Commentary

Present and Future Economies of India and Pakistan - 1
By Bashir Ahmad, MD
US

In the Pakistan Link issue of June 23, 2006, two articles regarding Pakistan’s economy appeared. One was authored by Dr. Nayyer Ali, who painted a rosy picture of Pakistan’s economy and another by Mr. Ardeshir Cowasjee who presented a gloomy one,.
Dr. Nayyer mentioned the current growth rate of Pakistan’s economy of 6.6%, industrial growth rate of 8.6%, claiming that this has raised per capita GDP to $850 and has reduced poverty from 34% to 24%. Currently India’s per capita GDP is $728.
I shall be giving the latest comparative statistics about the economies of India and Pakistan at the end of this article.
India, Pakistan’s immediate neighbor and competitor, has assured itself of becoming the economic superstar of the world. It has emerged as a leader in the field of information technology, business outsourcing and is attracting huge influx of foreign investments. India has set its goal to become an economic superpower of the world.
Mr. Cowasjee, the much admired journalist of Pakistan, has scoffed at the economy of Pakistan. This is what he wrote under the heading ‘Laughing at ourself? Difficult . . . “As for wealth our prime minister will most probably hold that our reserves are close to US $13 billion. Does he know that the endowment fund of just one university in the US, Harvard University, stands close to 29 billion?”
Respected Ardeshir Cowasjee does not have to cite Harvard Unviersity’s endowment fund of $29 billion, an Indian, Lakshami Mittal is the world’s fifth richest person who has a fortune of 27 billion.
Mr. Mittal’s family background is unremarkable. “He was born in a village without electricity in Rajashtan, he was hardly destined for riches.” (Fortune, July 24, Page 107)
Mr. Mittal owns steel factories in Europe, Asia and the Far East. Recently, Mr. Mittal succeeded in his hostile takeover bid of the Luxembourgian steel company Arceler to become the top steel producer in the world. The Economic Times wrote the following about the takeover bid: “For India, it is a harbinger of things to come – economic super stardom.”
Fortune Magazine wrote the following about this deal: “ . . . the new company will be colossus, providing 110 million tons of steel annually, three times more than number two – Nippon Steel.” The combined companies performed a 2005 revenue of $68.5 billion would have vaulted Mittal Steel from #208 on this year’s Fortune Global 500 to #63.” (Fortune, July 24, 2006, Page 102)
Mr. Mittal has declared his intention of investing 400 billion rupees (6.7 billion to 9.0 billion US dollars) to build a steel plant in the mineral rich state of Orissa. (New York Times, July 8, 2006)
It is obvious that India is determined to achieve its cherished goal of the industrial dominance of the world. Tata Steel Company of India and British steel giant, Corus Group, have agreed to create the world’s sixth largest steel company. The deal values the Corus Group at 10.2 billion dollars.
Tata Steel Company has acquired two other companies in the last couple of years: Nat Steel Company of Singapore and Millenium Steel Company of Thailand. (New York Times, Oct. 20, 2006)
With the goal of spurring industrialization, India is opening up steel mills in the villages to provide jobs to farmers, who are suffering economically to such a degree that some of them are committing suicide. The Indian Government has reported that about 100,000 farmers committed suicide between 1993 to 2003.
A steel factory has been built in Hazira in northwestern India, where some residents still rely on camels to carry trader’s goods.
The Essar Group is making steel to be used for making ventilation shafts in Philadelphia, high-rise structural beams in Chicago and car engine mountings in Detroit. (New York Times, Sept. 1, 2006, Front Page)

Achievements of Indians in the USA
Some Indians have reached the pinnacle of glory in the US. Recently, Ms. Indra K. Nooyi was appointed as president and CEO of Pepsi Co., with annual revenue of 33 billion dollars.
Ms. Nooyi, 50, who was born in India, has a Bachelors of Science Degree from Madras Christian College India, an MBA from the Indian Institute of Management and a Masters in Public and Private Management from the Yale University. Before joining Pepsi Co. in 1994 she held strategic planning positions at the engineering and construction giant Asea Brown Boveri (now ABB), Motorola and Boston Consulting Group. (New York Times, August 15, 2006)
President and CEO of major American corporations earn on the average about 15 million dollars annually. What a dazzling accomplishment for an Indian lady!
In America there are numerous prominent influential professionals of Indian descent, who with powerful lobbying, exert tremendous influence on both houses of congress as well as President Bush. “President Bush recently agreed to assist India’s nuclear programs, even at the risk of undermining his efforts to put an end to the nuclear ambitions of Iran.” (OP-ED by Pankaj Mishra, New York Times, July 6, 2006)
America is trying its best to make India a strong country, economically, industrially, and militarily. Probably, America, in future, is hoping to use the Indian card against China.

What the Future Holds for Pakistan
America’s war against Al-Qaida and Taliban has made Pakistan its strongest ally. This alliance appears to be of a transitory nature. When Al-Qaeda and Taliban are completely eliminated in Afghanistan, Pakistan shall surely lose its importance in the American eye. This is exactly what Ashley Tellis at the Carnegie Endowment for Peace said: “Our relationship with Pakistan is far more important in the near term, our relationship with India is far more important in the long term. The script we follow is a script worth following.” (New York Times, July 24, 2006)
How Did India Make Spectacular Advances in Science and Technology?
The credit goes to Pandit Jawahar Lal Nehru, the first Prime Minister of India, who in the fifties established the Indian Institute of Technology. Three hundred students from all over India were enrolled in the institute after a stiff test. It is said that only 2% of the brightest applicants were selected. No recommendation or favors for admission were considered. The staff comprised of brilliant professors, some with international standing and repute.
The graduates of I.I.T. were the pioneers in computer and informational technology. The American Computer Corporation owes a great deal to the Indian engineers for its supremacy in computer technology.
It is said that Indian students who failed to gain admission in I.I.T. were admitted in the American M.I.T. with open arms. It is also claimed that the American Technological Corporation give preference to the graduates of I.I.T. over graduates of M.I.T.
It is the lure to hire these graduates of I.I.T. that has compelled American corporations like IBM, Intel, Dell, Microsoft and numerous others, to open large factories in India.
What a dazzling accomplishment of India in the field of technology!
It is an undeniable fact that India and China are on the road to superpower status. Thomas Friedman in his recent column in the New York Times stressed this point that the future historians writing about the present time will “cite the rise of China and India. How the world accommodates itself to these rising powers, and how America manages the economic opportunities and the challenges they pose . . .” (New York Times, Nov. 10, 2006)
I shall be discussing in detail the socio-economic, educational, and industrial status of Pakistan in my next article,. Insha-Allah. I shall, also attempt to point out problems which may turn Pakistan into a failed state – God forbid.
Following are the comparative statistics of India and Pakistan pertaining to population, adult literacy, 1990 and 2004; reserves of foreign exchange, GDP, consumption of commercial energy per head, index of agricultural production and expectation of life. These statistics have been resourced from the World Bank.
Population at Mid-Year
Units: ’000
Source: World Bank, World Development Indicators database.

1995 2000 2002 2003 2004
India 932,180 1,015,923 1,048,641 1,064,399 1,079,721
Pakistan 122,375 138,080 144,902 148,439 152,061
World 5,667,590 6,061,723 6,213,734 6,289,858 6,364,981

Adult Illiteracy Rates, 1990
Units: % of population aged 15 years and over
Source: World Bank, World Development Indicators database.

Females Males Total
India 64.1 38.1 50.7
Pakistan 79.9 50.7 64.6

Adult Illiteracy Rates, 2004
Units: % of population aged 15 years and over
Source: World Bank, World Development Indicators database.

Females Males Total
India 52.2 26.6 39.0
Pakistan 64.0 37.0 50.1

Reserves of Foreign Exchange
Units: US $ million at 31 December
Source: IMF, International Financial Statistics

1995 2000 2003 2004 2005
India 17,467 37,264 97,617 125,164 131,018
Pakistan 1,718 1,499 10,693 9,554 9,817

GDP in Current Prices
Units: US $ Million
Source: World Bank, World Development Indicators database.

1995 2000 2002 2003 2004
India 355,163 457,371 508,881 600,615 691,163
Pakistan 60,636 73,321 71,485 82,350 96,115
World 29,448,380 31,745,790 32,794,910 36,835,180 41,290,410

Economic Activities, 2004 (unless otherwise indicated)
Units: % of GDP
Source: World Bank, World Development Indicators database.

Agriculture Industry Services
India 21.1 27.1 51.7
Pakistan 22.3 24.9 52.7
World (2003) 3.5 28.1 68.4

Consumption of Commercial Energy Per Head
Units: kg of oil equivalent
Source: World Bank, World Development Indicators database.

1995 2000 2001 2002 2003
India 473.3 508.8 507.8 513.4 519.9
Pakistan 443.8 463.1 461.4 456.9 466.9
World 1,659.1 1,691.2 1,681.1 1,697.1 1,734.0

Index of Manufacturing Production
Units: base: 1995 = 100
Source: UN, Monthly Bulletin of Statistics and Statistical Yearbook.

1999 2002 2003 2004 2005
India 128.0 147.1 158.0 171.8 n.a.
Pakistan 109.1 134.3 159.0 183.5 n.a.

Index of Agricultural Production
Units: base: 1999-2001 average = 100
Source: FAO

1995 2000 2002 2003 2004
India 86.6 99.0 97.7 105.1 106.1
Pakistan 88.5 101.7 100.6 104.3 112.0
World 87.6 100.1 103.4 106.2 110.7

Expectation of Life, 2004
Units: years at birth
Source: World Health Organization, World Health Report 2006.

Both Sexes Females Males
India 62 63 61
Pakistan 62 63 62

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