What Pakistan and India have been doing wrong!
There is an old adage that says, ‘Too much analysis leads to paralyses’. While this seems to be the case with the rest of the world, there is a definitely a lack of analysis or quality analysis when it comes to the Indian economy which gets stuck in one trouble after another like following a zero sum business cycle. However, the condition looks to be equally if not more grave with the Pakistan economy as well. The country never showed any signs of real growth in the past few years and at this juncture of bleeding edge technologies and sky high rates of industrialized growth all around the world, it is hard to digest the hard fact that we (both India and Pakistan) don’t seem like going anywhere important.
Numbers can be manipulated. They can be twisted as per one economist’s heart desires and used to convey the great period of growth that the countries are facing or even how they are beating the world out there and on their way to be the superpowers themselves with baseless year estimates like 2020 and 2050.
Let us look at the statistics first to clear some misconceptions. The GDP of Pakistan has grown 325 times from the period 1960 to 2005 and it is a sky touching figure if looked in isolation. Dig a little deeper and one finds that the GDP per capita as a percentage of USA has constantly fallen down from 3.37 per cent in 1960 to 1.71 per cent in 2005. This is nothing but the bare truth that nominal valuation is equivalent to marking your Rs1000 bills as Rs100000 and believing it while not realizing that the rest of the world has actually made this money.
The same goes for India. The economy was once touted to be the frontrunner for the next superpower after China race and now all people care about is to get the money out of the country safely because the economy has been ‘hit’. While this is a common knowledge but nobody is ever able to speak with conviction what exactly has ‘hit’ the robust and the third largest economy so bad that its growth rate has halved in a matter of one and a half years. Now we are fighting off nonsense and lack of responsibility and accountability manifesting in terms of multiple scams as well as irresponsible handling of government records.
This definitely looks like a gory picture and this is what this article is all about. We have to stop creating utopian visions and paint colourful pictures of the both countries filled with citizens taking over the world and the young population going out and achieving things when in reality there is widespread disgust and uncertainty in the minds of young achievers who are bogged down by lack of employment opportunities and rising inflation.
A good place for the two countries to start should be to first secure confidence and trust of their own people before luring the world to invest with them. This is with regards to the dwindling public opinion and hence investor sentiment in both countries due to power shifts after elections and the lack of a resolve from government’s side to safeguard interests of a certain community. Be it retail investors, consumers or businesses looking to invest in the countries, they are all facing doubt and uncertainty about years to come.
There has been a huge change in power from the hands of Yousuf Raza Gillani to Nawaz Sharif, the incumbent prime minister, and this has resulted in large speculation and debate in international circles as investors seek politically safe avenues for their investment. India, on the other hand ruined its image in the business circles by consecutive scams in various agencies as well as retrospective tax legislation case with Vodafone that discouraged so many multinationals from doing business in India.
‘Two strong nations like India and Pakistan can come together and send a strong message to the investors from all over the world by enabling trade once again and starting off with peace initiatives that stopped midway.’
The Ease Of Doing Business Index which records the tax legislations, government controls and other factors which are critical to business and industries’ growth and survival ranks Pakistan at 107th place which is ahead of India’s place at 132nd in the list of countries. Both the countries hence, need to ramp up the regulatory, governance and executive issues which malign their image and rot the roots of businesses and growth in the long term. Pakistan’s economy proved to be resilient after the Asian crisis and India showed signs of growth even when the world was dealing with recession but now is not the time to recount moments of glory but it commands concerted efforts from both countries to breakout.
We are neighbors who were one not a very long time ago and the demographics are as similar as the problems we face. Both countries are battling high inflation, less levels of growth, competition from China and other cheaper Asian producers as well as volatile investors’ sentiment. The countries are divided into rural and urban and there is a huge difference in the standards of living between Karachi and Abbottabad just like Delhi and Lucknow are poles apart. A joint effort could exponentially enhance the positives for the both nations.
We need to move ahead of the petty politics being played out in Pakistani Kashmir and the dispute with Indian state of Kashmir and focus on the issues that really affect our future prospects. Trade treaties and bilateral agreements to import and exports goods from the cheaper places and helping the rural creations sell outside the country can boost the economy from the ground level. Two strong nations like India and Pakistan can come together and send a strong message to the investors from all over the world by enabling trade once again and starting off with peace initiatives that stopped midway and foster a period of growth and financial freedom for the citizens.
The writer is a politics and finance lover who loves to spend time on the internet and in conferences that discuss and debate international issues. Mayank strongly believes in the power of knowledge and he can be spotted reading a thick book, writing poetry and articles or discussing relevant issues very often.