Kumar expects sales of appliances to grow by 20% year-on-year to 414,999 units in 2021, compared to 345,832 units in 2020.

And exactly which two appliances are growing? Well, refrigerator sales of the company have grown at an annual rate of 12% over the last three years. That being said the Covid-19 lockdown and higher interest rates caused refrigerator sales to decline 19% year-on-year in the first quarter of 2020, and is expected to decline by 25% year-on-year in the second quarter. And yet, since the lockdown has been lifted, Kumar expected sales to pick up and for the remaining two quarters to show 15% year-on-year growth.

In ACs, the company holds only a 10% market share – but AC sales have shown a five-year compound annualised growth rate (CAGR) of 64%. Kumar expects 15% year-on-year growth during the second half of 2020, after a subdued first half (again, because of Covid-19 lockdowns).

“During 2021, we estimate ACs sales to grow by 20% YoY to 90,997 units compared to 75,831 units in 2020,” notes Kumar.

PEL is also benefiting from slew of factors outside of its control. Pakistan is becoming more urbanized (at 43% in 2019, compared to just 33% in the year 2000. Between 2012 and 2020, per capita income and remittances have grown at CAGRs of 7% and 6% respectively. The central bank has made it mandatory for banks to allocate 5% of their private sector advances for the construction sector. And finally, Pakistan has grown warmer, experiencing a 0.6 degree Celsisu jump in the last century.

So: a more urban population, moving into brand new homes, with money in their pockets and finding that their fans just will not cut it in this heat: this means a greater demand for electrical goods in the future.

It is not just PEL that has picked up on this trend: Panasonic Marketing Middle East & Africa has partnered with PEL on high-end goods. So far, high-end ACs have been introduced. But growing incomes, and rising urbanization, means that Panasonic thinks that there will be more ‘high end’ customers to cater to in the future.

Now, to the second segment: power supplies. PEL dominates in the power transformer sector, holding an 81% share in the market after Siemens exited. Similarly, it holds the highest share in the distribution transformers market, at 31%.

Riaz Haq said...

Production of home appliances soars

KARACHI: Easing of lockdown and rising heatwave have caused a sharp rise in production of home appliances with refrigerators hitting a 32-month high in April, followed by 19-month high in air conditioners and 22-month in deep freezers.

Production of refrigerators during April soared to 131,953 units from 6,996 units in April 2020 while in March the production was 119,535 units, showed Large-Scale Manufacturing (LSM) data.

Production of air-conditioners soared to 62,953 units in April as compared to 5,246 units in April 2020 while in March the production stood at 35,418 units, showing a jump of 78pc MoM.

Deep freezers sales also saw a strong rebound, rising to 11,732 units in April 2021 from 1,048 units in April 2020 while March 2021 production stood at 7,236 units.

According to a financial analyst at a brokerage house, demand for electrical goods is rising after tapering off the Covid-19 led lockdown which is much evident from LSM figures of April. Production of other power sector electrical goods such as electric transformers and meters production also witnessed strong rebound in April.

Riaz Haq said...

Household Appliances - Pakistan | Statista Market Forecast

Revenue in the Household Appliances segment is projected to reach US$1,663m in 2021.
Revenue is expected to show an annual growth rate (CAGR 2021-2025) of 9.08%, resulting in a projected market volume of US$2,354m by 2025.
With a projected market volume of US$97,974m in 2021, most revenue is generated in China.
In the Household Appliances segment, the number of users is expected to amount to 20.8m users by 2025.
User penetration will be 5.6% in 2021 and is expected to hit 8.6% by 2025.
The average revenue per user (ARPU) is expected to amount to US$132.78.


Household Appliances - Bangladesh | Statista Market Forecast

Revenue in the Household Appliances segment is projected to reach US$988m in 2021.
Revenue is expected to show an annual growth rate (CAGR 2021-2025) of 27.87%, resulting in a projected market volume of US$2,642m by 2025.
With a projected market volume of US$97,974m in 2021, most revenue is generated in China.
In the Household Appliances segment, the number of users is expected to amount to 56.4m users by 2025.
User penetration will be 16.2% in 2021 and is expected to hit 32.7% by 2025.
The average revenue per user (ARPU) is expected to amount to US$36.69.

Riaz Haq said...

Cement Production in Pakistan increased to 4042 Thousands (4 million tons) of Tonnes in September from 3765 Thousands of Tonnes in August of 2021. source: State Bank of Pakistan


In the last seven years, the production capacity of the local cement companies increased by 131 percent, while demand rose by 106 percent.

At the end of 2018, the production capacity stood at 5.80 crore tonnes, while the demand rose to as much as 3.10 crore tonnes.

Of the locally produced cement, the government uses 35 percent, commercial developers use 35 percent and individual-level small buyers use the rest.

From 2011 to 2018, the per capita use of cement increased by 97 percent to stand at 187kg. However, the country yet lags behind the world average of per capita use of 563kg.

Bangladesh is the 40th country in the world cement market now.

Riaz Haq said...

Eidul Azha has helped other sections of the struggling market like transporters who shuttle animals from the market to homes; electronics especially deep-freezers; various forms of knives and cutting boards; spices and other things to help cook on the big day; BBQ equipment — skewers and grills — and fuel like coal.


Deep freezers sales also saw a strong rebound, rising to 11,732 units in April 2021 from 1,048 units in April 2020 while March 2021 production stood at 7,236 units

Riaz Haq said...

NFHS-5 report 7 Percent of households in India own a car, Goa first and Bihar last IG News

NFHS-5 report 7 Percent of households in India own a car, Goa first and Bihar last
New Delhi: According to the National Family Health Survey 2019-21 (NFHS-5) report, 7.5% of households in India own a car. This number has increased by 1.5% in the last 4 years. In 2018, the figure was 6%. In terms of states, Goa ranks first, Kerala second and undivided Jammu and Kashmir third. In Goa, 45.2% of households own a car. The figure is 24.2% in Kerala and 23.7% in Jammu and Kashmir.

In Himachal Pradesh 22.1% of households own a car, in Punjab the figure is 21.9% and in Nagaland it is 21.3%. In Sikkim, 20.9% of households own a car. The hill and northeastern states are at the forefront in this regard. 19.3% in Arunachal Pradesh, 17.0% in Manipur, 15.5% in Mizoram, 12.9% in Meghalaya and 8.1% in Assam own a car. In the hill states of Uttarakhand, after Jammu and Kashmir and Himachal, 12.7% of households own a car.

In the national capital Delhi, 19.4% of households own a car. In Haryana, 15.3% of households own a car. In Uttar Pradesh, the largest state in the country in terms of population, only 5.50% of households own a car. The fewest families in Bihar have their own car. Only 2.0 per cent of households in the state own a car. This is followed by the number of Odisha. In Odisha, 2.7% of households own a car.


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Riaz Haq said...

PLSM Pakistan 2019-20

Computer 19 7 12
Internet 48 23 33
Mobile 96 91 93
Pakistan 65 25 45
Urban 71 38 55
Rural 61 17 39
Pakistan 24 14 19
Urban 37 24 31
Rural 16 7 12
Copy Move 66 57 63
Copy Paste 54 52 53
Send Mail 51 44 48
Spread Sheet 31 20 27
Finding Downloading Software. 33 32 33
Presentation 25 16 21
Transferring Files 35 33 35
Programming 24 15 20
Social Media 46 41 45
Entertainment 60 58 59
Connecting Installing Devices 26 15 22

Riaz Haq said...

Haier revolutionizes cooling solutions with launch of Pakistan's first Solar Hybrid Air Conditioner

Haier is proud to unveil an unprecedented leap in the realm of cooling solutions with the introduction of Pakistan's very first solar hybrid air conditioner. This groundbreaking innovation marks a monumental shift towards sustainable and energy-efficient living, setting new standards in the industry. The launch of the solar hybrid air conditioner underscores Haier's dedication to shaping a brighter future for generations to come.

The Haier solar hybrid air conditioner is a groundbreaking marvel that operates entirely on solar power during daylight hours, eliminating the need for any intermediary devices such as inverters, batteries, UPS, or converters. By seamlessly integrating four 540W solar panels and establishing a direct connection to the outdoor unit, the AC functions autonomously, setting an industry precedent. This marks a historic milestone in Pakistan, where an air conditioner operates directly on solar power without any supplementary support.

For the very first time, consumers can embrace cooling technology that not only cools their spaces but also ensures zero electricity bills during daylight hours. Never before in Pakistan has an air conditioner operated directly on solar power without any intermediate support. This innovative approach significantly minimizes the concerns related to electricity costs and additional equipment expenses. As daylight graces the solar panels, the AC operates exclusively on solar energy, providing cooling comfort without the burden of utility bills. The system seamlessly switches to the grid only in case of cloudy weather, mimicking the hybrid concept found in modern-day hybrid cars. Additionally, the same holds true for nighttime operations.