Comparing India and Pakistan 2010
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Forget this mini-scuffle. I did not like you posting several posts in a row which I normally see as intimidation technique.
karan.1970
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Which baseless commentary are you refering to?? Incidently statements, specially partial statements taken out of context do not constitute as data..
For example, if I had started a thread using the last paragraph from the telegraph article by Dalrymple and justified it by calling it not posting an article in entirity but only relevent parts, it wouldn't have done justice either to the writer or the readers of my post.. See how it looks out of context
Pakistan's problems are on a different scale from India; indeed, the country finds itself at a crossroads. As Jugnu Mohsin, the publisher of the Lahore-based Friday Times, put it recently, "After a period of relative quiet, for the first time in a decade, we are back to the old question: it is not just whether Pakistan, but will Pakistan survive?" On the country's 60th birthday, the answer is by no means clear.
Show me one area where I have attacked you. I have attacked your methods of selective pruning of articles writtent by others but have never abused you or used derogatory terms. Its you who first tried to distort the articles and then when caught are now diverting attention by whining about Indian mob mentality..
Dude.. Read my responses to other Pakistani members in this thread it self. Members who are reasonable and do not mess around with data and text of others (which in my view is worse than plagiarism because you are not only stealing their text but also distorting the intent of the article.). I have myself agreed to both India and Pakistan being pathetic in the social services sector and that the comparison is foolhardy
There you go again.. Spewing nonsense...
I dont contend that India is pathetic in social services.. But do contend that Pakistan is better and I have shown data to prove that..
Havent attacked you so far... Only your falsified and distorted commentary...
Right after you learn to post without distorting facts..
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indian_musing
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Haq's blog is barometer ?? If US senator sneezes pakistan catches not cold but H1N1 flue.
Hint: Kerry amd Luguard bill.
And if a US ambassador smiles all of india gets angry?
Hint: Holbrooke
karan.1970
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Well the problem is you see the former happening rarely. The latter happens very often. Like I said, this group uses media reports to derive their rankings. Seriously, what kind of rankings are those suppose to be? And yet people use them without looking too much into them.
indian_musing
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The Hindu Business Line : Pakistan: A failed economy?
Pakistan: A failed economy?
Pakistan is not yet a failed economy. But it can become one. This is not a prospect the world, especially India, can view with equanimity as the spillover will impact us badly.
The IMF estimates that GDP growth will drop to 1.9 per cent in 2009.
Santosh Kumar
Neha Malik
The escalating conflict in Pakistan between the army and Islamic militants has, once again, brought to the fore the question whether the country is a failed state. To bring clarity to the issue, it might be useful to keep political and security factors aside for the moment. There has been no dearth of doomsday scenarios but, going by the record, the Pakistani economy has been doing moderately well until recently.
Since the reforms at the beginning of this decade, GDP has grown at an average of 5 per cent from 2000-01 to 2008-09. The short- to medium-term prognosis is, however, not encouraging, post the financial crisis.
What is more worrisome is the structural fault lines in the economy which, unless addressed, do not bode well for the long-term future. Per capita income has also grown, albeit at a slower pace, owing to the high rate of population growth.
Agricultural production has more than kept pace with population increases, registering an average growth rate of 3 per cent. Having started from a narrow resource and manufacturing base, the modern sector comprising industry and services has gained salience and now accounts for over 72 per cent of the country’s GDP. This has brought about a large increase in the entrepreneurial and middle classes. The record, therefore, gives some credence to the claim of the latest Pakistani Economic Survey that the economy has done relatively well.
Any analysis based solely on Pakistani statistics can be misleading as they are often inconsistent and need to be seen in conjunction with figures provided by multilateral institutions. Confusion is further confounded by the large parallel economy that is not captured in official data.
global meltdown
The negative impact of the global financial crisis and the internal conflict on Pakistan’s economy is, of course, a more serious concern. The IMF estimates that GDP growth will drop to 1.9 per cent in 2009 and take half a decade to limp back to 5 per cent. Year-on-year CPI inflation has declined from 24.3 per cent in July 2008 to 11.2 per cent in July 2009 (State Bank of Pakistan). However, it still runs in double digits, thereby posing a threat to the growth prospects.
Further, the current account, after showing a surplus from 2001-04, has been in deficit since 2004-05 and stood at last financial year around $13.7 billion or 8.3 per cent of the GDP. Forex cover for imports, which fell to alarmingly low levels with the depletion of reserves by end-November 2008, stood at 2.9 months with a rise in the reserves to about $9.1 billion by end-June 2009, but mainly due to the IMF disbursements under the $7.6-billion programme approved in November 2008.
The short-term prospects for the Pakistan economy are, therefore, not entirely rosy.
Pronounced youth bulge
Foremost among the structural fault lines is the high (2.2 per cent) rate of growth in its population, which is leading to a pronounced youth bulge. Pressures on education, employment, housing, social services and public order will mount as a result. It is noteworthy that Pakistan’s expenditure budget is pre-empted largely by defence and debt servicing, leaving the physical and social infrastructure neglected.
At the same time, manpower outlets to the West and the Gulf are likely at best to remain unchanged, if not get further restricted. Pakistan’s challenge of managing its youth is, therefore, likely to become formidable and unless tackled successfully will tend to swell jihadi ranks. A high rate of urbanisation is a parallel trend that is likely to accentuate the problem. Migration trends indicate that Pakistan’s urban population, mainly youth, will go beyond 50 per cent of the total population by 2020.
Pakistan’s economy is dominated by about 50 families and the trickle-down effect is weak. Economic polarisation is reflected in regional imbalances and the high percentage of population below the poverty line.
Other areas of worry
Fragilities are also evident in Pakistan’s agricultural sector, which is likely to come under duress over the next decades due to land and water scarcity. In Punjab, Pakistan’s granary, cultivation intensity is reaching saturation point. Pakistani agriculture relies extensively on irrigation canals but the storage dams feeding them are beset by silting problems.
Water storage capacity is estimated to have been reduced to almost a quarter, while scope for construction of new storage dams in Pakistani territory is limited by topographical, political and financial considerations.
Pakistan is prone to running up large current account deficits, which pose yet another structural problem. Sluggish overseas markets are likely to accentuate it. The deficits are partly financed by non-debt creating inflows i.e. FDI and portfolio investments, which are expected to remain weak in future.
Dependence on debt-creating inflows is, therefore, likely to increase. It is worth noting that disbursement of official loans and grants to Pakistan have quadrupled from $0.878 billion in 2000-01 to $3.581 billion in 2007-08, reflecting the renewed western interest in the country after 9/11. The ratio of Pakistan’s external debt and liabilities to forex reserves, which had reached 19.3 in FY2000, dipped in subsequent years to around 3 as a result. But, it has again shown a rising trend in the last two years, reaching 5.1 by end March 2009.
Pakistan’s external debt and liabilities can become unsustainable in the future if foreign exchange reserves do not keep pace with debt servicing obligations.
At economic crossroads
Pakistan appears to be at an economic crossroads. It has the potential to revert to 5 per cent growth rate and even surpass the benchmark if short and long-term challenges are adequately addressed. The alternative is a steep downward descent. Much depends on the economic choices it makes but unfortunately also on exogenous political and strategic factors that are not entirely within its control. A case in point is a scenario of western aid drying up as a result of reduction in Pakistan strategic value in the event of loss of US interest in Afghanistan.
Pakistan is not yet a failed economy. To misquote Mark Twain, reports of its demise are exaggerated. But it can happen. This is not a prospect the world, especially India, can view with equanimity since the spill-over will impact us badly. How to reverse the process is, of course, a more than billion dollar question!
(Santosh Kumar is senior consultant and Neha Malik Research Assistant at ICRIER. blfeedback@thehindu.co.in)
Pakistan: A failed economy?
Pakistan is not yet a failed economy. But it can become one. This is not a prospect the world, especially India, can view with equanimity as the spillover will impact us badly.
The IMF estimates that GDP growth will drop to 1.9 per cent in 2009.
Santosh Kumar
Neha Malik
The escalating conflict in Pakistan between the army and Islamic militants has, once again, brought to the fore the question whether the country is a failed state. To bring clarity to the issue, it might be useful to keep political and security factors aside for the moment. There has been no dearth of doomsday scenarios but, going by the record, the Pakistani economy has been doing moderately well until recently.
Since the reforms at the beginning of this decade, GDP has grown at an average of 5 per cent from 2000-01 to 2008-09. The short- to medium-term prognosis is, however, not encouraging, post the financial crisis.
What is more worrisome is the structural fault lines in the economy which, unless addressed, do not bode well for the long-term future. Per capita income has also grown, albeit at a slower pace, owing to the high rate of population growth.
Agricultural production has more than kept pace with population increases, registering an average growth rate of 3 per cent. Having started from a narrow resource and manufacturing base, the modern sector comprising industry and services has gained salience and now accounts for over 72 per cent of the country’s GDP. This has brought about a large increase in the entrepreneurial and middle classes. The record, therefore, gives some credence to the claim of the latest Pakistani Economic Survey that the economy has done relatively well.
Any analysis based solely on Pakistani statistics can be misleading as they are often inconsistent and need to be seen in conjunction with figures provided by multilateral institutions. Confusion is further confounded by the large parallel economy that is not captured in official data.
global meltdown
The negative impact of the global financial crisis and the internal conflict on Pakistan’s economy is, of course, a more serious concern. The IMF estimates that GDP growth will drop to 1.9 per cent in 2009 and take half a decade to limp back to 5 per cent. Year-on-year CPI inflation has declined from 24.3 per cent in July 2008 to 11.2 per cent in July 2009 (State Bank of Pakistan). However, it still runs in double digits, thereby posing a threat to the growth prospects.
Further, the current account, after showing a surplus from 2001-04, has been in deficit since 2004-05 and stood at last financial year around $13.7 billion or 8.3 per cent of the GDP. Forex cover for imports, which fell to alarmingly low levels with the depletion of reserves by end-November 2008, stood at 2.9 months with a rise in the reserves to about $9.1 billion by end-June 2009, but mainly due to the IMF disbursements under the $7.6-billion programme approved in November 2008.
The short-term prospects for the Pakistan economy are, therefore, not entirely rosy.
Pronounced youth bulge
Foremost among the structural fault lines is the high (2.2 per cent) rate of growth in its population, which is leading to a pronounced youth bulge. Pressures on education, employment, housing, social services and public order will mount as a result. It is noteworthy that Pakistan’s expenditure budget is pre-empted largely by defence and debt servicing, leaving the physical and social infrastructure neglected.
At the same time, manpower outlets to the West and the Gulf are likely at best to remain unchanged, if not get further restricted. Pakistan’s challenge of managing its youth is, therefore, likely to become formidable and unless tackled successfully will tend to swell jihadi ranks. A high rate of urbanisation is a parallel trend that is likely to accentuate the problem. Migration trends indicate that Pakistan’s urban population, mainly youth, will go beyond 50 per cent of the total population by 2020.
Pakistan’s economy is dominated by about 50 families and the trickle-down effect is weak. Economic polarisation is reflected in regional imbalances and the high percentage of population below the poverty line.
Other areas of worry
Fragilities are also evident in Pakistan’s agricultural sector, which is likely to come under duress over the next decades due to land and water scarcity. In Punjab, Pakistan’s granary, cultivation intensity is reaching saturation point. Pakistani agriculture relies extensively on irrigation canals but the storage dams feeding them are beset by silting problems.
Water storage capacity is estimated to have been reduced to almost a quarter, while scope for construction of new storage dams in Pakistani territory is limited by topographical, political and financial considerations.
Pakistan is prone to running up large current account deficits, which pose yet another structural problem. Sluggish overseas markets are likely to accentuate it. The deficits are partly financed by non-debt creating inflows i.e. FDI and portfolio investments, which are expected to remain weak in future.
Dependence on debt-creating inflows is, therefore, likely to increase. It is worth noting that disbursement of official loans and grants to Pakistan have quadrupled from $0.878 billion in 2000-01 to $3.581 billion in 2007-08, reflecting the renewed western interest in the country after 9/11. The ratio of Pakistan’s external debt and liabilities to forex reserves, which had reached 19.3 in FY2000, dipped in subsequent years to around 3 as a result. But, it has again shown a rising trend in the last two years, reaching 5.1 by end March 2009.
Pakistan’s external debt and liabilities can become unsustainable in the future if foreign exchange reserves do not keep pace with debt servicing obligations.
At economic crossroads
Pakistan appears to be at an economic crossroads. It has the potential to revert to 5 per cent growth rate and even surpass the benchmark if short and long-term challenges are adequately addressed. The alternative is a steep downward descent. Much depends on the economic choices it makes but unfortunately also on exogenous political and strategic factors that are not entirely within its control. A case in point is a scenario of western aid drying up as a result of reduction in Pakistan strategic value in the event of loss of US interest in Afghanistan.
Pakistan is not yet a failed economy. To misquote Mark Twain, reports of its demise are exaggerated. But it can happen. This is not a prospect the world, especially India, can view with equanimity since the spill-over will impact us badly. How to reverse the process is, of course, a more than billion dollar question!
(Santosh Kumar is senior consultant and Neha Malik Research Assistant at ICRIER. blfeedback@thehindu.co.in)
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