Saturday, January 29, 2011

Will Foreign Capital Inflows Buoy KSE-100 in 2011?

"The bottom line is that Pakistan is not going to go away. We want to buy stocks that look cheap as prices come down as a result of the flood."
Mark Mobius, Head, Templeton Asset Management Ltd


Pakistan's main shares index KSE-100 rose 28% (26% in US dollar terms) in year 2010, as profits registered 14% growth and dividend yields of 5.2% in the companies making up the index.

The market gains were driven by significant foreign buying, particularly by insitutional investors after the massive summer floods in KP, Punjab and Sindh provinces. Foreign institutional investors bought $1.2 billion worth of shares, and sold about $687 million, with the net FII capital inflow of $522 million during the year. One example of renewed foreign institutional buying after the post-floods market is Mark Mobius of the Templeton Asset Management Ltd, as reported by Businessweek. “There will be an impact on growth but company valuations are very, very attractive now and therefore we continue to invest in Pakistan despite all the negatives,” Mobius said in an interview in Singapore. “The bottom line is that Pakistan is not going to go away. We want to buy stocks that look cheap as prices come down as a result of the flood.”

As of Dec 31, 2010, Mobius had 4.8% of his $17 billion Templeton Asian Growth Fund invested in Pakistan.



The highest performing sectors were food and beverage (65%), oil and gas (40%), chemicals (30%) and personal goods(20%). These were followed by smaller gains in electricity, fixed-line telecom, automobiles, and construction materials, according to JS Global research. Oil and gas shares now make up 36% of KSE's total marke cap, a major shift from 2007 when financial services made up 31% of the Karachi Stock Exchange market cap of about $40 billion.



Even with lower than historic average gains in a challenging year, KSE-100 easily beat 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%.

After the 26% gain in 2010, the KSE-100 shares still trade at PE ratio of just 8, significantly discounted relative to KSE's historic price-earnings multiple of 10, and other regional markets of Shanghai and Manila at 15, and Mumbai at about 20.

While the big interest rate hikes by Pakistan's central bank (SBP) to fight inflation have dramatically reduced liquidity for local investors, the massive economic stimulus (aka quantative easing policy to jumpstart the US economy) by the US Federal Reserve has unleashed a torrent of US dollars looking globally for good returns on investment. This is likely to continue to push shares in the emerging markets higher through at least 2011.

The problem with the foreign institutional investment (FII) is that it can be very destabilizing for an emerging economy. It is often described as hot money, and it can leave as quickly as it comes in. 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.

In Pakistan's case, however, the amount of FII has so far been very small relative to its market capitalization and the size of the country's GDP. If foreign portfolio investment dollars continue to come in at the same or even a bit higher rate in 2011 as they did last year, it will likely result in a healthy situation in providing necessary liquidity and help push the market up again this year.

Other factors that will the affect the KSE market performance this year include:

1. Continued rise in exports, overseas Pakistanis' remittances, and other inflows for a healthy current account balance which ended in surplus of $26 million in 2010.

2. Enhanced domestic liquidity expected from the launch of new leveraged financial products in 2011.

3. Movement toward better manangement of the energy crisis leading to fewer blackouts and brownouts.

4. Progress on balancing the budget, with better tax collection and higher tax receipts in 2011.

5. Implementation of the IMF program, stabilization of prices, reduction in interest rates, and rising foreign exchange reserves.

6. Improvement in the overall security situation with perceptible reduction in violence.

Here's a video on how to invest in Pakistan:



Related Links:

Haq's Musings

Pakistan's 2010-2011 Budget Priorities

Pakistan's Exports and Remittances Rise to New Highs

Pakistan's KSE Outperforms BRIC Exchanges in 2010

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

Copper, Gold Deposits Worth $500 Billion at Reko Diq, Pakistan

China's Trade and Investment in South Asia

India's Twin Deficits

Pakistan's Economy 2008-2010

Sunday, January 23, 2011

High Food Prices Boost Pakistan's Rural Economy

Since taking the reins of power almost three years ago, the coalition government in Islamabad, which is led by the Pakistan Peoples' Party, has been increasing the support prices of wheat and other agricultural commodities every year. This policy has had the following effects:

1. It is transferring the additional new income of about Rs. 300 billion in the current fiscal year alone to the ruling party's power base of landowners in small towns and villages, from those working in the urban industrial and service sectors.

2. It has driven up food prices dramatically for all Pakistanis, particularly hurting the poor people the most.

3. It has reduced government tax revenues because the agricultural income is not taxed by either the federal or the provincial governments, and resulted in growing budget deficits.

4. It has significantly increased demand for consumer and industrial goods and services in the rural areas.

5. It has forced the State Bank of Pakistan to maintain a tight monetray policy which is drying up the much-needed credit for the industries and the average consumers alike.

6. It's likely to slow rural-to-urban migration and relieve pressure on major cities and their inadequate infrastructure.



In 2008, the government pushed the procurement price of wheat up from Rs. 625 per 40 kg to Rs. 950 per 40 kg. This action immediately triggered inflationary pressures that have continued to persist as food accounts for just over 40% of Pakistan's consumer price index. According to State Bank of Pakistan (SBP) analysis, cumulative price of wheat surged by 120 per cent since 2008, far higher than the 40 per cent between 2003 and 2007. it is also many times greater than the international market price increase of 22 per cent for wheat in the same period. Similarly, sugar prices have surged 184 per cent higher since 2008, compared with 46 per cent increase during 2003-07.

The transfer of additional Rs. 300 billion to Pakistan's agriculture sector during the current fiscal year 2010-2011 by higher prices of agriculture produce and direct flood compensation to 1.6 million affected families at the rate of one hundred thousands rupees each will boost economic confidence in the countryside. It will generate rural demand for consumer items including consumer durables such as fans, TVs, motorcycles, cars, refrigerators, etc.

The big feudal landowners have been the biggest beneficiaries of the PPP's gift of high crop prices. However, the policy has helped small farmers as well, as shown by a recent survey reported by The Nation newspaper. The survey of 300 farmers in Sind's Sukkur district was conducted by Sukkur Institute of Business Administration for the State Bank of Pakistan (SBP). It has highlighted the following about district's rural economy:

1. In Sukkur district, majority of the farmers are subsistence farmers. 31 percent of them own less than 5 acres of land, and another 34 percent own up to 12.5 acres of land.

2. They spend an average of Rs. 1,611 a month on their children's education, with some of them spending up to Rs. 12,000 a month.

3. Wheat, rice, cotton and sugarcane are the major crops being cultivated by 93 per cent, 58 percent, 37 percent and 12 percent of the respondent farmers in that order.

4. 24 percent of them are also growing fruits including dates, mangoes and bananas.

5. 22 percent of the respondent own livestock.

6. About half (49 percent) use privately purchased seeds for wheat cultivation, 33 perecent use their own retained seed and 18 perecent use the seed purchased from Public Sector Seed Corporations.

7. On average, a farmer uses 96.73 Kg chemical fertilizer per acre with the maximum and minimum of 350 Kg and 40 Kg respectively. The average per acre cost of wheat production is Rs. 10,670.

8. All 300 farmers are using tractors for cultivation and preparing land for crops, and some are using tractors for fetching their crop produce to market.

Already, the upside of the government policy is that Pakistan's rural economy is being spurred by high crop prices that may help the GDP growth this year and next. Increased farm incomes are whetting the rural households' appetite for industrial and consumer goods in 2011 and beyond.



A key indicator of growing rural economy is the double digit increase in the sale of tractors. Millat Tractors Limited, the largest supplier of tractors in Pakistan, had record sales of 41,500 tractors in the calendar year 2010, an increase of nearly 11% over 37,537 tractors sold in 2009. Of these 41,500 tractors, a record 5000 tractors were sold in the month of Dec, 2010 alone, acording to The Nation newspaper. Millat sold 10,000 units under Benazir Tractor Scheme and 5,000 units under the Sindh government tractor scheme in the last fiscal year. Another 10,000 units were sold as part of the Punjab government scheme, 70 per cent of the units were sold, according to Dawn News.

Earlier, the sales of Fiat and Massey Ferguson tractors grew to 1,632 and 3,194 units in September 2010 from 537 and 3,100 in August 2010. The overall sales of these tractors rose to 13,931 during July-September 2010 as compared to 12,690 units in the same period of 2009, according to Dawn news.

Over 50 per cent of the motorcycles and 40-45 per cent of cars in Pakistan are purchased by people living in rural areas. Total car sales in July-September 2010(including Suzuki Bolan) rose by 12 per cent to 30,030 units as compared to 26,812 units in the same period of 2009, according to Pakistan Automotive Manufactureres Association PAMA). Furqan Punjani of Topline Securities said car sales are expected to reach 154,000 units by the end of June 2011.

In addition to rising demand for cars and tractors, there is also an upward trend in two-wheeler sales. The cumulative sales of motorcycles in July-September 2010 rose to 126,701 units from 105,862 units in the same period of 2009.

While it is good to see Pakistan's rural farm economy perk up, it is also important to recognize that the overall national economic outlook can not improve significantly unless the growing budget deficits and rising inflation are brought under control. And this will require the ruling feudal elite to pitch in by paying their fair share of income tax on their rising farm incomes. It is time for them to lead by example.

Related Links:

Haq's Musings

Pakistan's Exports and Remittances Rise to New Highs

Sugar Crisis in Pakistan

Agricultural Growth in India, Pakistan and Bangladesh

Pakistan's Rural Economic Survey

Pakistan's KSE Outperforms BRIC Exchanges in 2010

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

World Bank Report on Rural Poverty in Pakistan

USAID Report on Pakistan Food & Agriculture

Copper, Gold Deposits Worth $500 Billion at Reko Diq, Pakistan

China's Trade and Investment in South Asia

India's Twin Deficits

Pakistan's Economy 2008-2010

Tuesday, January 18, 2011

Pakistan's Silver Lining in Rising Exports, Remittances

In addition to significant foreign institutional investments (FII) in Karachi shares last year, the reports of surging remittances by overseas Pakistanis and the nation's growing exports are the only two other pieces of good news amidst an avalance of bad news on the economic front in Pakistan in 2010.

The State Bank of Pakistan has reported that overseas Pakistanis sent home $5.291 billion during July-Dec, 2010, an increase of $761 million or 17 per cent year over year, according to Pakistan's Dawn newspaper.

Remittances of $863 million were sent by overseas Pakistanis last month, up 23.72 per cent or $165 million compared to December, 2009.

Exports in the July-December 2010 touched almost $11 billion – $1.8 billion, or 20.6per cent, higher than last year’s exports in the corresponding period. Meanwhile, imports stood at $19.2 billion, marking a growth of 19.6 per cent, or $3.2 billion, in the first half, according to the Express Tribune.

Pakistani government has been relying heavily on remittances by overseas Pakistanis to fund the massive trade imbalance, which exceeded $8 billion during the first six months of this fiscal.

The increased remittances and rising exports have helped bring down the nation's current account deficit to $504 million for six months, or 0.6 percent of GDP, about 30% lower than the same period in the previous year.

Foreign direct investment (FDI) declined 15.5 per centin the first six months of the current fiscal year to $828.5 million from $968.9 million in the same period last year, according to the Nation quoting figures from the State Bank of Pakistan.

However, in spite of Pakistan's multiple serious crises, the foreign buyers have continued to be relatively sanguine about Pakistan's prospects.

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.

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



Related Links:

Haq's Musings

Pakistan's KSE Outperforms BRIC Exchanges in 2010

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

Pakistan Planning Commission

Copper, Gold Deposits Worth $500 Billion at Reko Diq, Pakistan

China's Trade and Investment in South Asia

India's Twin Deficits

Pakistan's Economy 2008-2010

Friday, January 14, 2011

Mining Rights for Gold, Copper and Rare Earths in Pakistan

The sale of Reko Diq mining rights is currently being reviewed by Pakistan Supreme Court in response to allegations of lack of transprarency. The entire discussion in the courtroom is primarily centered on valuations and estimates of traditional metals like gold and copper. The second topic of discussion in the apex court is about the absence of any contract provisions for development of downstream job-creating industries to extract these metals.

What is conspicuously absent from the debate is the potential for extraction at Reko Diq of rare earth elements that are even more precious and in much greater and growing demand for the latest high-tech equipment and batteries for all-electric autos, communications, and other applications than traditional precious metals like gold and silver. It is the estimates of these rare earths at Reqo Diq that could put the value of the contract at considerably more than the current best estimates of $500 billion for copper and gold.

Recent trade disputes between China and its major trading partners in the United States, Europe and Japan have been the result of China restricting rare earth exports.

A current production Toyota Prius nickel metal hydride battery pack uses 30 kilograms of nickel, 2 kilograms of cobalt and 12 kilograms of lanthanum because the active hydrogen storage alloy in the battery is either LaNi4.5Co0.5 or (Ce, La, Nd, Pr)Ni5. The Prius assembly plant in Japan has so far used one and 1.5 million rechargeable nickel metal hydride battery packs and achieved with them some of the lowest numbers of service issues ever seen in the OEM automotive industry. In fact most of the original Prius rechargeable nickel metal hydride battery packs have exceeded their 8-year 100,000 mile warranty and are still functioning, according to Resource Investor website.



China controls 95% of the world’s supply of rare earth elements, a class of ores used not just in Toyota Prius electric motors and batteries but in a wide range of high-technology applications, from sonar systems to wind turbines, mobile phones and fluorescent lights.

All this gives China an extraordinary - some might say unfair - advantage to lead the race to dominate the manufacture of cutting-edge technology, according to the Wall Street Journal. Even before any major technology partnership announcements, there are reports that the legendary US investor Warren Buffet is investing in BYD, an obscure Chinese battery, mobile phone, and electric car company.

Here is how an expert who asked not to be named explained the mining potential in Balochistan:

"The Pegmatite rock that covers much of Balochistan (and other parts of Pakistan as well) has several different gems, in it which have been mined for a long time. These are easy to visualize as they differ in color from the rest of the rock, and can be removed with a small geologist's hammer. Pegmatite, though, also contains uranium which can be separated using a Geiger Counter, and rare metals and rare earths. Some of these like Lithium can be separated relatively easily. Others like Samarium and Dysprosium are vastly more difficult to separate because you need X-Ray equipment to help identify them. Also, their presence is very small - that is why they are classed as "rare." The presence of many of these metals was not known to science until recently and until the Japanese began to use them in electronics, hardly any effort was made to mine them. Now, of course, they are all the rage because they have been found especially useful in the latest "green" generation equipment as well as in defense and other applications. Indeed, until China banned their sale to Japan, no one really even bothered about them - it suited the Japanese to remain quiet as they were getting very good prices for these resources from an unaware Chinese, and the same thing is now happening in other parts of the world, in Pakistan in this case.

Much of the testing that is involved here is difficult and requires very advanced technical equipment, and even methods like gas spectrometry etc may not help identify materials that exist in extremely small percentages in soil or rock. In India for example, some of these metal reserves were not known until the USGS first and then the Russians helped analyze soil and rocks across the country. If nothing else, the Indians formed a government owned company called Indian Rare earths Limited which comes under the Atomic Energy Commission and is directly under the Prime Minister of India. They do seem to have handled the conservation and exploitation of these reserves far better than is being done in Pakistan."


Given the potential for tremendous mineral wealth at Reqo Diq, Saindak and other similar sites in Balochistan and elsewhere in Pakistan, it is extremely important for the Supreme Court to insist on an independent panel of experts to evaluate it, and to base court orders on the findings of such panel. How the Supreme Court tackles these issues now will have a significant impact on the future well-being of Pakistan in terms of the availablity of public funds for spending on education, health care and other badly needed human development projects in Balochistan and elsewhere in the country.

Here is a video clip from GeoTV on Reko Diq:



Related Links:

Haq's Musings

Pakistan's Mineral Wealth

China's Electric Ambitions

Buffet Investing in Chinese Battery Maker

Remote Sensing Oil and Gas Fields in Pakistan

Pakistan's Mineral Yearbook 2005

US, NATO Fighting to Stalemate in Afghanistan

South Asia Slipping in Human Development

Abundant, Cheap Coal Electricity in Pakistan

Car Battery Battle Between Li-on and Nickel Metal Hydride

Auto Industry Prospects in India, Pakistan and China

Sunday, January 9, 2011

Can India Sustain Economic Growth Amidst Exploding Population and Depleting Resources?

India is expected to surpass China as the world's most populous nation by 2025. As the Indian population rises rapidly amidst its depleting land and water resources, the widespread hunger problem could grow worse unless serious steps are taken now to remedy the situation.





The International Food Policy Research Institute (IFPRI) reported last year 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.



In 2011, the situation in India is only getting worse with double-digit food inflation and growing shortages of basics like onions.

With the growing population and worsening water shortages, the prognosis for hunger in India is not good, according to the author of National Geographics cover story in its latest issue on population.

India is ranked 33rd and Pakistan 39th among the most overcrowded nations of the world by Overpopulation Index published by the Optimum Population Trust based in the United Kingdom. The index measures overcrowding based on the size of the population and the resources available to sustain it.

India has a dependency percentage of 51.6 per cent on other nations and an ecological footprint of 0.77. The index calculates that India is overpopulated by 594.32 million people. Pakistan has a dependency percentage of 49.9 per cent on other nations and an ecological footprint of 0.75. The index calculates that Pakistan is overpopulated by 80 million people. Pakistan is less crowded than China (ranked 29), India (ranked 33) and the US (ranked 35), according to the index. Singapore is the most overcrowded and Bukina Faso the least on a list of 77 nations assessed by the Optimum Population Trust.



Here are some excerpts from National Geographics' cover story "7 Billion and Counting":

In 1966, when Ehrlich took that taxi ride, there were around half a billion Indians. There are 1.2 billion now. Delhi’s population has increased even faster, to around 22 million, as people have flooded in from small towns and villages and crowded into sprawling shantytowns. Early last June in the stinking hot city, the summer monsoon had not yet arrived to wash the dust from the innumerable construction sites, which only added to the dust that blows in from the deserts of Rajasthan. On the new divided highways that funnel people into the unplanned city, oxcarts were heading the wrong way in the fast lane. Families of four cruised on motorbikes, the women’s scarves flapping like vivid pennants, toddlers dangling from their arms. Families of a dozen or more sardined themselves into buzzing, bumblebee-colored auto rickshaws designed for two passengers. In the stalled traffic, amputees and wasted little children cried for alms. Delhi today is boomingly different from the city Ehrlich visited, and it is also very much the same.




At Lok Nayak Hospital, on the edge of the chaotic and densely peopled nest of lanes that is Old Delhi, a human tide flows through the entrance gate every morning and crowds inside on the lobby floor. “Who could see this and not be worried about the population of India?” a surgeon named Chandan Bortamuly asked one afternoon as he made his way toward his vasectomy clinic. “Population is our biggest problem.” Removing the padlock from the clinic door, Bortamuly stepped into a small operating room. Inside, two men lay stretched out on examination tables, their testicles poking up through holes in the green sheets. A ceiling fan pushed cool air from two window units around the room.

Bortamuly is on the front lines of a battle that has been going on in India for nearly 60 years. In 1952, just five years after it gained independence from Britain, India became the first country to establish a policy for population control. Since then the government has repeatedly set ambitious goals—and repeatedly missed them by a mile. A national policy adopted in 2000 called for the country to reach the replacement fertility of 2.1 by 2010. That won’t happen for at least another decade. In the UN’s medium projection, India’s population will rise to just over 1.6 billion people by 2050. “What’s inevitable is that India is going to exceed the population of China by 2030,” says A. R. Nanda, former head of the Population Foundation of India, an advocacy group. “Nothing less than a huge catastrophe, nuclear or otherwise, can change that.”

Sterilization is the dominant form of birth control in India today, and the vast majority of the procedures are performed on women. The government is trying to change that; a no-scalpel vasectomy costs far less and is easier on a man than a tubal ligation is on a woman. In the operating theater Bortamuly worked quickly. “They say the needle pricks like an ant bite,” he explained, when the first patient flinched at the local anesthetic. “After that it’s basically painless, bloodless surgery.” Using the pointed tip of a forceps, Bortamuly made a tiny hole in the skin of the scrotum and pulled out an oxbow of white, stringy vas deferens—the sperm conduit from the patient’s right testicle. He tied off both ends of the oxbow with fine black thread, snipped them, and pushed them back under the skin. In less than seven minutes—a nurse timed him—the patient was walking out without so much as a Band-Aid. The government will pay him an incentive fee of 1,100 rupees (around $25), a week’s wages for a laborer.

The Indian government tried once before to push vasectomies, in the 1970s, when anxiety about the population bomb was at its height. Prime Minister Indira Gandhi and her son Sanjay used state-of-emergency powers to force a dramatic increase in sterilizations. From 1976 to 1977 the number of operations tripled, to more than eight million. Over six million of those were vasectomies. Family planning workers were pressured to meet quotas; in a few states, sterilization became a condition for receiving new housing or other government benefits. In some cases the police simply rounded up poor people and hauled them to sterilization camps.

The excesses gave the whole concept of family planning a bad name. “Successive governments refused to touch the subject,” says Shailaja Chandra, former head of the National Population Stabilisation Fund (NPSF). Yet fertility in India has dropped anyway, though not as fast as in China, where it was nose-diving even before the draconian one-child policy took effect. The national average in India is now 2.6 children per woman, less than half what it was when Ehrlich visited. The southern half of the country and a few states in the northern half are already at replacement fertility or below.

In Kerala, on the southwest coast, investments in health and education helped fertility fall to 1.7. The key, demographers there say, is the female literacy rate: At around 90 percent, it’s easily the highest in India. Girls who go to school start having children later than ones who don’t. They are more open to contraception and more likely to understand their options.


SO FAR THIS APPROACH, held up as a model internationally, has not caught on in the poor states of northern India—in the “Hindi belt” that stretches across the country just south of Delhi. Nearly half of India’s population growth is occurring in Rajasthan, Madhya Pradesh, Bihar, and Uttar Pradesh, where fertility rates still hover between three and four children per woman. More than half the women in the Hindi belt are illiterate, and many marry well before reaching the legal age of 18. They gain social status by bearing children—and usually don’t stop until they have at least one son.

As an alternative to the Kerala model, some point to the southern state of Andhra Pradesh, where sterilization “camps”—temporary operating rooms often set up in schools—were introduced during the ’70s and where sterilization rates have remained high as improved hospitals have replaced the camps. In a single decade beginning in the early 1990s, the fertility rate fell from around three to less than two. Unlike in Kerala, half of all women in Andhra Pradesh remain illiterate.

Amarjit Singh, the current executive director of the NPSF, calculates that if the four biggest states of the Hindi belt had followed the Andhra Pradesh model, they would have avoided 40 million births—and considerable suffering. “Because 40 million were born, 2.5 million children died,” Singh says. He thinks if all India were to adopt high-quality programs to encourage sterilizations, in hospitals rather than camps, it could have 1.4 billion people in 2050 instead of 1.6 billion.

Critics of the Andhra Pradesh model, such as the Population Foundation’s Nanda, say Indians need better health care, particularly in rural areas. They are against numerical targets that pressure government workers to sterilize people or cash incentives that distort a couple’s choice of family size. “It’s a private decision,” Nanda says.

In Indian cities today, many couples are making the same choice as their counterparts in Europe or America. Sonalde Desai, a senior fellow at New Delhi’s National Council of Applied Economic Research, introduced me to five working women in Delhi who were spending most of their salaries on private-school fees and after-school tutors; each had one or two children and was not planning to have more. In a nationwide survey of 41,554 households, Desai’s team identified a small but growing vanguard of urban one-child families. “We were totally blown away at the emphasis parents were placing on their children,” she says. “It suddenly makes you understand—that is why fertility is going down.” Indian children on average are much better educated than their parents.

That’s less true in the countryside. With Desai’s team I went to Palanpur, a village in Uttar Pradesh—a Hindi-belt state with as many people as Brazil. Walking into the village we passed a cell phone tower but also rivulets of raw sewage running along the lanes of small brick houses. Under a mango tree, the keeper of the grove said he saw no reason to educate his three daughters. Under a neem tree in the center of the village, I asked a dozen farmers what would improve their lives most. “If we could get a little money, that would be wonderful,” one joked.

The goal in India should not be reducing fertility or population, Almas Ali of the Population Foundation told me when I spoke to him a few days later. “The goal should be to make the villages livable,” he said. “Whenever we talk of population in India, even today, what comes to our mind is the increasing numbers. And the numbers are looked at with fright. This phobia has penetrated the mind-set so much that all the focus is on reducing the number. The focus on people has been pushed to the background.”

It was a four-hour drive back to Delhi from Palanpur, through the gathering night of a Sunday. We sat in traffic in one market town after another, each one hopping with activity that sometimes engulfed the car. As we came down a viaduct into Moradabad, I saw a man pushing a cart up the steep hill, piled with a load so large it blocked his view. I thought of Ehrlich’s epiphany on his cab ride all those decades ago. People, people, people, people—yes. But also an overwhelming sense of energy, of striving, of aspiration.
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Some parts of it may well be; some parts of it are hellish today. There are now 21 cities with populations larger than ten million, and by 2050 there will be many more. Delhi adds hundreds of thousands of migrants each year, and those people arrive to find that “no plans have been made for water, sewage, or habitation,” says Shailaja Chandra. Dhaka in Bangladesh and Kinshasa in the Democratic Republic of the Congo are 40 times larger today than they were in 1950. Their slums are filled with desperately poor people who have fled worse poverty in the countryside.
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The World Bank has predicted that by 2030 more than a billion people in the developing world will belong to the “global middle class,” up from just 400 million in 2005. That’s a good thing. But it will be a hard thing for the planet if those people are eating meat and driving gasoline-powered cars at the same rate as Americans now do. It’s too late to keep the new middle class of 2030 from being born; it’s not too late to change how they and the rest of us will produce and consume food and energy. “Eating less meat seems more reasonable to me than saying, ‘Have fewer children!’ ” Le Bras says.

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For centuries population pessimists have hurled apocalyptic warnings at the congenital optimists, who believe in their bones that humanity will find ways to cope and even improve its lot. History, on the whole, has so far favored the optimists, but history is no certain guide to the future. Neither is science. It cannot predict the outcome of People v. Planet, because all the facts of the case—how many of us there will be and how we will live—depend on choices we have yet to make and ideas we have yet to have. We may, for example, says Cohen, “see to it that all children are nourished well enough to learn in school and are educated well enough to solve the problems they will face as adults.” That would change the future significantly.

The debate was present at the creation of population alarmism, in the person of Rev. Thomas Malthus himself. Toward the end of the book in which he formulated the iron law by which unchecked population growth leads to famine, he declared that law a good thing: It gets us off our duffs. It leads us to conquer the world. Man, Malthus wrote, and he must have meant woman too, is “inert, sluggish, and averse from labour, unless compelled by necessity.” But necessity, he added, gives hope:

“The exertions that men find it necessary to make, in order to support themselves or families, frequently awaken faculties that might otherwise have lain for ever dormant, and it has been commonly remarked that new and extraordinary situations generally create minds adequate to grapple with the difficulties in which they are involved.”

Seven billion of us soon, nine billion in 2045. Let’s hope that Malthus was right about our ingenuity.


Related Links:

Haq's Musings

Seven Billion and Counting

NPR Discussion on 7 Billion and Counting

South Asia's Rising Population and Declining Resources

Environmental Degradation at Siachen

Climate Change Worsens Poverty in India

World's Biggest Polluters

Global Warming Impact on Pakistan

Indian Rural Poverty Worsens

Climate Change Impact on Karachi, South Asian Megacities

Water Scarcity in Pakistan

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

Global Hunger Index Report 2009

Grinding Poverty in Resurgent India

Food, Clothing and Shelter For All

India's Family Health Survey

Hunger and Undernutrition Blog

Pakistan's Total Sanitation Campaign

Is India a Nutritional Weakling?

Asian Gains in World's Top Universities

India's Vulnerability to Climate Change

South Asia Slipping in Human Development

What Does Democracy Deliver in Pakistan

Do South Asian Slums Offer Hope?

Tuesday, January 4, 2011

Pakistani-American's Vision to Revolutionanize User Interfaces

Walking into the local Fry's stores in Silicon Valley during Christmas shopping season, I was fascinated by the latest Xbox 360 demo complete with excited kids dancing in front of a big screen wth a 3D sensor mounted on top of it.

Upon closer examination, I learned that Microsoft Xbox 360 has acquired a few new game-changing tricks thanks to the use of the amazing 3D gensture recognition technology from Canesta, a company co-founded in 2002 by my Pakistani-American friend Nazim Kareemi in Silicon Valley. Cyrus Bamji, an Indian-American, and Abbas Rafii, an Iranian-American, are the other members of the Canesta founding team.



Just before Christmas 2010, Microsoft started shipping Kinect, a $150 add-on for its Xbox gaming consoles, which uses gesture recognition to allow people to play games with body motions instead of controllers. Players work through menus with hand gestures and then move to make their on-screen avatars run, jump, duck, swing and dance. In fact, Microsoft CEO Steve Ballmer liked the technology so much that he decided to buy Canesta. Canesta has already secured 44 patents in this area and has more pending.



Microsoft and its partners are now in a position to revolutionize natural user interfaces for personal computers, televisions, cars, cellphones, cameras and other devices with gesture recognition capability acquired through Canesta's purchase. Other uses of the technology include enhancing automobile safety by detecting obstacles and recognizing the size and body shape of a person in a seat and adjust the way an air bag inflates.

While Nazim stands out as a serial high-tech entrepreneur with PenWare (1992), Canesta (1999) and Mixamo (2009) to his credit, there are thousands of other entrepreneurs and high-tech professionals of Pakistani origin who have made significant contributions in Silicon Valley and elsewhere in North America and Europe. Hundreds of them gather each summer at OPEN Forum organized by the Organization of Pakistani Entrepreneurs (OPEN) in Silicon Valley.

Related Links:

Haq's Musings

OPEN Forum 2010

Pakistani-American in $500 Million NFL Deal

Is Pakistan Too Big to Fail?

Pakistani-American Elected Mayor

Fighting Poverty Through Microfinance in Pakistan

Silicon Valley Summit of Pakistani Entrepreneurs

Pakistan's Multi-Billion Dollar IT Industry

Media and Telecom Sectors Growing in Pakistan

Pakistan's Middle Class Growth in 1999-2009

Social Entrepreneurs Target India, Pakistan