Friday, December 31, 2010

Karachi Stock Index Beat BRICs in 2010

Pakistan's main stock market ended 2010 with a 28 percent annual gain, driven by foreign buying mainly in the energy sector, despite concerns about the country's macroeconomic indicators after summer floods, according to Reuters. Although it was less than half of the 63% gain recorded in 2009, it is still an impressive rise in KSE-100 index when compared favorably with the performance of Mumbai(+17%) and Shanghai(-14.3%) key indexes. Among other BRICs, Brazil is up just 1% for the year, and the dollar-traded Russian RTS index rose 22% in the year, reaching a 16-month closing high of 1,769.57 on Tuesday, while the rouble-based MICEX is also up 22%.


Pakistan's key share index KSE-100 was just over 1000 points at the end of 1999, and it closed at 12022.46 on Dec 31, 2010, sgnificantly outperforming BRIC markets for the decade. Pakistan rupee remained quite stable at 60 rupees to a US dollar until 2008, slipping only recently to a range of 80-85 rupees to a dollar. In spite of the currency decline, Pakistan's KSE-100 stock index surged 55% in 2009 in US dollar terms and 65% in rupee terms. During the same period of 1999-2009, Mumbai Sensex index moved from just over 5000 points to close at 17,464.81.

If you had invested $100 in KSE-100 stocks on Dec. 31, 1999, you'd have over $1000 today, while $100 invested in Mumbai's Sensex stocks would be worth about $400. Investment of $100 in emerging-market stocks in general on Dec. 31, 1999 would get you about $300 today, while $100 invested in the S&P500 would be essentially flat at $100 today.

The US Federal Reserve's current easy money policy, euphemistically called "quantitative easing", sent a torrent of US dollars flooding into the US, European and emerging markets around the world. All three major US stock indices rose in 2010. The Dow was up 1,149.46, or 11 percent. The S&P gained 142.54, or 12.8 percent. The Nasdaq ended higher by 383.72, or 16.9 percent.

Some of the US stimulus money found its way into India and Pakistan as well. The 28% gain in KSE-100 is driven in part by net foreign capital inflows of Rs. 43 billion ($515 million US dollars) in 2010. Similarly, global funds bought a net 6.05 billion rupees ($135 million) of Indian equities on Dec. 29, taking this year’s record flows into equities to 1.31 trillion rupees ($27 billion US dollars), according to data on the Securities and Exchange Board of India website. India's FII inflows surged 61 percent in 2010, making the gauge the most expensive in Asia and among the BRIC markets.

While China's situation is superior among the emerging markets, including BRICs, because it enjoys significant current account surpluses and has strong capital flow controls, it is also seeing its economy overheat along with India's economy. Joseph Stiglitz, a Nobel Laureate Columbia University economist, has argued that India is more vulnerable to an asset bubble than China, saying that “strong economies that don’t yet have capital control become the focal point” for the liquidity injected by the US Federal Reserve. Stiglitz thinks that India, more than China or Brazil, should watch out for the tidal wave of money made available from the Fed’s quantitative easing. Mike Shedlock, an American investment advisor, believes that "India and China are going to overheat and crash, or their economic growth is going to slow dramatically, quite possibly both".

Although the hot money does help to partially fund the growing current account deficits in both India and Pakistan, the net inflow of $515 million of FII in Pakistan is relatively small at 0.3% of its GDP, and it is less likely to impact the economy even if all of it goes away in 2011. In India's case, however, the $27 billion in FII represents a little over 2% of its GDP and its sudden flight out of India is a substantial risk for Indian economy.

In my opinion, the uncertain US and European economic recoveries and future monetary policy of the US Federal Reserve in 2011 and beyond represent the greatest source of instability for capital markets in the emerging nations such as India and Pakistan, which impose relatively lax controls on short-term capital flows.

Related Links:

Haq's Musings

Trade and Economy Indicators of 231 Countries

JS Global on Pakistani Stocks in 2010

Indian Economy's Hard Landing in 2011?

High Cost of Failure to Aid Flood Victims

Karachi Tops Mumbai in Stock Performance

India and Pakistan Contrasted in 2010

Pakistan's Decade 1999-2009

Musharraf's Economic Legacy

China's Trade and Investment in South Asia

India's Twin Deficits

Pakistan's Economy 2008-2010

Inflation Hits India

Goldman Sachs India Warning on Twin Deficits

India's Nov 2010 Imports, Exports

Pakistan' One-dimensional Coverage With Selective Headlines in 2010

Have you ever wondered if Pakistan is really as one-dimensional a country as stereotyped by the negative torrent of international media coverage that dominated the news headlines in 2010?

Have you ever thought that Pakistanis engage in any pursuits other than as perpetrators or victims of terror that the journalists find the most newsworthy about the world's sixth most populous South Asian nation?

Well, an Indian-American producer Madhlika Sikka on NPR's Talk of the Nation radio did wonder about it when she visited Pakistan this year. In the talk show aired on June 3, 2010, she described the main concerns of young Pakistanis follows:

"I think, that young people are concerned with the same things you'd think young people are concerned with. In fact, when I came home, the immigration officer asked me about Pakistan, and she said, well, what are they thinking about?

And I said, well, I met a lot of young people, and they're thinking about jobs, and they're thinking about the fact that the power goes out regularly, gas costs a fortune. They're really thinking about what their prospects are and the conflict with India, the war on terrorism, isn't at the top of their list."

She summed up her assessment of the current situation in Pakistan in the following words:

"Well, I think that I think that there's no doubt that if you live in a city like Islamabad or Peshawar, certainly where Julie McCarthy was, you know, they live and breathe this tension every day.

But let's take a city like Lahore, where we were just a couple of weeks ago. And last week, there was a huge attack on a mosque in Lahore, 70, 80 people were killed. You can't help but feel that tension, even though you are trying your best to go live your daily life as best you can. And I think that that push and pull is really a struggle.

But one thing I do want to talk about in the, you know, what is our vision of Pakistan, which often is one dimensional because of the way the news coverage drives it.

But, you know, we went to visit a park in the capital, Islamabad, which is just on the outskirts, up in the hills, and we blogged about it, and there are photos on our website. You could have been in suburban Virginia.

There were families, picnics, picnic tables, you know, kids playing, stores selling stuff, music playing. It was actually very revealing, I think for us and for people who saw that posting, because there's a lot that's similar that wouldn't surprise you, let's put it that way."




Along the same lines as NPR's Sikka, let me share with you some of the best kept secrets of Pakistan's other story which would take a lot of effort to discover on your own.

The world media have correctly reported on the deadly blasts caused by the frequent US drone strikes and many suicide bombings in 2010. But Pakistanis have also seen an explosion in arts and literature in the last few years as the nation's middle class has grown rapidly amidst a communications and mass media revolution. A British magazine Granta dedicated an entire issue in 2010 to highlight the softer side of Pakistan.

Granta has highlighted the extraordinary work of many Pakistani artists, poets, writers, painters, photographers and musicians inspired by life in their native land.



For example, the magazine cover carries a picture of a piece of truck art by a prolific truck painter Islam Gull of Bhutta village in Karachi. Gull was born in Peshawar and moved to Karachi 22 years ago. He has been practicing his craft on buses and trucks since the age of 13, and now teaches his unique craft to young apprentices. Commissioned with the assistance of British Council in Karachi, Gull produced two chipboard panels photographed for the magazine cover.

Granta issue has articles, poems, paintings, photographs and frescoes about various aspects of life in Pakistan. It carries work by writers like Mohsin Hamid (The Reluctant Fundamentalist), Daniyal Mueenuddin (In Other Rooms, Other Wonders), Kamila Shamsie (Burnt Shadows), Mohammad Hanif (A Case of Exploding Mangoes) and Nadeem Aslam (The Wasted Vigil) who have been making waves in literary circles and winning prizes in London and New York.

In a piece titled "Mangho Pir", Fatima Bhutto highlights the plight of the Sheedi community, a disadvantaged ethnic minority of African origin who live around the shrine of their sufi saint Mangho Pir on the outskirts of Karachi.

In another piece "Pop Idols", Kamila Shamsie traces the history of Pakistani pop music as she experienced it living in Karachi, and explains how the music scene has changed with Pakistan's changing politics.

A piece "Jinnah's Portrait" by New York Times' Jane Perlez describes the wide variety of Quaid-e-Azam's portraits showing him dressed in outfits that give him either "the aura of a religious man" or show him as a "young man with full head of dark hair, an Edwardian white shirt, black jacket and tie, alert dark eyes". Perlez believes the choice of the founding father's potrait hung in the offices of various Pakistani officials and politicians reveals how they see Jinnah's vision for Pakistan.

While Granta's focus on art and literature has produced a fairly good publication depicting multi-dimensional life in Pakistan, there are apects that it has not covered. For example, Pakistan has a growing fashion industry which puts on fashion shows in major cities on a regular basis. The biggest of these is Pakistan Fashion Week held in Karachi in February. Over 30 Pakistani designers - including Sonya Battla, Rizwan Beyg, and Maheen Khan - showed a variety of casual and formal outfits as well as western wear, jackets, and accessories.






There were scores of expos and trade shows put on by various industries, including a book fair in Karachi, attended by about 250,000 people. Publishers from the UK, Singapore, Iran, Malaysia and India also participated in the event.

Karachi's Mohatta Palace Museum hosted an Art exhibition, “The Rising Tide: New Direction in Art From Pakistan,” that included more than 40 canvases, videos, installations, mobiles and sculptures made in the past 20 years. Its curator, the feminist sculptor and painter Naiza Khan, told the New York Times that her aim was to show the coming of age of Pakistani art.



A Pakistani theater group defied the government ban and put on "Burqavanza", a satirical play in which all the actors wear burqa as a metaphor for hypocrisy in the nation. Adam Ellick of the NY Times reported that the play "doesn’t sidestep any of the country’s problems: a creeping radicalization, terrorism, government corruption, and interference by Western nations, especially the United States."

A conference celebrating 31 years of a theater group named Tehrik-i-Niswan (Feminist movement) included presentations, research papers, theatrical performances and a poetry recital just this month.

While it is true that Pakistan faces many serious crises, particularly religious extremism and terrorism, there is much more to see and report about this nation of 180 million people with a large and well-educated urban middle class.

Here's a video titled "I Am Pakistan":



Here's a CNBC Pakistan video on January 2011 events:



Related Links:

Haq's Musings

Pakistan's Media Revolution

Along Grand Trunk Road in India and Pakistan

Pakistan's Urban Middle Class

Music Drives Coke Sales in Pakistan

Life Goes On in Pakistan

Karachi Fashion Week

Is Pakistan Too Big to Fail?

Karachi Fashion Week Goes Bolder

More Pictures From Karachi Fashion Week 2009

Pakistan's Foreign Visitors Pleasantly Surprised

Start-ups Drive a Boom in Pakistan

Pakistan Conducting Research in Antarctica

Pakistan's Multi-billion Dollar IT Industry

Pakistan's Telecom Boom

ITU Internet Data

Eleven Days in Karachi

Pakistani Entrepreneurs in Silicon Valley

Musharraf's Economic Legacy

Infrastructure and Real Estate Development in Pakistan

Pakistan's International Rankings

Assessing Pakistan Army Capabilities

Pakistan is not Falling

Jinnah's Pakistan Booms Amidst Doom and Gloom

Tuesday, December 28, 2010

Is India's Economic Crash Likely in 2011?

Pakistan's economy had a hard landing in 2008. It was triggered by a balance of payments crisis brought about through precipitous decline in foreign capital inflows combined with policy inaction in response to major external shocks in terms of food and fuel prices during political transition. Is the Indian economy similarly vulnerable in 2011? Is it headed for significant slowdown in the next twelve months? And if it is, can the Indian leadership manage a soft landing through major policy actions now?

To answer these questions, let us examine the following facts:

1. India's current account deficit widened sharply to $13.7 billion in the June-quarter, which was around 3.7 per cent of GDP. The deficit was $4.5 billion in the same period year ago.



2. India's FDI has declined by a third from $34.6 billion in 2009 to $23.7 billion in 2010. Its current account deficit is being increasingly funded by short-term capital inflows (FII up 66% from $17.4 billion in 2009 to $29 billlion in 2010) rather than more durable foreign direct investment (FDI), posing a risk to external balance and funding of gap, according to a recent warning by Goldman Sachs. "Nearly 80 per cent of the capital inflows are non- FDI related. Given the excess spare capacity globally, FDI may remain weak going forward," the Goldman note said.





3. Inflation in India is running at a double digit pace as is credit expansion. India's primary articles price index was up 15.35 percent in the latest week compared with an annual rise of 13.25 percent a week earlier, data on Thursday showed. Year-over-year credit growth was 23 per cent till December 3, while deposit growth was only 15 per cent, as compared to RBI's projection of 20 per cent and 18 per cent, respectively, for 2010-11.



4. India's Food and fuel prices are continuing to rise by double digits. The food price index rose more than 12 percent, with the price of onions -- the country's most widely-eaten vegetable -- of especial concern, while the fuel price index climbed 10.74 percent. This compared with 9.46 percent and 10.67 percent respectively in the previous week.

5. The oil prices are likely to spike as the American and European economies recover in 2011, prompting Indian commerce secretary Rahul Kullar to acknowledge that “I am not sanguine. One blip on crude prices and my import bill suddenly zooms. On pro-rata basis we are looking at $ 120 billion with a caveat that if oil prices go up, it could be $ 130-135 billion”. Crude oil prices are currently running at $ 87-88 per barrel.



While China's situation is better because it enjoys significant current account surpluses and has strong capital flow controls, it is also seeing its economy overheat along with India's economy. Joseph Stiglitz, a Nobel Laureate Columbia University economist, has argued that India is more vulnerable to an asset bubble than China, saying that “strong economies that don’t yet have capital control become the focal point” for the liquidity injected by the US Federal Reserve. Stiglitz thinks that India, more than China or Brazil, should watch out for the tidal wave of money made available from the Fed’s quantitative easing. Mike Shedlock, an American investment advisor, believes that "India and China are going to overheat and crash, or their economic growth is going to slow dramatically, quite possibly both".

Indian President Pratibha Patil said last week that she is confident the economy will grow at about 9 percent in the current fiscal year ending March 2011 and would be on a sustained growth path of about 9 to 10 percent in FY12, according to Reuters. It is quite surprising that the Indian government continues to talk about increasing levels of economic growth in 2010-2011 and beyond amidst growing inflation and rising imbalances in the Indian economy. What they should be thinking about now is how to manage a soft landing by reducing liquidity and cutting India's twin deficits, rather than stepping on the accelerator and risk a big economic crash with long term negative consequences.

Related Links:

Haq's Musings

China's Trade and Investment in South Asia

India's Twin Deficits

Pakistan's Economy 2008-2010

Inflation Hits India

Goldman Sachs India Warning on Twin Deficits

India's Nov 2010 Imports, Exports

Saturday, December 18, 2010

China Targets India and Pakistan to Grow Trade and Investments

The Chinese Prime Minister Mr. Wen Jiabao is on state visits to both India and Pakistan to grow his country's invesment and trade. He has signed deals worth $16 billion in trade with India, and $35 billion in trade and investment with Pakistan this month.

China is now India's largest trade partner, with bilateral trade expected to reach $60 billion during this fiscal year ending March 31, 2011. On Thursday, the two countries set a target for bilateral trade to reach $100 billion by 2015. The bulk of Chinese exports are financed by Chinese banks on attractive terms. And China has invested significantly in many parts of the world including South Asia, more in Pakistan than it has in India.



China is Pakistan’s third largest trading partner with $7 billion in trade in 2009, after the United States and the European Union, while Pakistan is China’s largest investment destination and second biggest trade partner in South Asia.

Currently, China enjoys two-to-one trade advantage with both South Asian nations, with China exporting twice as much as its imports. This large and growing imbalance stems from the fact that India and Pakistan import high-value manufactured products like power generation and telecom equipment from China, while India's biggest export to China is iron ore, and Pakistan's main export to China is cotton yarn.

The Chinese delegation to India and Pakistan was larger than the number in delegations led in recent weeks to India by US President Barack Obama (215), French President Nicolas Sarkozy (more than 60) and British Prime Minister David Cameron (about 40), according to a BBC report. For his Pakistan visit, Mr. Wen was accompanied by dozens of corporate chief executives and 250 business leaders—many of whom were also present during the Chinese leader's visit to India earlier this week, during which he announced economic deals aimed at stabilizing a fragile relationship with New Delhi, according to Wall Street Journal.

India and China signed some 50 deals in power, telecommunications, steel, wind energy, food and marine products worth $16bn at the end of a business conference attended by Mr Wen in the capital, Delhi, on Wednesday evening.

This overtakes the $10bn of agreements signed between Indian and American businesspeople during the recent visit of US President Barack Obama.

In Islamabad, Pakistan, the Chinese Premiere has signed 45 agreements worth $35 billion in just the first two days of his three day visit, approaching the total value ($40 billion) of all of India's agreements signed with China, US, France and Britain during their leaders' recent visits to New Delhi.

Pakistan and China Saturday signed 22 new trade agreements, worth $15-billion, aimed at deepening strategic and economic toes between the two countries, officials told media covering the visit.

These come on the top of another 13 agreements worth around $20 billion signed Friday after bilateral meetings.

The fresh deals were inked at a business summit addressed by Chinese Premier Wen Jiabao and his Pakistani host Prime Minister Yousuf Raza Gilani and attended by business representatives from the two nations.

Gilani said that the corporate and business sectors of both countries must now seize business opportunities offered by Pakistan and take the lead.

Wen urged the investors from his country to invest in Pakistan and help build the economic ties with the traditional Chinese friend.

"We have strong political relations and now we are building economic ties, which can witnessed from the fact that trade has risen from $1 billion in 2000 to $7 billion by 2009," he said.

The state-run Pakistan Television (PTV) said the agreements are expected to bring $25 billion in investments and double the bilateral trade to $15 billion by 2015.

Through their huge investments in Africa and significant commitments in Afghanistan and Pakistan, the Chinese have shown the extraordinary capacity to see great opportunity where others see large risks.

The Chinese know how to do good and do well. They are clearly demonstrating by Mr. Wen's Pakistan visit what they like to call their "all-weather friendship" with Pakistan. The marked shift in focus of this relationship from mostly defense-related deals to broad commerical ties is particularly welcome, given the rise of China as the world's second largest economy after the United States, and a major lender, investor and trading partner of the United States and the European Union.

The positive impact of China-Pakistan business relationship will only be achieved by full implementation of these agreements. Let's hope Pakistanis hold their end of the bargain to realize the full potential of economic ties with the world's fastest growing and the second largest economy.

Related Links:

Haq's Musings

China Signs Power Plant Deals with Pakistan

Soaring Imports from China Worry India

China's Checkbook Diplomacy

Yuan to Replace Dollar in World Trade?

China Sees Opportunities Where Others See Risk

Chinese Do Good and Do Well in Developing World

Can Chimerica Rescue the World Economy?

Food, Fuel Inflation Hits India; Primary Price Index Up 15%, Credit Expansion Up 23%

Wednesday, December 15, 2010

India's Big Media Coverup of Telecom Scandal

India's multi-billion dollar telecom scandal, also known as 2G scandal, is continuing to grow with new revelations coming out almost every day, especially since the failure of the blackout attempt orchestrated by some of the biggest Indian TV channels and newspapers.

The main source of these leaks are over 100 tapes of 5,000 recordings made by India's Enforcement Directorate and Income Tax authorities as part of their surveillance of Ms. Nira Radia. Radia lobbied government ministers and politicians on behalf of India's business elite, including the biggest business magnates Mukesh Ambani and Ratan Tata.



NDTV journalist Barkha Dutt and Hindustan Times columnist Vir Sanghvi are among those implicated by the tapes in the growing scandal. Initially, attention was focused on Ms. Dutt, who was accused of agreeing to pass on messages from Ms. Radia to the Congress party. Ms. Dutt denied that and defended herself on Twitter, in a statement and on television, and said that at most she had made an “error of judgment” in how she conversed with Ms. Radia.

The focus is now on on Mr. Sanghvi's role, according a Wall Street Journal report. In one of the tapes, Mr. Sanghvi sounded on one recording as if he was agreeing to slant his column on the feuding Ambani industrialist brothers according to Ms. Radia’s suggestions. Ms. Radia represents elder brother Mukesh Ambani, who controls Reliance Industries. Anil Ambani, the younger brother, controls the Reliance Anil Dhirubhai Ambani Group. Mr. Sanghvi tells Ms. Radia the piece is “dressed up as a plea to [Indian Prime Minister] Manmohan Singh so it won’t look like an inter-Ambani battle thing except to people in the know.” She responds: “Very nice.” In another conversation, between Ms. Radia and an employee, she asks for questions to be prepared for an interview between Mr. Sanghvi and Mukesh Ambani, saying that “he has agreed to ask whatever questions we suggest.”

In a court affidavit filed last week, the Indian government said it had begun tapping Ms Radia's phone after an allegation that she was spying for foreign intelligence.

Ms. Radia's telephone was tapped by the Indian government for 180 days during two separate stints in 2008 and 2009. Several hundreds of those call recordings have so far been leaked to Indian media outlets in the past few weeks. Some of these recordings have been posted on the Internet by India's Outlook and Open magazines.

Stung by the disclosures, Indian Prime Minister Manmohan Singh has asked cabinet secretary KM Chandrasekhar to investigate and report within a month. Singh said he "was aware of the nervousness in the corporate sector" over authorized phone-tapping. The Tata group chairman has taken legal action after his conversations with a lobbyist were leaked to media.

Here are some of the key revelations to date:

1. Billionaire businessman Mukesh Ambani is quoted as bragging that the ruling Congress Party is "Apni Dukan" (our shop), implying that he owns the ruling party.

2. Telecom minister Andimuthu Raja left an estimated $40 billion on the table by accepting bribes in exchange for lower bids from Indian and foreign bidders on 2G cellular spectrum auction, according to a New York Times report.

3. India's Highway Minister Kamal Nath is alleged to skim 15% on all the projects his ministry oversees.


There have long been allegations of corruption against Indian government ministers and politicians, but the tapes now confirm the extent of graft that was accidentally discovered by Indian authorities who were looking for evidence of Radia's possible involvement in spying for foreign nations.

There has long been a nexus of crime, corruption and politics in India. Of the 278 current Indian MPs for whom records are obtainable, 63 have criminal backgrounds. Of those, 11 have been charged with murder and two stand accused of dacoity (banditry). Other alleged misdemeanors range from fraud to kidnapping, according to data collected by National Election Watch, the campaign group that has put together the data.

Most Indian politicians have used their election wins to significantly enrich themselves, according to their own pre-election declarations of assets. For example, the comparison of assets of candidates who won in 2004 and sought re-elections in 2009 shows that the wealth of UP politicians has grown by 559%, over five times, in five years, second only to their Karnataka counterparts who registered a growth of 693% in the same period, according to a report..

Commenting on the scandal, Wharton's Professor Jitendra Singh says corruption in India is "heterogeneous and multifaceted," ranging from a simple bribe to systemic corruption, "where retrograde cultural norms get well-established in specific settings, such that a non-corrupt newcomer may well find it impossible to survive." Inferior cultural norms are the toughest to tackle, and those values could prove very difficult to unhinge, according to Singh. "In its abstract form, the gains in a transaction get disproportionately appropriated by actors in relation to their role in the creation of this value," he says. "This distorts incentives and, ultimately, values in a society and leads to inequitable distribution of income and wealth, and inefficient allocation of capital." He warns of "collective consequences such as the institutionalization of inferior cultural norms [for example, 'in order to succeed, you have to be dishonest, because everyone else is dishonest'] that may take generations, even centuries, to sort out meaningfully."

The telecom scandal may just be the tip of the iceberg. A broader and more serious independent inquiry is now necessary to find any evidence of widespread corruption as powerful Indian businessmen like Ambanis and Tatas use their power, influence and cash to garner resources or projects, whether mining rights, gas fields, land, infrastructure projects or the electromagnetic waves known as spectrum that carry cellphone service.

As to the role of the media, the US Supreme Court Justice Louis Brandeis once said that "sunlight is the best disnifectant". Transparency is not possible when the mass media join the effort to block sunlight, as has been the case in India's telecom scandal. Instead of playing their role as watchdogs in a democracy, many in the Indian media have chosen to collaborate with corrupt politicians and greedy businessmen to enrich themselves. The Indian media are guilty of manufacuring consent in a favor of the powerful few against the interests of the vast majority of India's population that is among the poorest and the most deprived in the world.

To protect the future of democracy, sustain economic growth and ensure that the benefits of growth are shared equitably by India's population, emergence of an honest, transparent and ethical media are absolutely essential. I hope the sane members of the Indian media will now find a way to clean up their ranks and begin a serious self-policing effort based on a new set of sound standards of professional ethics.

Related Links:

Haq's Musings

Manufacturing Consent in India

Challenges of Indian Democracy

Poor, Hungry and Illiterate India

Radia Tapes and Transcripts of India's 2G Scandal

Friday, October 29, 2010

Most Indians and Pakistanis Work in Agriculture and Textile Sectors

About 60% of India's workforce is in agriculture. Textile industry is the second biggest employer, accounting for a fifth of India’s exports, and employs almost 10 percent of India’s workforce, or some 35 million people, and has the potential to add another 12 million new jobs --dwarfing the 1-2 million jobs created by the much-heralded IT and BPO sector, according to a World Bank report.

The largest number of people in other South Asian nations are also employed in the agriculture sector, followed by textile manufacturing as the second largest employer.

About 60% of India's workforce is engaged in agriculture, contributing about 16% of GDP, according to published data. Textile manufacturing claims the second largest employment and comprises 26% of manufacturing output. It accounts for a fifth of India’s exports, and employs almost 10 percent of India’s workforce, or some 35 million people, and has the potential to add another 12 million new jobs --dwarfing the 1-2 million jobs created by the much-heralded IT and BPO sector, according to a World Bank report. Even the most optimistic estimates by NASSCOM put the total direct and indirect employment in IT and ITES sectors at 10 million jobs.

The textile sector is crucial to India's economy. The textile industry contributed 4% of India's gross domestic product in the year that ended March 31, and accounted for 13.5% of Indian exports, bringing in $17.6 billion, according to the Wall Street Journal.

With the Indian rupee soaring — up 9 percent against the dollar in the last 16 months, textile exports are down 6.4 percent from a year earlier in the $10 billion Indian clothing industry, according to a recent report in the New York Times.

About 23% of the India's workforce is part of the services sector which accounted for 55% of the GDP in 2007. Within the service sector, the fastest growing segment is business services, contributing about 7% of GDP. It includes information technology enabled services (ITES), information technology (IT), business process outsourcing (BPO) etc. In 2000, it was one third of the total output of services.

Agriculture in Pakistan accounts for 19.4% of GDP and 42% of labor force, followed by services providing 53.4% of GDP and 38% employment, with the remainder 27.2% of GDP and 20% workers in manufacturing sector. Over half of Pakistan's manufacturing jobs are in the textile sector, making it the second biggest employer after agriculture.

The dire situation in India's agriculture sector has been epitomized by over 200,000 farmers' suicides in the last decade. And the rising Indian rupee is now hurting India's textile sector by making its exports more expensive in the world market.

Pakistan's agriculture and textile sectors have also suffered in the last two years. Reduced water flows from India followed by recent floods have adversely affected large swathes of Pakistan's farmland. And the current energy crisis combined with the economic slowdown have hit the textile industry particularly hard. The European Commission, the EU's executive, has recently approved tariff waivers on 75 categories of imports from Pakistan for up to three years, according to a report in the Wall Street Journal. The gesture followed an order by EU leaders wanting to demonstrate they're helping some 10 million Pakistanis left without shelter in the wake of floods.

Pakistan shipped about $4.2 billion of exports to EU last year. About 75% of Pakistani exports to EU are textiles, clothing, leather or related products, and those goods will make up a majority of the roughly $140 million in total extra trade the EU says the deal will generate from eliminating the EU tariffs.

Here is a quick comparison of different sectors of the economy in India and Pakistan in terms of employment and GDP contribution:

Country....Agri(emp/GDP)..Textiles..Other Mfg..Service(incl IT)

India........60%/16% ...........10%/4%.....7%/25%...........23%/55%

Pakistan......42%/20%...........12%/8%......8%/18%...........38%/54%

Assuming India's PPP GDP of $3.75 trillion (population 1.2 billion, nominal gdp $1.3 trillion) and Pakistan's $450 billion (population 175 million, nominal gdp $167 billion)), here is what I calculated in terms of per capita GDP in different sectors of the economy:

India vs. Pakistan: Per Capita GDP $3,125 PPP ($1,083 nom) vs. $2,570 ($955 nom)

Agriculture: $833 PPP ($288 nom) vs. $1,225 PPP ($454 nom)

Textiles: $1,242 ($433) vs. $1,714 ($636)

Non-Textile Mfg: $11,155 ($3,870) vs $5,785 ($2,142)

Services $7,246 ($2,590) vs $3,654 ($1356)

Data shows that the majority of Indians who work in agriculture and textiles are on average 50% poorer than their Pakistani counterparts, as also reflected in the under-$2 a day per capita income figures for 60% of Pakistanis and 76% of Indians.

Agriculture Value Added Per Worker in Constant 2000 US$ (Source: World Bank


It also shows that Indians in manufacturing and services sectors add almost twice as much value as Pakistanis, and produce significantly higher value goods and services than their Pakistani counterparts.

The income range in India is much wider from $883 to $11,155 accounting for the much bigger rich-poor gap relative to Pakistan's relatively narrower range from $1225 to $5,785.

The challenge for India is to improve its farmers' productivity and move some of them into higher value added sectors of the economy.

The challenge for Pakistan is to have its manufacturing and services sectors produce more goods and services of higher value, and continue to migrate more of its farmers into other sectors of the economy.

It's clear that farming and textiles continue to be the most important economic sectors with the biggest impact on the lives of the majority of ordinary citizens of India and Pakistan. And just as the US and EU look after their farmers, it is very important for South Asian governments to protect their farming and textile sectors even as they promote diversification of their economies.

Related Links:

Haq's Musings

Pakistan Textile Industry Report

Pakistan's Farmland Controversy
Peepli Live and India's Farmers' Suicides

Floods in Pakistan
Pakistan's Textile Woes

Agricultural Growth in India, Pakistan and Bangladesh

KPMG Report on Pakistan Economy 2010

India and Pakistan Contrasted
Pakistan's Major Business Sectors
Labor Laws: To Create Good Jobs, Reform Labor Regulations

Foreign Investors Buying Pakistani Farm Land
Is Leasing Agricultural Land to Foreigners a Good Idea?

Pakistan's Sugar Crisis and Dietary Habits

Wheat Research and Development in Pakistan

Pakistan's Water Crisis

Wheat Productivity, Efficiency and Sustainability

Agrarian Reform in Pakistan
Urbanization in Pakistan

Water Scarcity in Pakistan

Pakistan Agribusiness Report 2009

Pakistan to Lease 700,000 Acres to Arab States

Pakistan's Total Arable Land

Monday, October 25, 2010

South Asians Must Reduce Disease Burdens to Improve Prospects



Poverty, hunger, unsanitary or unsafe conditions and inadequate health care in South Asia's developing nations are exposing their citizens to high risk of a variety of diseases which may impact their intelligence. Every year, World Health Organization reports what it calls "Environmental Burden of Disease" in each country of the world in terms of disability adjusted life years (DALYs) per 1000 people and total number of deaths from diseases ranging from diarrhea and other infectious diseases to heart disease, road traffic injuries and different forms of cancer.



In the range of DALYs/1000 capita from 13 (lowest) to 289 (highest), WHO's latest data indicates that India is at 65 while Pakistan is slightly better at 58. In terms of total number of deaths per year from disease, India stands at 2.7 million deaths while Pakistani death toll is 318, 400 people. Among other South Asian nations, Afghanistan's DALYs/1000 is 255, Bangladesh 64 and Sri Lanka 61. By contrast, the DALYs/1000 figures are 14 for Singapore and 32 for China.

Recent research shows that there are potentially far reaching negative consequences for nations carrying high levels of disease burdens causing lower average intelligence among their current and future generations.

Published by the University of New Mexico and reported by Newsweek, new research shows that there is a link between lower IQs and prevalence of infectious diseases. Comparing data on national “disease burdens” (life years lost due to infectious diseases or DALYs) with average intelligence scores, the authors found a striking inverse correlation—around 67 percent. They also found that the cognitive ability is rising in some countries than in others, and IQ scores have risen as nations develop—a phenomenon known as the “Flynn effect.”



According to the UNM study's author Christopher Eppig and his colleagues, the human brain is the “most costly organ in the human body.” The Newsweek article adds that the "brainpower gobbles up close to 90 percent of a newborn’s energy. It stands to reason, then, that if something interferes with energy intake while the brain is growing, the impact could be serious and longlasting. And for vast swaths of the globe, the biggest threat to a child’s body—and hence brain—is parasitic infection. These illnesses threaten brain development in several ways. They can directly attack live tissue, which the body must then strain to replace. They can invade the digestive tract and block nutritional uptake. They can hijack the body’s cells for their own reproduction. And then there’s the energy diverted to the immune system to fight the infection. Out of all the parasites, the diarrheal ones may be the gravest threat—they can prevent the body from getting any nutrients at all".

Looking at the situation in South Asia, it appears from the WHO data that Pakistan is doing a bit better than India in 12 out of 14 disease groups ranging from diarrhea to heart disease to intentional injuries, and it is equal for the remaining two (Malaria and Asthma).

A detailed WHO report on World Health Statistics for 2010 assesses and compares its member nations on the basis of nine criteria including mortality and burden of disease, cause-specific mortality, selected infectious diseases, health service coverage, risk factors, health workforce-infrastructure, health expenditures and demographic and socioeconomic statistics. It shows that both India and Pakistan have some serious challenges to overcome to have any chance of meeting health-related Millennium Development Goals (MDGs 4, 5 and 6).

Related Links:

Haq's Musings

Infectious Diseases Kill Millions in South Asia

Infectious Diseases Cause Low IQ

Malnutrition Challenge in India and Pakistan

Hunger: India's Growth Story

WHO Report 2010 Blogger Analysis

Syeda Hamida of Indian Planning Commission Says India Worse Than Pakistan and Bangladesh

Global Hunger Index Report 2009

Grinding Poverty in Resurgent India

WRI Report on BOP Housing Market

Food, Clothing and Shelter For All

India's Family Health Survey

Is India a Nutritional Weakling?

Asian Gains in World's Top Universities

South Asia Slipping in Human Development

Monday, October 18, 2010

India's Other Growth Story

The International Food Policy Research Institute (IFPRI) reported last week that hunger in India has grown over the last three years.

IFPRI said India's hunger index score has worsened over the last three years from 23.7 to 23.9 to 24.1 and its ranking moved from 66 to 65 to 67 on a list of 84 nations....while Pakistan's hunger index score has improved over the same period reported since 2008 from 21.7 (2008) to 21.0 (2009) to 19.1 (2010) and its ranking has risen from 61 to 58 to 52.

Here's an Indian blogger Abhinav who blogged last February about "Indian Growth Story Nobody Wants To Talk About":

Today’s news on the death of fifty people from hunger at Balangir in Orissa is a grim reminder of the little growth story that India has had. It clearly indicates many negative facets of our system, bureaucracy and the public at large. As per the World Food Program, almost half of the world’s population who are deprived of food live in India. Another website of a well known NGO (http://www.bread.org/learn/hunger-basics/hunger-facts-international.html) offers a grim picture of this particular issue especially when the same is getting the least attention by the policy makers across the world. If 50% of the starving residents belong to India, we do not need to look beyond our borders to nail the culprits.

More than six decades post independence and being counted as one of the key growth engines to the world economy, why are hunger deaths still happening in India? Is it because there is a scarcity of food to offer the ones hungry? Clearly that is not the case.

Those leading a life above the poverty line pay taxes to the Central and the State Governments so that it is used for public facilities, amenities and for the benefit of those living the poverty line. Obviously, those in power have to let go of their hunger for corruption or we have to watch the country going down the drains. Otherwise, it would constantly fail to administer the proper distribution of food and nutrition to people who matter.

We all talk about “3 idiots” and how a college principal is called a murderer who is responsible for the suicide of the students in his college. In the same way, aren’t the following responsible for the demise of people from hunger in our country?

1. Politicians responsible for making food security and food distribution laws.
2. Governmental agencies responsible for proper storage of food grains.
3. Bureaucrats responsible for administration and distribution amongst the right people.
4. Local security agencies which must maintain law and order to ensure proper distribution.

And why is it that they are not punished for these deaths. We have poor being imprisoned for thefts but those in power prosper, while the poor suffer. Is there any accountability for what is being and can be done to break this nexus? Would those in urban cities who are fortunate enough to be writing and reading this blog do something about it? Would they start taking candle light walks in memory of those unfortunate who die in India of hunger every day? Will they go beyond the regular candle marches or force those in power to take responsibility and amend their ways?


Related Links:

Haq's Musings

India Ranks Below China, Pakistan in Global Hunger Index

Low Status of Indian Women

India's Commonwealth Games Mess

Disaster Dampens Spirits on Pakistan's 63rd Independence Day

UNESCO Education For All Report 2010

India's Arms Build-up: Guns Versus Bread

South Asia Slipping in Human Development

World Hunger Index 2009

Challenges of 2010-2020 in South Asia

India and Pakistan Contrasted 2010

Food, Clothing and Shelter in India and Pakistan

Introduction to Defense Economics

Cost of Afghan War: $50 Million Per Dead Taliban

US War in Afghanistan entered its tenth year this week, making it the longest war in US history.

What began as a US-Saudi-Pakistani sponsored anti-Soviet jihad in Afghanistan in the 1980s, and led to the terrorist attacks on Sept 11, 2001, is now threatening to engulf Africa, Central Asia, Middle East and South Asia in its growing flames. And its effects are continuing to be strongly felt in America and Europe.

The victorious veterans of the 1980s Afghan resistance have successfully indoctrinated and trained several generations of battle-hardened global jihadis to take on the United States and various pro-Western governments in Islamic nations in all parts of the world. This trend is accelerating as the US steps up its attacks in Afghanistan and Pakistan, according a recent report in Newsweek magazine. Here is an excerpt from its report:

"The Central Asians retreated to Afghanistan and Pakistan in the late 1990s after failing to topple their home governments. Now they seem ready to try again, using guerrilla tactics and know-how they’ve picked up from the Taliban about improvised explosive devices. Small groups of Tajik and Uzbek militants began moving into Tajikistan in late winter 2009, says a Taliban subcommander in the northern Afghan province of Kunduz. In Kunduz they joined up with fighters from the Islamic Movement of Uzbekistan (IMU), a Qaeda-linked group active there and in Tajikistan. “Once these first groups made it back safely [to Tajikistan], they signaled to militants here in Kunduz and even in Pakistan’s tribal areas that the journey was possible,” the subcommander, who didn’t want to be named for security reasons, tells Newsweek."

As the war expands, it is now worth pondering over the current and future costs of what appears to be an interminable war on terror, and consider alternative approaches, including greater use of soft power.

Even if most Americans choose to assign no value to the lives of many poor Afghan and Pakistani civilians killed as "collateral", here is an analysis by a blogger at kabulpress.org of the exorbitant financial cost of the US war in Afghanistan to the American taxpayers:

The estimated cost to kill each Taliban is as high as $100 million, with a conservative estimate being $50 million.

1. Taliban Field Strength: 35,000 troops

2. Taliban Killed Per Year by Coalition forces: 2,000 (best available information)

3. Pentagon Direct Costs for Afghan War for 2010: $100 billion

4. Pentagon Indirect Costs for Afghan War for 2010: $100 billion

Using the fact that 2,000 Taliban are being killed each year and that the Pentagon spends $200 billion per year on the war in Afghanistan, one simply has to divide one number into the other. That calculation reveals that $100 million is being spent to kill each Taliban soldier. In order to be conservative, the author decided to double the number of Taliban being killed each year by U.S. and NATO forces (although the likelihood of such being true is unlikely). This reduces the cost to kill each Taliban to $50 million, which is the title of this article. The final number is outrageously high regardless of how one calculates it.

To put this information another way, using the conservative estimate of $50 million to kill each Taliban:

It costs the American taxpayers $1 billion to kill 20 Taliban

As the U.S. military estimates there to be 35,000 hard-core Taliban and assuming that no reinforcements and replacements will arrive from Pakistan and Iran:

Just killing the existing Taliban would cost $1.75 Trillion, not including the growing numbers of new Taliban recruits joining every day.

The reason for these exorbitant costs is that United States has the world’s most mechanized, computerized, weaponized and synchronized military, not to mention the most pampered (at least at Forward Operating Bases). An estimated 150,000 civilian contractors support, protect, feed and cater to the American personnel in Afghanistan, which is an astonishing number. The Americans enjoy such perks and distinctions in part because no other country is willing to pay (waste) so much money on their military.

The ponderous American war machine is a logistics nightmare and a maintenance train wreck. It is also part-myth. This author served at a senior level within the U.S. Air Force. Air Force “smart” bombs are no way near as consistently accurate as the Pentagon boasts; Army mortars remain inaccurate; even standard American field rifles are frequently outmatched by Taliban weapons, which have a longer range. The American public would pale if it actually learned the full story about the poor quality of the weapons and equipment that are being purchased with its tax dollars. The Taliban’s best ally within the United States may be the Pentagon, whose contempt for fiscal responsibility and accountability may force a premature U.S. withdrawal from Afghanistan as the Americans cannot continue to fund these Pentagon excesses.


The blogger argues that "if President Obama refuses to drastically reform the Pentagon’s inefficient way of making war, he may conclude that the Taliban is simply too expensive an enemy to fight. He would then have little choice but to abandon the Afghan people to the Taliban’s “Super-Soldiers.” That would be an intolerable disgrace".

Regardless of the killing efficiency of Pentagon's war machine, I do not think that the United States can win this war by military means alone. It's time for the American leadership to go beyond rhetoric and seriously implement its 80/20 strategy. The 80/ 20 rule, as outlined by General Petraeus, calls for 80% emphasis on the political/economic effort backed by 20% military component to fight the Taliban insurgency in both Pakistan and Afghanistan. This rule has led many to speculate about a US-backed "Marshall Plan" style effort to help Afghanistan and Pakistan expand the economic opportunity for their young and growing population, vulner able to exploitation by extremists.

I believe that the US has a stark choice in Afghanistan: Either spend %1.75 trillion on a losing war, or $200 billion in development funds to bring peace and honorable exit.

Just the long-neglected education and heathcare sectors can easily absorb tens of billions of dollars a year in Pakistan through government and non-government agencies.

In spite of all of the corruption and inefficiencies, the money will still be better spent on improving the lives of common people to live in peace than on war where the private defense contractors are looting the taxpayers in broad day light.

The need is great, and the funds are scarce in infrastructure projects. Massive funds are needed in clean water, sanitation, roads, bridges, power plants, schools and clinics projects to meet the UN Millennium Development Goals.

If America can get people busy doing productive work, there will be no need to kill them to try and win wars.

I highly recommend books like "Three Cups of Tea" and "Turning Stones into Schools" by Greg Mortenson to get a sense of what I am talking about.


Related Links:

Haq's Musings

80/20 Strategy and Marshall Plan For Pakistan

UN Millennium Development Goals

Twentieth Anniversary of Soviet Defeat in Afghanistan

US Afghan Exit: Trigger for India to Talk to Pakistan?

Facts and Myths about Afghanistan and Pakistan

Obama's New Regional Strategy

Webchat On Obama's New Regional Strategy

Steph en Cohen on India-Pakistan Relations

Obama's Afghan Exit Strategy

Obama's New Regional Strategy in Afghanistan and Pakistan

US Escalating Covert War in Pakistan?

Can India "Do a Lebanon in Pakistan?

20th Anniversary of Soviet Defeat in Afghanistan

Growing Insurgency in Swat

Afghan War and Collapse of the Soviet Union

US, NATO Fighting to Stalemate in Afghanistan?

FATA Faceoff Fears

FATA Raid Charades

Friday, October 15, 2010

Hunger and Poverty in Pakistan 2000-2008

Poverty and hunger often go together. The affordability of food is usually a bigger issue than its availability in most poor nations, according to research published by Indian-born economist and Nobel Laureate Dr. Amartya Sen. With few exceptions, rising incomes and reductions in poverty rates are known to lead to lower hunger levels.



Pakistan experienced significant declines in poverty and hunger from the year 2000 until 2008, according to figures published by the World Bank and the International Food Policy Research Institute in their separate reports published recently.

Per Capita PPP GDP


As per capita income rose over 50% to nearly $2500 in purchasing power, poverty in Pakistan decreased from about 34.5% to 17.2% and hunger went down with it during Musharraf years from 2000 to 2008, as reported by World Bank and IFPRI as lagging indicators. The global hunger index score, published annually by the International Food Policy Research Institute(IFPRI), is a number between zero and 100, with lower figure signifying less hunger.



Based on hunger data collected from 2003 to 2008, IFPRI reported that Pakistan's hunger index score improved over the last three consecutive years reported since 2008 from 21.7 (2008) to 21.0 (2009) to 19.1 (2010) and its ranking rose from 61 to 58 to 52. During the same period, India's index score worsened from 23.7 to 23.9 to 24.1 and its ranking moved from 66 to 65 to 67 on a list of 84 nations.

At 22.67% improvement in its hunger score since 1990, Pakistan has improved less than India's 23.97% reduction, explained mainly by little or no progress in Pakistan during the lost decade of the 1990s under Bhutto and Sharif governments.

In spite of the progress Pakistan made until 2008, the hunger situation in Pakistan (and Sri Lanka) is still rated as serious on a scale ranging from low level hunger to extremely alarming, and for the rest of South Asia, including India, the situation is described as alarming by the world hunger report 2010.



On the 11th anniversary of General Musharraf's coup this year, the dominant and self-serving political rhetoric on the airwaves of Pakistan completely obscures Musharraf government's positive role in significantly enhancing Pakistan's economic growth, and reducing hunger and poverty on his watch. Instead, Musharraf's enemies are focusing entirely on his missteps to try and hide their own major failures since 2008...failures that have brought Pakistan's economy near collapse, reminiscent of the bad old days of the 1990s that ended with Musharraf's coup in 1999. How long can they fool the people of Pakistan? Only time will tell.

Related Links:

Haq's Musings

IMF Country Report on Pakistan Poverty

Haq's Musings

Musharraf's Coup Revived Pakistan's Economy

State Bank of Pakistan Quarterly Reports

World Bank Poverty Report on Pakistan

Musharraf's Economic Legacy

Ishrat Husain: Structural Reforms in Pakistan's Economy

Pakistan's Economic Performance 2008-2010

Incompetence Worse Than Corruption in Pakistan

Pakistan's Circular Debt and Load Shedding

US Fears Aid Will Feed Graft in Pakistan

Pakistan Swallows IMF's Bitter Medicine

Shaukat Aziz's Economic Legacy

Pakistan's Energy Crisis

Karachi Tops Mumbai in Stock Performance

India Pakistan Contrasted 2010

Pakistan's Foreign Visitors Pleasantly Surprised

The "Poor" Neighbor by William Dalrymple

Pakistan's Modern Infrastructure

Video: Who Says Pakistan Is a Failed State?

India Worse Than Pakistan, Bangladesh on Nutrition

UNDP Reports Pakistan Poverty Declined to 17 Percent

Pakistan's Choice: Talibanization or Globalization

Pakistan's Financial Services Sector

Pakistan's Decade 1999-2009

Pakistan's Economic History 1947-2010

South Asia Slipping in Human Development

Asia Gains in Top Asian Universities

BSE-Key Statistics

Pakistan's Multi-Billion Dollar IT Industry

India-Pakistan Military Comparison

Food, Clothing and Shelter in India and Pakistan

Pakistan Energy Crisis

IMF-Pakistan Memorandum of Economic and Financial Policies

2010 World Hunger Index Report

Thursday, October 14, 2010

Resurgent India's Success at Commonwealth Games 2010

Is there a correlation between a nation's economic performance and its success at international sports competitions? Has India's economic resurgence contributed to its achieving remarkable second place status on the medals table at the Commonwealth Games 2010 that just concluded in New Delhi?



Economics professor Daniel Johnson and his student Ms. Ayfer Ali have developed a model to predict a country's Olympic performance using per-capita income (the economic output per person), the nation's population, its political structure, its climate and the host nation advantage. The Johnson-Ali model was described in a paper, “A Tale of Two Seasons: Participation and Medal Counts at the Summer and Winter Olympics,” that was written in 1999 with Ayfer Ali, while Johnson was on sabbatical at Harvard University and Ali was a student. It was published in Social Science Quarterly in December 2004."It's just pure economics," Johnson insists. "I know nothing about the athletes. And even if I did, I didn't include it."

"The home-field advantage is not trivial. That's why we structure playoffs the way we do," says Johnson.

Over the past five Olympics since 2000, Johnson-Ali model has demonstrated 94% accuracy between predicted and actual national medal counts. For gold medal wins, the correlation is 87%. For the 2008 Beijing Games, Johnson predicted the U.S. team would win 103 medals in total, 33 of them gold. The Americans ended up winning 110 medals, 36 being gold. With its host nation advantage, China did better than Johnson's forecast. Johnson predicted Chinese athletes would win 89 medals; they took 100. He expected China to earn 44 gold medals by the time of the closing ceremonies at the Bird's Nest in Beijing. The Chinese collected a list-leading 51 golds, besting the model's expectations.

The Johnson-Ali model has not done well for nations other than the top 10. For example, Pakistan, which Johnson suggested would win seven medals, including three golds, won no medals at all at Athens Olympics. In fact, Pakistan has won three golds,three silvers and four bronze medals, a total of 10 medals in the entire history of its participation in Olympics movement since 1948. Eight out of the ten medals were won by Pakistan's field hockey team. The last Olympic medal Pakistan won was a bronze in 1992. India has won nine golds,four silvers and seven bronze medals, a total of 20 medals in its entire Olympics history which began in 1927 while Sri Lanka has won two medals in its history at the Olympics, one silver and one bronze. At Beijing in 2008, India won three medals, including one gold and two bronzes, and Afghanistan won its first-ever Olympic medal, a bronze. Bangladesh is the most populous country in the world never to have won an Olympic medal. Nepal won a bronze medal in Taekwondo at Seoul in 1988, but it was won in an exhibition match not counted among official medals.

Eighty of 205 Olympic committees, representing about 40 percent of the world's nations, have never won an Olympic medal.

Now let's see if Johnson-Ali model has any relevance to the results of Delhi CWG 2010. Representing the host nation, Indian athletes have performed very well, winning second spot on the medals table with 101 medals, including 38 golds, beating England to win the second place with just one more gold medal than England's 37 golds.

As expected, Australians top the medals table with 177 medals, including 74 golds, although down significantly from 221 medals they won in 2006, according to the BBC.

Indians double their medal count to 101 this year from 50 medals in 2006.

England also make gains, winning 142 medals this year, up from 110 in 2006.

Pakistan ranks 17th, on a list of 37 medal winning nations. Pakistan's medal count is flat at 5 from 2006, including 2 golds.

In terms of population per medal, Nauru (2 medals) tops the list with one medal per 5000 people.

India and Pakistan are both near the bottom with one medal per 11 million and 33 million citizens respectively.

Bangladesh is at the very bottom with its one bronze medal for its entire population of 162 million people.

In terms of GDP, Nauru tops with 1 medal per $119 million.

India (101 medals) and Pakistan (5 medals) are near the bottom with $12 billion and $33 billion respectively.

Bangladesh is last with just one bronze for its entire GDP of $94 billion.

Indians deserve to be congratulated for leveraging their rapid economic growth in recent years to achieve remarkable success at the 2010 Commonwealth Games in New Delhi. However, in terms of India's GDP and the size of its population, the Indians still have a long way to go to match the performance of China and OECD member nations at major international sports competitions like the Olympics.

Many of India's best athletes at CWG 2010 are women, including badminton star Saina Nehwal, who picked up the badminton singles gold, putting India in second place ahead of England on the medals table. Many of India's medal-winning women are from the northern state of Haryana, which has some of the worst rates of female foeticide in the country. Let us hope that these girls drive positive social change in this benighted region where the politicians have failed.

With rising enthusiasm for competitive sports and its world-class training facilities built for Delhi Commonwealth Games, I believe India has taken a giant step forward to become a sports powerhouse ready to compete and win in major international sporting events in future.

Related Links:

Haq's Musings

India, Pakistan and Johnson-Ali Model

BBC's Commonwealth Games 2010 Table

India Ranks Below China, Pakistan in Global Hunger Index

Low Status of Indian Women

India's Commonwealth Games Mess

Disaster Dampens Spirits on Pakistan's 63rd Independence Day

UNESCO Education For All Report 2010

India's Arms Build-up: Guns Versus Bread

South Asia Slipping in Human Development

World Hunger Index 2009

Challenges of 2010-2020 in South Asia

India and Pakistan Contrasted 2010

Food, Clothing and Shelter in India and Pakistan

Introduction to Defense Economics