Dr. Ishrat Husain, a former World Bank senior official and an ex governor of the State Bank of Pakistan, wrote an article captioned "India, Pakistan: a comparison" at the end of the first five decades of two nations' existence as independent states. To my knowledge, Dr. Hussain has not done an update of his article since it was first published. Although about three years too late, this post is my attempt to present a comparison of the two South Asian nations after sixty years of independence.
Here is a partial update:
1. Per capita incomes in both nations have more than doubled in the last ten years, in spite of significant increases in population. The most recent and detailed real per capita income data was calculated and reported by Asian Development Bank based on a detailed study of a list of around 800 household and nonhousehold products in 2005 and early 2006 to compare real purchasing power for ADB's trans-national income comparison program (ICP). The ABD ICP concluded that Pakistan had the highest per capita income at HK$ 13,528 (US $1,745) among the largest nations in South Asia. ADB reported India’s per capita as HK $12,090 (US $1,560).
2. The incidence of poverty (defined as $1.25 per day) has also come down in both nations, although the number of poor in South Asia still remains very high. According to the 2009 UN Human and Income Poverty Report, the people living under $1.25 a day in India is 41.6 percent, about twice as much as Pakistan's 22.6 percent. The most recent estimates by UNDP in Pakistan for 2007-2008 indicate poverty level at 17.2%.
3. Food production has barely kept pace with the rise of population, particularly in Pakistan. There have been higher food prices and shortages of various commodities such as wheat and sugar. There is widespread hunger and malnutrition in all parts of India. India ranks 66th on the 2008 Global Hunger Index of 88 countries while Pakistan is slightly better at 61 and Bangladesh slightly worse at 70. The first India State Hunger Index (Ishi) report in 2008 found that Madhya Pradesh had the most severe level of hunger in India, comparable to Chad and Ethiopia. Four states — Punjab, Kerala, Haryana and Assam — fell in the 'serious' category. "Affluent" Gujarat, 13th on the Indian list is below Haiti, ranked 69. The authors said India's poor performance was primarily due to its relatively high levels of child malnutrition and under-nourishment resulting from calorie deficient diets.
4. Though the nutritional status has improved in both nations, there are still very high levels of malnutrition, particularly among children. In spite of the fact that there is about 22% malnutrition in Pakistan and the child malnutrition being much higher at 40% (versus India's 46%), the average per capita calorie intake of about 2500 calories is within normal range. But the nutritional balance necessary for good health appears to be lacking in Pakistanis' dietary habits. Senior Indian official Syeda Hameed has acknowledged that Pakistan and Bangladesh have done better than India in meeting the nutritional needs of their populations.
5. India's economy has grown more rapidly than Pakistan's in the last ten years. However, both nations have accepted and implemented significant economic reforms that have opened up their economies and brought about rapid growth, more than doubling the size of each economy in the last ten years.
Let me conclude with an excerpt from a British writer William Dalrymple's article, published on 14 August, 2007 in The Guardian:
"On the ground, of course, the reality is different and first-time visitors to Pakistan are almost always surprised by the country's visible prosperity. There is far less poverty on show in Pakistan than in India, fewer beggars, and much less desperation. In many ways the infrastructure of Pakistan is much more advanced: there are better roads and airports, and more reliable electricity. Middle-class Pakistani houses are often bigger and better appointed than their equivalents in India.
Moreover, the Pakistani economy is undergoing a construction and consumer boom similar to India's, with growth rates of 7%, and what is currently the fastest-rising stock market in Asia. You can see the effects everywhere: in new shopping centers and restaurant complexes, in the hoardings for the latest laptops and iPods, in the cranes and building sites, in the endless stores selling mobile phones: in 2003 the country had fewer than three million cellphone users; today there are almost 50 million."
Summary:
If the deteriorating security situation and current economic slump in Pakistan are not contained and managed properly, there is a strong chance that Pakistan would be left significantly behind India at the time of the next update of this comparison in 2020. However, Pakistan is just too big to fail. In spite of all of the serious problems it faces today, I remain optimistic that country will not only survive but thrive in the coming decades. With a fairly large educated urban middle class, vibrant media, active civil society, assertive judiciary, many philanthropic organizations, and a spirit of entrepreneurship, the nation has the necessary ingredients to overcome its current difficulties to build a strong economy with a democratic government accountable to its people.
Please read more at:
Haq's Musings: India and Pakistan Contrasted in 2010
Haq's Musings: India-Pakistan Military Balance
I did mention this earlier, but I believe this requires a seperate response. The above article which started this thread is actually being misquoted by Riaz Haq. He has selectively picked up parts of a balanced article that were in favor of Pakistan and left out rest of the article. Reproducing the complete article below
PS: This article talks about the situation that was prevelent in 1997.. In terms of Pakistan thats akin to an Indian talking about India in past being a Sone ki Chidiya
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India, Pakistan: a comparison
http://users.erols.com/ziqbal/ih2.htm
DR. ISHRAT HUSAIN
The author is the Director, Poverty and Social Policy Department, World Bank. The views expressed in this article are personal and do not represent those of the World Bank.
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India and Pakistan are completing five decades of their independence. Since the partition, the relationship between the two countries has been uneasy and characterized by a set of paradoxes. There is a mixture of love and hate, a tinge of envy and admiration, bouts of paranoia and longing for cooperation, and a fierce rivalry but a sense of proximity, too. The heavy emotional overtones have made it difficult to sift the facts from the myths and make an objective assessment. There are in fact only two extreme types of reactions on each side. Either there are those who always find that the grass is greener on the other side of the pasture or those who are totally dismissive of the accomplishments of the other side.
This article attempts to present an objective, empirically-based and balanced view of the economic achievements and failures of both the countries during the span of the last five decades. The strict comparison becomes somewhat problematic because of the separation of East from West Pakistan in 1971 but, the analysis and conclusions drawn by and large remain valid.
First, the common successes shared by both the countries:
Despite the prophets of gloom and doom on both sides of the fence, both India and Pakistan have succeeded in more than doubling their per capita incomes. This is a remarkable feat considering that the population has increased fourfold in case of Pakistan and threefold in India. Leaving aside the countries in East Asia and China, very few large countries have been able to reach this milestone.
The incidence of poverty (defined as $1 per day) has also been reduced significantly although the number of absolute poor remains astoundingly high. However, the level of poverty is lower in Pakistan.
Food production has not only kept pace with the rise in population but has surpassed it. Both countries, leaving aside annual fluctuations due to weather conditions, are self-sufficient in food. (Pakistan exports its surplus rice but imports small volumes of wheat).
Food self-sufficiency has been accompanied by improved nutritional status. Daily caloric and protein intake per capita has risen by almost one-third but malnourishment among children is still high.
The cracks in the dualistic nature of the economy -- a well-developed modern sector and a backward traditional sector -- are appearing fast in both the countries. A buoyant middle class is emerging. The use of modern inputs and mechanization of agriculture has been a leveling influence in this direction. But public policies have not always been consistent or supportive.
Second, the common failures of the two countries. The relatively inward-looking economic policies and high protection to domestic industry did not allow them to reap the benefits of integration with the fast-expanding and much larger world economy. This has changed particularly since 1991 but the control mind-set of the politicians and the bureaucrats has not changed. The centrally planned allocation of resources and "license raj" has given rise to an inefficient private sector that thrive more on contacts, bribes, loans from public financial institutions, lobbying, tax evasion and rent-seeking rather than on competitive behavior. Unless both the control mind-set of the government and the parasitic behavior of the private industrial entrepreneurs do not change drastically, the potential of an efficient economy would be hard to achieve. This can be accomplished by promoting domestic and international competition, reducing tariff and non-tariff barriers and removing constraints to entry for newcomers.
The weaknesses in governance in the legal and judicial system, poor enforcement of private property rights and contracts, preponderance of discretionary government rules and regulations and lack of transparency in decision making act as brakes on broad-based participation and sharing of benefits by the majority of the population.
In terms of fiscal management, the record of both the countries is less than stellar. Higher fiscal deficits averaging 7-8 percent of GDP have persisted for fairly long periods of time and crowded out private capital formation through large domestic borrowing. Defense expenditures and internal debt servicing continue to pre-empt large proportion of tax revenues with adverse consequences for maintenance and expansion of physical infrastructure, basic social services and other essential services that only the government can provide. The congested urban services such as water, electricity, transport in both countries are a potential source of social upheaval.
The state of financial sector in both countries is plagued with serious ills. The nationalization of commercial banking services, the neglect of credit quality in allocation decisions, lack of competition and inadequate prudential regulations and supervision have put the system under severe pressure and increased the share of non-performing assets in the banks’ portfolio. The financial intermediation role in mobilizing and efficiently allocating domestic savings has been seriously compromised and the banking system is fragile. Both countries are now taking steps to liberalize the financial sector and open it up to competition from foreign banks as well as private banks.
Third, the areas where India has surpassed Pakistan. There is little doubt that the scientific and technological manpower and research and development institutions in India are far superior and can match those of the western institutions. The real breakthrough in the Indian export of software after the opening up of the economy in 1991 attests to the validity of the proposition that human capital formation accompanied by market-friendly economic policies can lift the developing countries out of low-level equilibrium trap.
Indian scientists working in India excel in the areas of defense technology, space research, electronics and avionics, genetics, telecommunications, etc. The number of Ph.Ds produced by India in science and engineering every year -- about 5,000 -- is higher than the entire stock of Ph.Ds in Pakistan. The premier research institutions in Pakistan started about the same time as India have become hotbed of internal bickerings and rivalries rather than generator of ideas, processes and products.
Related to this superior performance in the field of scientific research and technological development is the better record of investment in education by India. The adult literacy rate, female literacy rate, gross enrollment ratios at all levels, and education index of India have moved way ahead of Pakistan. Rapid decline in total fertility rates in India has reduced population growth rate to 1.8 percent compared to 3.0 percent for Pakistan.
Health access to the population and infant mortality rates are also better in India and thus the overall picture of social indicators, although not very impressive by international standards, emerges more favorable. The two most important determinants of Pakistan’s dismal performance in social development are its inability to control population growth and the lack of willingness to educate girls in the rural areas.
Fourth, the areas where Pakistan has performed better than India. The economic growth rate of Pakistan has been consistently higher than India. Starting from almost the same level or slightly lower level in 1947, Pakistan’s per capita income today in US nominal dollar terms is one-third higher (430 versus 320) and in purchasing parity dollar terms is two-third higher (2,310 versus 1,280). The latter suggests that the average Pakistani has enjoyed better living standards and consumption levels in the past but the gap may be narrowing since early 1990s. Had the population growth rate in Pakistan been slower and equaled that of India, this gap would have been much wider and the per capita income in Pakistan today would have been twice as high and the incidence of poverty further down.
Although both India and Pakistan have pursued inward-looking strategies, the anti-export bias in case of Pakistan has been comparably lower and the integration with the world market faster. The trade-GDP ratio in PPP terms is twice that of all South Asian countries. Pakistan’s export growth has been stronger and the composition of exports has shifted from primary to manufactured goods; albeit the dominance of cotton-based products has enhanced its vulnerability.
Domestic investment rates in Pakistan have remained much below those of India over the entire span primarily due to the relatively higher domestic savings rates in the latter. But the efficiency of investment as measured by the aggregate incremental capital-output ratio or total factor productivity has been higher in case of Pakistan and, to some extent, compensated the lower quantity of investment.
CONCLUSION
What is the bottom line then? The overall record looks mixed. Pakistan scores high on income and consumption growth, poverty reduction and integration with the world economy. India has done very well in developing its human resource base and excelled in the field of science and technology. Both countries face a set of common problems -- the inherited legacy of a control mind-set among the government and rent-seeking private sector, widespread corruption, poor fiscal management, weak financial system and congested and overcrowded urban services. But there is an important and perceptible positive shift in most of the indicators of India since 1991. Export growth rates have almost doubled, GDP growth is averaging 6 to 7 percent in recent years, current account deficit is down and foreign capital flows for investment have risen several fold. The edge that Pakistan has gained over India in most of these indicators until 1990 is fast eroding. Pakistan, on the other hand, has made greater progress in privatization of state owned enterprises and in attracting foreign investors to expand power generating capacity in the country.
How does the future look like? Since 1991, both India and Pakistan have embarked on a policy of liberalization, outward orientation and faster integration with the global economy. The initial responses have been very positive. As outlined earlier, portfolio and foreign direct investment flows in the last few years have surpassed those accumulated over the last 20-25 years. Indian exports recorded an increase of 50 percent since 1991 while Pakistan, despite a setback due to failure of successive cotton crops, have expanded by two-thirds since 1990. The political uncertainty in India has been minimized after the elections and adoption by the coalition government of the Congress’ agenda on economic reforms. This combination of political stability, economic policy credibility and well developed human resource base places India at an advantage today. But there is no earthly reason as to why we in Pakistan cannot put our house in order, strike a consensus among the two major political parties on the contours of our economic policy direction, stop brickbating each other for the larger sake of the country’s interests and avoid promoting contrived and perceived sense of economic instability.
The imperatives of globalization and integration with the world economy dictate that the countries that are not agile and do not seize the opportunities at the right time are likely to be losers. What is encouraging is that the economic policy stance of both major parties in Pakistan is identical, i.e., liberalization of the economy. We have made a headstart and let us not lose this momentum by narrow-minded and purely self-serving interests. The destiny of a nation depends upon the hard work, discipline and internal cohesion of its people and the vision of its leaders. Let our future generations not blame our leaders for failing to leave a legacy of prosperity and hope for them.
.. Considering his age, he can not stay up whole night (like some of us) and pound away at the keyboard.
