Oligarchs of India and Pakistan
By Riaz Haq

India is the world's third biggest and the fastest rising oligarchy with 17.2% of its GDP amassed by its 55 billionaire. India's system of governance has some of the worst features of democracy and oligarchy in which the democratically elected politicians are bought off by the richest Indians, and both groups further enrich themselves at the expense of the vast majority of ordinary Indians. The biggest Indian oligarchs today are mainly industrialists like Ambanis, Adanis, Birlas, Mittals, Premjis and Tatas.
Like India, Pakistan is an oligarchy too. But it is dominated by the feudal rather than the industrial elite. These oligarchs dominate Pakistan's legislature. Vast majority of them come from rural landowning and tribal backgrounds. Well-known names include the Bhuttos and Khuhros of Larkana, the Chaudhrys of Gujarat, Tiwanas of Sargodha, Daulatanas of Vehari, the Jatois and Qazi Fazlullah family of Sindh, the Gilanis, Qureshis and Gardezis of Multan, the Nawabs of Qasur, the Mamdots of Ferozpur/Lahore, Ghaffar Khan-Wali Khan family of Charsadda and various Baloch tribal chieftains like Bugtis, Jamalis, Legharis, and Mengals. The power of these political families is based on their heredity, ownership of vast tracts of land and a monopoly over violence – the ability to control, resist and inflict violence.
Pakistan, too, has an industrial elite. Its biggest names include Manshas (Nishat Group), Syed Maratib Ali and Babar Ali (Packages), Saigols, Hashwanis, Adamjees, Dawoods, Dadabhoys, Habibs, Monnoos, Lakhanis and others. But their collective power pales in comparison with the power of the big feudal families. The only possible exception to this rule are the Sharif brothers who own the Ittefaq Group of Industries and also lead Pakistan Muslim League (Nawaz Group), one of the two largest political parties. But the Sharifs too rely on political support from several feudal families who are quick to change loyalties.
The origins of the differences between Indian and Pakistan oligarchies can be found in some of the earliest decisions taken by the founding fathers of the two nations. India's first prime minister dismantled the feudal system almost immediately after independence. But Nehru not only left the industrialists like Birla and Tata alone, his policies protected them from foreign competition with the imposition of heavy tariff barriers on imports. In Pakistan, there was no serious land reform, nor was any real protection given to domestic industries from foreign competition.
Oligarchy is the antithesis of democracy. However, it's important to understand the differences between feudal and industrial oligarchies, and their effects on nations as observed in South Asia.
The industrial oligarchs of India have accelerated economic growth, created a large number of middle class jobs, increased India's exports significantly and paid higher taxes to the tune of 17% of GDP. This has created a trickle-down effect in terms of increased public spending on education, health care and various social programs to fight poverty. Unfortunately, the tax collection in Pakistan's feudal oligarchy remains dismally low - at less than 10% of GDP, and the lack of revenue makes it extremely difficult for the state to spend more on basic human development and poverty reduction programs.

As for the future, the hope for Pakistan is that the feudal hold on power will eventually weaken as the nation sustains its rapid pace of urbanization. Pakistan has and continues to urbanize at a faster pace than India. From 1975-1995, Pakistan grew 10% from 25% to 35% urbanized, while India grew 6% from 20% to 26%. From 1995-2025, a UN forecast sees Pakistan urbanizing from 35% to 60%, while India's forecast is 26% to 45%.

For this year, a little over 40% of Pakistan's population lives in cities. The political power shift from rural to urban areas may eventually produce a more industry-friendly government in the future. Such a government can be expected to help increase the tax base significantly, permitting greater spending on education and health care, and reduced dependence on foreign aid.




Editor: Akhtar M. Faruqui
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