Pakistan/India GDP/informal economy

[Nilgiri]

Those stats you provide come from some non for profit outfit that could be set up by any pressure group with some financial backing.

They take their data from the WHO, FAO, UNICEF and others if you are talking about the global hunger index.

Here is the FAO with their data for overall malnourishment in a country (its the exact same number GHI uses):

http://www.fao.org/hunger/en/

Their report for Asia:

http://www.fao.org/3/a-i4624e.pdf

More such data (for stunting etc) can be found here:

http://data.unicef.org/topic/nutrition/malnutrition/

GHI literally only compiles 4 published indices by the UN socioeconomic groups and makes an overall composite index of them.

Similarly the base source for my infant mortality, population growth rate, life expectancy etc are from the UN. The World bank just illustrates them on their website like so:

http://data.worldbank.org/indicator/SP.DYN.IMRT.IN?locations=IN-PK

They even say so:

Estimates Developed by the UN Inter-agency Group for Child Mortality Estimation ( UNICEF, WHO, World Bank, UN DESA Population Division ) at childmortality.org.

 

[RiazHaq]

All the SAARC countries lie in different categories. Like Bangladesh, Nepal and India are in high MPI countries, means there is poverty more than 50%. On the other hand Pakistan and Bhutan are in medium category, and Sri Lanka and Maldives are in low MPI countries. The data of MPI of Afghanistan is not given due to unavailable sources for the collection of the data.



Multi-dimensional poverty index is an international measure of acute poverty covering over 104 countries.
As everyone knows that Poverty is measured as a single dimensional index such as income. But income alone misses
a lot because India is growing fast in economic perspective but health, education and living standard not improved
yet. It is the fact that India’s per capita income lies in one of the top countries in the world but if we look on the
other aspects like health, education and standard of living, then we find that India is not so good in the other aspects
rather than the income. India lies on 73rd position from 104 countries with a 53% multidimensional poor. Among
the 29 states, some states of India having high per capita income, yet lies in the high multidimensional poverty index.
It means those states have high per capita income but lacks in the health and standard of living. Some states like
Kerala is in very good position in Multidimensional poverty index while remaining states are in very bad position in
MPI according to OPHI. MPI illuminates a different set of deprivation and reflects the deprivation in very
rudimentary services and core human functioning for people. It shows the number of people who are
multidimensional poor and the number of deprivation with which poor household typically content.


http://www.erpublications.com/uploaded_files/download/download_07_03_2015_15_24_25.pdf

 

[Nilgiri]

All the SAARC countries lie in different categories. Like Bangladesh, Nepal and India are in high MPI countries, means there is poverty more than 50%. On the other hand Pakistan and Bhutan are in medium category, and Sri Lanka and Maldives are in low MPI countries.

MPI uses Indian data from 2005/06 whereas rest of the countries use data from 2012/13 and as recent as 2014.

Its comparing apples to oranges given most of India's socio economic improvement happened between 2005 to now in many of the indicators measured.

http://www.ophi.org.uk/multidimensional-poverty-index/mpi-2015/mpi-data/

They specifically state this:

http://www.ophi.org.uk/multidimensional-poverty-index/mpi-faqs/

What are the main limitations of the MPI? The MPI has some drawbacks, due mainly to data constraints. First, the indicators include both outputs (such as years of schooling) and inputs (such as cooking fuel) as well as one stock indicator (child mortality, which could reflect a death that was recent or long ago), because flow data are not available for all dimensions. Second, the health data are relatively weak and overlook some groups’ deprivations especially for nutrition, though the patterns that emerge are plausible and familiar. Third, in some cases careful judgments are needed to address missing data. But to be considered multidimensionally poor, households must be deprived in at least six standard of living indicators or in three standard of living indicators and one health or education indicator. This requirement makes the MPI less sensitive to minor inaccuracies. Fourth, as is well known, intra-household inequalities may be severe, but these could not be reflected. Fifth, while the MPI goes well beyond a headcount to include the intensity of poverty experienced, it does not measure inequality among the poor, although decompositions by group can be used to reveal group-based inequalities. Finally, the estimates presented here are based on publicly available data and cover various years between 2002 and 2011, which limits direct cross-country comparability.

Why does national data for the MPI date from so many different years? Isn’t it unfair to compare countries if the statistics in one case are five years older than in another?

The MPI relies on the most recent and reliable data available since 2005. However surveys are taken in different years, and some countries do not have recent data. In order to facilitate the analysis, the year of the survey is reported in the MPI tables. The difference in dates limits direct cross country comparisons, as circumstances may have improved, or deteriorated, in the intervening years. Naturally, this is a stimulus for country government to collect new surveys that reflect more recent progress better. A significant number of DHS and MICS household surveys are currently underway and it is expected that more recent data will be available soon for a number of countries.

 

[RiazHaq]

MPI uses Indian data from 2005/06 whereas rest of the countries use data from 2012/13 and as recent as 2014.

Its comparing apples to oranges given most of India's socio economic improvement happened between 2005 to now in many of the indicators measured.

http://www.ophi.org.uk/multidimensional-poverty-index/mpi-2015/mpi-data/

They specifically state this:

http://www.ophi.org.uk/multidimensional-poverty-index/mpi-faqs/

What are the main limitations of the MPI? The MPI has some drawbacks, due mainly to data constraints. First, the indicators include both outputs (such as years of schooling) and inputs (such as cooking fuel) as well as one stock indicator (child mortality, which could reflect a death that was recent or long ago), because flow data are not available for all dimensions. Second, the health data are relatively weak and overlook some groups’ deprivations especially for nutrition, though the patterns that emerge are plausible and familiar. Third, in some cases careful judgments are needed to address missing data. But to be considered multidimensionally poor, households must be deprived in at least six standard of living indicators or in three standard of living indicators and one health or education indicator. This requirement makes the MPI less sensitive to minor inaccuracies. Fourth, as is well known, intra-household inequalities may be severe, but these could not be reflected. Fifth, while the MPI goes well beyond a headcount to include the intensity of poverty experienced, it does not measure inequality among the poor, although decompositions by group can be used to reveal group-based inequalities. Finally, the estimates presented here are based on publicly available data and cover various years between 2002 and 2011, which limits direct cross-country comparability.

Why does national data for the MPI date from so many different years? Isn’t it unfair to compare countries if the statistics in one case are five years older than in another?

The MPI relies on the most recent and reliable data available since 2005. However surveys are taken in different years, and some countries do not have recent data. In order to facilitate the analysis, the year of the survey is reported in the MPI tables. The difference in dates limits direct cross country comparisons, as circumstances may have improved, or deteriorated, in the intervening years. Naturally, this is a stimulus for country government to collect new surveys that reflect more recent progress better. A significant number of DHS and MICS household surveys are currently underway and it is expected that more recent data will be available soon for a number of countries.

So why hasn't India updated its MPI data? What's it hiding?

Pakistan just updated its MPI data in conjunction with UNDP.

Pakistan's first ever official report on multidimensional poverty launched here on Monday showed a strong decline, with national MPI poverty rates falling from 55 percent to 39 percent from year 2004 to 2015.

However progress across different regions of Pakistan is uneven. Poverty in urban areas is 9.3 percent as compared to 54.6 percent in rural areas. Disparities also exist across provinces.

The report launched by the Ministry of Planning, Development and Reform, details Pakistan's official Multidimensional Poverty Index (MPI) which was earlier published in the Economic Survey of Pakistan 2015-16.

The report has been complied with technical support from UNDP Pakistan and the Oxford Poverty and Human Development Initiative (OPHI), University of Oxford.

According to the report, nearly 39 percent of Pakistanis live in multidimensional poverty, with the highest rates of poverty in FATA and Balochistan.

The report found that over two-third of people in FATA (73 percent) and Balochistan (71 percent) live in multidimensional poverty. Poverty in Khyber Pakhtunkhwa stands at 49 percent, Gilgit-Baltistan and Sindh at 43 percent, Punjab at 31 percent and Azad jammu and Kashmir at 25 percent.

There are severe difference between districts: Islamabad, Lahore and Karachi have less than 10 percent multidimensional poverty, while Qila Abadullah, Harnai and Barkhan, all in Balochistan, have more than 90 percent poverty.

Deprivation in education contributes the largest share of 43 percent to MPI followed by living standards with contributes nearly 32 percent and health contributing 26 percent. These findings further confirm that social indicators are very weak in Pakistan, even where economic indicators appear healthy.

The report also found that the decrease in multidimensional poverty was slowest in Balochistan, while poverty levels had actually increased in several districts in Balochistan and Sindh during the past decade. The level and composition of multidimensional poverty for each of Pakistan's 114 districts are also covered in this report.

Speaking at the launch, Minister for Planning, Development and Reform, Prof. Ahsan Iqbal, said, Pakistan has set zero poverty goal much before the year 2030, adding,the reduction of multidimensional poverty is one of the core objectives of Pakistan's Vision 2025.

He said, inclusive and balanced growth, which benefits everyone and especially the marginalized communities, is government priority and is essential for promoting harmony in society.

MPI is a useful instrument for inform public policy for targeting, budgeting, resource allocation and inclusion.


Pakistan's MPI establishes baseline not for only Vision 2015, but also for Pakistan's progress towards achieving the Sustainable Development Goals, and complements the consumption-based poverty estimates recently released by the government.

UNDP Country Director, Marc Andre Franche said,"We consider this a highly innovative approach because of its multi-faceted nature and the availability of estimates at the sub-national level."

Multidimensional poverty provides useful analysis and information for targeting poverty, and reducing regional inequalities.

Many countries are using MPI to inform government priorities for planning and it is encouraging to see government of Pakistan adopting MPI to complement monetary poverty measure in Pakistan, he added.

Director OPHI, Dr Sabina Alkire congratulated Pakistan on launching the national MPI as an official poverty measure.


http://www.samaa.tv/pakistan/2016/0...fall-from-55pc-to-39pc-from-2004-to-2015-mpi/

http://www.pk.undp.org/content/paki...ids/Multidimensional-Poverty-in-Pakistan.html

"India is home to over 340 million destitute people and is the second poorest country in South Asia after war-torn Afghanistan...In South Asia, Afghanistan has the highest level of destitution at 38%. This is followed by India at 28.5%. Bangladesh (17.2%) and Pakistan (20.7%) have much lower levels" Colin Hunter, Center for Research on Globalization Increases in per capita income and human development index are often used as indicators to represent improvements in the lives of ordinary people in developing nations in Asia, Africa and Latin America. Both of these have significant limitations which are addressed by Oxford Poverty and Human Development Initiative (OPHI)'s MPI, multi-dimensional poverty index.

The MPI brings together 10 indicators, with equal weighting for education, health and living standards (see table). If you tick a third or more of the boxes, you are counted as poor.

http://www.riazhaq.com/2014/10/multi-dimensional-poverty-index.html

 

[xyxmt]

Good read, and really happy to know that Pakistan is doing really good in the economic front. Hope CPEC and other such projects prove to be a game changer.

Can you please tell me how much is $1 in Pakistan right now ?? It's something around Rs. 67 - 68 in Indian currency I guess.

how does it matter?

 

[Nilgiri]

So why hasn't India updated its MPI data? What's it hiding?

Why would this be a special priority over the many other poverty measurements and indices? MPI has already announced they are updating the old data with new data, the onus is on them to use newer data that is published, not the country to produce MPI specific studies. So why not wait and give it time?

Besides, the real priority is the transfer/conversion of lower poverty/higher income into better health, education and human welfare.

Indian babies die at about half the rate of Pakistan's both at birth and within their first year. This extends to children in their under 5 mortality as well.

In fact Afghanistan has caught up to you largely, and is even better than you in neo-natal deaths:

http://data.worldbank.org/indicator/SH.DYN.NMRT?locations=IN-PK-AF

http://data.worldbank.org/indicator/SP.DYN.IMRT.IN?locations=IN-PK-AF

http://data.worldbank.org/indicator/SH.DYN.MORT?locations=IN-PK-AF

Combine this with the worse-off nutrition and declining literacy rate in Pakistan and its not a pretty picture.

So maybe it should be Pakistan that introspects what it is "hiding" regarding why its social indicators severely lag its poverty and income indices.

 

[my2cents]

I have always been fascinated in how economists measure performance and how accurate those figures are. There is being 'paper prosperous' and 'real life prosperous'. How accurate are the figures we hear being touted everyday in reflecting the real situation on the ground? If I have a job as electrician and I am earning good money but the taxman has no record of me, for that matter no statistician in the world will be aware of my income. But in real life my family will be living a decent life.

I mention 'electrician' because I know one from my ancestral village who makes good money, has newly built house, a car and sends his kids to private school. He has even done work in UK by coming here as on 'holiday' but then putting in 12 hour shifts, 7 days a week in factories redoing their electrical wiring until his 'holiday' ran out and he went back.

As everybody here loves chucking about GDP figures I thought I would look into this. Remember the real stock here is the real income not what is being detected in formal records. What matters is reality not what any particular number says. To measure reality requires nuanced approach rather than relying on one crude measure.

What got me thinking was according to World Bank the percentage of people living on $1.90 for 2011 was

India - 21%
Pak - 7%

Link > http://povertydata.worldbank.org/poverty/country/IND
Link > http://povertydata.worldbank.org/poverty/country/PAK

Now think about this? There are about three times more absolute poor in India then Pakistan. How is this possible? Either wealth is far more unfairly divided in India then or there is more wealth to share out in Pakistan thus less absolute poor. The GDP figures make India look shining.

Although not scientific and anecdotal most observors notice more visible poverty, beggers and general shambolic conditions prevailing in India (we all know the sanitation) compared to Pakistan. This while Pakistan is wracked by insurgency, war and terrorism. So what is going on here?

Well large part of of the explaination is the informal economy. The electrician I mentioned does not figure in the Pakistan GDP but he has a car, a house and for sure he has proper sanitation. This is not a exception but quite prevalent in Pakistan. Meaning despite what the numbers say the reality in Pakistan is far better as reflected in simple things like sanitation. His equivalent in India will be pulling a rickshaw in Kokatta or Delhi barely able to place bowl of rice on his table.

All this is missed in official GDP figures. The informal economy and don't forget it may not show up fancy reports or GDP but it is real, it provides jobs and has tangibile reality on the ground like that electrician I mentioned. So is there any study done to look at informal economies? Yes there have been many. It appears that all countries have informal economies but the scale varies vastly from one to another. The average for India and Pakistan are:-

India - 22%
Pak - 37%

This means the real size of Pakistan economy or the real economy is far larger then the numbers you hear everyday. Don't forget it is the real economy that feeds real people. This might explain why Pakistan does not have 2 million pulling rickshaws to fill their emaciated bellies.


India No. 39 ~ 22.2%

Pakistan - No.94 ~ 35.7%

Primary Source Shadow Economies > http://www.gfintegrity.org/storage/..._bank_shadow_economies_all_over_the_world.pdf

@django @Sinopakfriend @AndrewJin @Chinese-Dragon @Nilgiri @WAJsal @PAKISTANFOREVER @lastofthepatriots @Syed.Ali.Haider @Solomon2 @Providence @A-Team @RiazHaq

*The purpose of this is not to gloat but to stop that incessant, irritating Indian claim of rich India versus poor Pakistan. Perception often is not reality and most defintely not in this case.

I would have taken your article seriously if you had not bring in our toilet issues. My observation is that inequities are more in India compared to Pakistan. That explains less poverty in your country. But by the same token you have to look at diversity of people that reside in our country. It is our strength and our weakness.

 

[ito]

Yes, informal economy is a problem while calculating GDP, however, I believe Pakistan has a robust GDP calculating mechanism that takes into account major sectors covering its major economic activities.

Moreover, while calculating GDP world bank has devised a method to include informal economy while publishing GDP figures. So the published figures do reflect the Pakistan's economy

 

[Nilgiri]

Declining?
Is literacy rate in Pakistan declining ?

http://tribune.com.pk/story/886027/2013-14-report-literacy-rate-slips-nationwide-by-2/

http://arynews.tv/en/economic-surve...for-development-projects-in-education-sector/

 

[Ryuzaki]

http://tribune.com.pk/story/886027/2013-14-report-literacy-rate-slips-nationwide-by-2/

http://arynews.tv/en/economic-surve...for-development-projects-in-education-sector/

I did not even think that was possible!

 

[Kabira]

I don't know why Indians are denying obvious truth. Pakistan doesn't have extreme India like poverty as observed by UN or World Bank. Sorry but dubious sources written by Indian origin people doesn't count when it comes to Pakistan.

But this could change quickly. Since 2007 things have gone bad to worse for Pakistan industry. Exports are not growing for many years. Still 2-3 years away to end energy shortages if everything goes right. But after energy shortages are ended then Pakistan will have to pay for all these power plants Chinese are building. Not to forget with gulf countries going in to recession remittances are bound to drop further. So right now things are not looking good but there is some hope because of CPEC.

PPPis was most corrupt ruling party in history of Pakistan, they make N League look like angels. CPEC should have been started in PPP era, I wonder why Chinese didn't bother back then? Pakistan need Ayub Khan era like development for a decade to get back on its feet and not being left behind by others much poorer neighbours historically.

 

[Nike]

Every country had their informal and shadow economy, usually shadow economy will keep bigger as the economy of said country is in recession or troubles, as people who doesnt get chance to be employed in formal jobs involved in underground economic activities and doing menial and odd jobs for their survival.

And so the OP blatantly clearly said about Pakistan had huge shadow economy right now, there is only one conclution about that.....

 

[enquencher]

This mere assumption shows how poorly you lacks the basic understanding of measuring GDP of economy and you made the whole article on this!!!!!

The electrician from wherever he is making making the money comes out from the pocket of someone? Isn't it? If not from others than govt. of Pakistan? They keep the record of currency printed, didnt they? He is buying a car, which comes out from a factory or he just happen to make it at home in his village?

You dont need to count infinite transaction domestically if you can count the source of inflow and outflows. If I give 1000 Rs to 50 people and they keep playing with it, keep donating randomly to every other person the total money with all of them combined will be 1000Rs only, irrespective of how many got 20 Rs or 100 Rs and how many got 0 or how many times they transacted.



This is outdated data, 5 years is a long time to make things good or worst. Would like to see some updated data soon.



GDP and poverty are separate, high GDP never mean there is no income inequality. Infact the name GDP (Gross Domestic Product) itself screams about gross production irrespective of who produce how much.




May be they got roads to reach nearby city and beg there unlike Pakistan. India has a road network of over 4,689,842 kilometres (2,914,133 mi) in 2013, the second largest road network in the world. At 0.66 km of roads per square kilometre of land, the quantitative density of India's road network is similar to that of the United States (0.65) and far higher than that of China (0.16) or Brazil (0.20).

So they can reach cities faster and you dont need to come to India to see that, just go to google maps and you will see yourself.

Transportation is a vital factor for migration of poors. The road and rail network combined can make total transportation infra of Pakistan timid. They prefer to beg or live in slum than do let their children die due to hunger in Thar desert.




Sometimes I wonder from where does this cr@p comes? Seriously this much BS without even knowing the difference between the GDP, Revenue and GNI per capita!

This is what happen when you learn the economics in Live with Dr. Shahid Massod program. Even if you have just read the definition or just the full form of GDP you wont be making this blunder.

Taxman keeps the record of tax payers, this is counted in Revenue of Govt. not GDP, whoever told you otherwise is a professor of Fake Exact University. Seriously this mixup is so ridiculous that I found it offensive to rape the economics!



RIP economics and logic! Who needs to calculate GDP or number when I got toilet at home !




Does it ever occur to you that a small non profit Organization some GFI can calculate the Shadow economy but not the govt. of Pakistan? nor did World Bank? they dont have resource that a small timer got?

Anyways lets assume somehow GFI can outclass WorldBank, IMF and other financial institution reach which deals in trillions per day and commit billions if not trillions on their own research and the data is correct.


You intentionally (just a guess) didnt mention the data is from 1999 to 2006. 17-10 years older. Lets assume that they can somehow measure it accurately that others cant.

Now in 1999 the GDP of India was $500 Billion and Pakistan was some $60 Billion.
Lets find 22% of 500 = 110 Billion (Twice the GDP of Pakistan, just the offset).
and 35% of 60 = 21 Billion.

Now after adding the "informal GDP" as you say to both countries:

GDP + Informal GDP in 1999

India: 610 Billion.
Pakistan: 81 Billion.

So the difference between GDP of India and Pakistan just got increased even after adding the "informal GDP" from 440 Billion to 529 Billion and strangely according to your logic somehow the real increase in Indian GDP makes India poor and Pakistan richer!!!!


Lets calculate for 2006 (I guess story will be different here):
GDP in 2006
India: $1000 Billion
Pakistan: $150 Billion

Informal GDP as per your data
India (22% of 1000) = 220 Billion
Pakistan (35% of 150) = 53 Billion

GDP + Informal GDP in 2006

India: 1220 Billion
Pakistan: 203 Billion

Difference before informal GDP added : $850 Billion
Difference after informal GDP added : $ 1017 Billion

and again after adding more money to the GDP India becomes poor than Pakistan? If you cant figure out economics a basic mathematics calculation would have helped you. The base on which that 22% is calculated is significantly larger than on which 35% is calculated.


But who cares about logic and facts, Dr. Shahid Massod school of economics sells like hot cakes Seriously my Professor would have eviscerated publicly you if you presented this as study or report.

Superb analysis...op need to give rebuttal to this instead trying to avoid it.. @BlackOpsIndia hats off to u.

 

[Tom M]

how does it matter?

Sorry didn't get you.

 

[wiseone2]

I have always been fascinated in how economists measure performance and how accurate those figures are. There is being 'paper prosperous' and 'real life prosperous'. How accurate are the figures we hear being touted everyday in reflecting the real situation on the ground? If I have a job as electrician and I am earning good money but the taxman has no record of me, for that matter no statistician in the world will be aware of my income. But in real life my family will be living a decent life.

I mention 'electrician' because I know one from my ancestral village who makes good money, has newly built house, a car and sends his kids to private school. He has even done work in UK by coming here as on 'holiday' but then putting in 12 hour shifts, 7 days a week in factories redoing their electrical wiring until his 'holiday' ran out and he went back.

As everybody here loves chucking about GDP figures I thought I would look into this. Remember the real stock here is the real income not what is being detected in formal records. What matters is reality not what any particular number says. To measure reality requires nuanced approach rather than relying on one crude measure.

What got me thinking was according to World Bank the percentage of people living on $1.90 for 2011 was

India - 21%
Pak - 7%

Link > http://povertydata.worldbank.org/poverty/country/IND
Link > http://povertydata.worldbank.org/poverty/country/PAK

Now think about this? There are about three times more absolute poor in India then Pakistan. How is this possible? Either wealth is far more unfairly divided in India then or there is more wealth to share out in Pakistan thus less absolute poor. The GDP figures make India look shining.

Although not scientific and anecdotal most observors notice more visible poverty, beggers and general shambolic conditions prevailing in India (we all know the sanitation) compared to Pakistan. This while Pakistan is wracked by insurgency, war and terrorism. So what is going on here?

Well large part of of the explaination is the informal economy. The electrician I mentioned does not figure in the Pakistan GDP but he has a car, a house and for sure he has proper sanitation. This is not a exception but quite prevalent in Pakistan. Meaning despite what the numbers say the reality in Pakistan is far better as reflected in simple things like sanitation. His equivalent in India will be pulling a rickshaw in Kokatta or Delhi barely able to place bowl of rice on his table.

All this is missed in official GDP figures. The informal economy and don't forget it may not show up fancy reports or GDP but it is real, it provides jobs and has tangibile reality on the ground like that electrician I mentioned. So is there any study done to look at informal economies? Yes there have been many. It appears that all countries have informal economies but the scale varies vastly from one to another. The average for India and Pakistan are:-

India - 22%
Pak - 37%

This means the real size of Pakistan economy or the real economy is far larger then the numbers you hear everyday. Don't forget it is the real economy that feeds real people. This might explain why Pakistan does not have 2 million pulling rickshaws to fill their emaciated bellies.


India No. 39 ~ 22.2%

Pakistan - No.94 ~ 35.7%

Primary Source Shadow Economies > http://www.gfintegrity.org/storage/..._bank_shadow_economies_all_over_the_world.pdf

@django @Sinopakfriend @AndrewJin @Chinese-Dragon @Nilgiri @WAJsal @PAKISTANFOREVER @lastofthepatriots @Syed.Ali.Haider @Solomon2 @Providence @A-Team @RiazHaq

*The purpose of this is not to gloat but to stop that incessant, irritating Indian claim of rich India versus poor Pakistan. Perception often is not reality and most defintely not in this case.

The reality is that India has a 1 million jobs in the IT sector. It does not move the needle on overall GDP.

I have always been fascinated in how economists measure performance and how accurate those figures are. There is being 'paper prosperous' and 'real life prosperous'. How accurate are the figures we hear being touted everyday in reflecting the real situation on the ground? If I have a job as electrician and I am earning good money but the taxman has no record of me, for that matter no statistician in the world will be aware of my income. But in real life my family will be living a decent life.

I mention 'electrician' because I know one from my ancestral village who makes good money, has newly built house, a car and sends his kids to private school. He has even done work in UK by coming here as on 'holiday' but then putting in 12 hour shifts, 7 days a week in factories redoing their electrical wiring until his 'holiday' ran out and he went back.

As everybody here loves chucking about GDP figures I thought I would look into this. Remember the real stock here is the real income not what is being detected in formal records. What matters is reality not what any particular number says. To measure reality requires nuanced approach rather than relying on one crude measure.

What got me thinking was according to World Bank the percentage of people living on $1.90 for 2011 was

India - 21%
Pak - 7%

Link > http://povertydata.worldbank.org/poverty/country/IND
Link > http://povertydata.worldbank.org/poverty/country/PAK

Now think about this? There are about three times more absolute poor in India then Pakistan. How is this possible? Either wealth is far more unfairly divided in India then or there is more wealth to share out in Pakistan thus less absolute poor. The GDP figures make India look shining.

Although not scientific and anecdotal most observors notice more visible poverty, beggers and general shambolic conditions prevailing in India (we all know the sanitation) compared to Pakistan. This while Pakistan is wracked by insurgency, war and terrorism. So what is going on here?

Well large part of of the explaination is the informal economy. The electrician I mentioned does not figure in the Pakistan GDP but he has a car, a house and for sure he has proper sanitation. This is not a exception but quite prevalent in Pakistan. Meaning despite what the numbers say the reality in Pakistan is far better as reflected in simple things like sanitation. His equivalent in India will be pulling a rickshaw in Kokatta or Delhi barely able to place bowl of rice on his table.

All this is missed in official GDP figures. The informal economy and don't forget it may not show up fancy reports or GDP but it is real, it provides jobs and has tangibile reality on the ground like that electrician I mentioned. So is there any study done to look at informal economies? Yes there have been many. It appears that all countries have informal economies but the scale varies vastly from one to another. The average for India and Pakistan are:-

India - 22%
Pak - 37%

This means the real size of Pakistan economy or the real economy is far larger then the numbers you hear everyday. Don't forget it is the real economy that feeds real people. This might explain why Pakistan does not have 2 million pulling rickshaws to fill their emaciated bellies.


India No. 39 ~ 22.2%

Pakistan - No.94 ~ 35.7%

Primary Source Shadow Economies > http://www.gfintegrity.org/storage/..._bank_shadow_economies_all_over_the_world.pdf

@django @Sinopakfriend @AndrewJin @Chinese-Dragon @Nilgiri @WAJsal @PAKISTANFOREVER @lastofthepatriots @Syed.Ali.Haider @Solomon2 @Providence @A-Team @RiazHaq

*The purpose of this is not to gloat but to stop that incessant, irritating Indian claim of rich India versus poor Pakistan. Perception often is not reality and most defintely not in this case.

What are we trying to prove here ??