Of course, Kashmir is Pakís core issue, itís made them a pauper - By SUNIL JAIN Back   Home  

PAKISTAN President General Pervez Musharraf is unlikely to admit it publicly when he comes calling this Saturday but heís a worried manóif his country continues with its almost exclusive anti-India and jihad focus, now packaged as ĎKashmir is the core issue,í it could stand to lose a whopping $40 billion over the next decade.

So while the Indian economy continues to notch a steady growth, Pakistanís is getting from bad to worseóits GDP actually fell from $62.2 bn in 1998 to $58.2 in 1999. If things continue this way, by 2010, Indiaís GDP will be a little over $800 bn while Pakistan will be lucky to even touch $70 bn. If, however, Pakistanís growth was similar to Indiaís, itís GDP would be around $110 bn by the end of the decade.

So whoever may win Kargil Part II, assuming the summit doesnít result in any material de-escalation, by 2010, the Indian economy will be around 12 times as large as Pakistanís ó today, itís around 7.5 times bigger. Even in 1980s and early 1990s, figures from the World Bank database show, the relative size of Indiaís economy to Pakistanís was around the same.

In other words, itís only in the last decade or so that Pakistanís fragile economic base has really begun to fall apart. Coincidentally, this is around the same time that Indiaís growth picked up further steam, thanks to economic reforms. And militancy grew full-blown in Kashmir.

Worse, thanks to its severe economic crises, and the IMF restructuring programme, almost every major item of Pakistani expenditure is now subject to IMF scrutiny. In November 2000, for instance, the Finance Minister of Pakistan and the Governor of its central bank had to countersign a letter to Horst Kohler, the managing director of the IMF, agreeing to monitor even the holiest of their holy cows ó defence spending ó on a monthly basis.

And the outcome of this is to be reported to a Fiscal Monitoring Committee of its finance ministry on a quarterly basis. In other words, the IMF is virtually dictating the size of the countryís military budget (see the www.imf.org for more details). Itís not as if Pakistan has always done badly economically. Indeed, it was quite the contrary. To begin with, at partition, Pakistan had the most fertile lands, and its per capita income has always been higher than Indiaís.

But thanks to the sharp deterioration in Pakistanís economy, some time around now (possibly even as you read this piece) Indiaís per capita income will actually overshoot that of the average Pakistani!

Even in 1980, Indiaís per capita income was a mere $240 as against Pakistanís $300, by 1999 Indiaís per capita was close to Pakistanís ó India was $440 while Pakistan was $470. Based on projections of how both economies are growing, the average Pakistani will earn around a third less than the average Indian by the end of the decade.

Itís Pakistanís wasted years, in fact, that ensured that India finally beat it on the UNDP Human Development Indices a few years ago ó today, India is ranked 115th on the index as against Pakistanís 127.

Now it can be no oneís case that the Indian economy is the globeís greatest success story, but when compared to Pakistan, it really shines. From around 3.7 per cent annually in the first plan period, Indiaís rate of growth rose to around 5.5 per cent in the mid-80s, to just under seven in the mid-90s.

Pakistan, on the other hand, grew by around 6.8 per cent in the Ayub years of the 1960s, and though this slowed down in the Zia years, it was still a steady 6.5 per cent or thereabouts. There are, of course, those who believe this has more to do with the category of leadership in Pakistan, that Pakistanís growth has fallen only during the Ďcivilianí years ó during Zulfiqar Ali Bhuttoís five-and-a-half years, for instance, the economy grew by just around 4.4 per cent per annum. And this has fallen to around half during the last few years of civilian rule. Therefore, the lesson is, military rule is good for the Pakistani economy!

Scholars such as S. Akbar Zaidi of the Karachi University, of course, refute this as simplistic nonsense ó part of Ziaís success, he argues, was explained by the huge remittances from Pakistanis in the Gulf and this helped fuel the services sector, but also lead to the Kalashnikov and heroin culture, and a parallel economy that has undermined the real economy. General Musharraf, however, is clearly hoping that the dictators-are-best dictum continues to hold true. He simply cannot afford to let the Indian economy grow to over twelve times that of Pakistanís.


This article was published in indianexpress.