COMPARISON BETWEEN ECONOMY OF PAKISTAN AND INDIA...PAKISTAN STUDIES ASSIGNMENT

1. ECONOMY OF PAKISTAN VS INDIA
INTRODUCTION:
An economy is an area of the production, distribution and trade, as well as consumption of goods
and services by different agents. In general, it is defined 'as a social domain that emphasizes
the practices, discourses, and material expressions associatedwith the production, use, and
management of scarce resources. If someone says that economy is the building block of a
country, state or nation it is very much true because economy is the driving force behind a
society. People in the world are divided on the basis of economical possessions they have.
According to the economic theory of Karl Marx economy is the force behind the changes
occurring in the world, at one hand a good economy means a well established state on the other
hand it means that it would attract imperialistic forces which mean war. Mostly world wars had
happened on the basis of economy, every state wants to have a stable economy than the other
which compels them to take over other countries. The subcontinent has had a very strong
wealthy economy which attracted the British imperialistic forces to take over subcontinent.
After partition there was a lack of labor forces, even the offices lack pen and ink. At the time of
partition, the original agreement was held that armed forces and other assets is to be divided in
the ratio of 64% for India and 36% for Pakistan, but Pakistan was later forced to accept a 1/3
share of assets. India from the very first day was ahead of Pakistan regarding economy,
economist especially Indian thought that nascent Pakistan would not survive because of poor
economic condition and India would soon attack on it. But after all these bad years Pakistan’s
economy stands 18th largest in terms of purchasing power parity (PPP) and 43rd largest in
terms of nominal gross domestic product, with a population of over 220 million people (5th)
largest in the world . While Indian stands sixth in the world economy behind USA, Japan . And
recent reports conducted by HIS Markit has shown that India is likely to surpass the economy of
Japan and become the second largest economic state in Asia and also there is a chance that in
2030 it would surpass those of United Kingdom and Germany’s economy to become the world
3rd largest economy. Regarding the economy of Pakistan Cpec is the key project according to a
research Pakistan would increase 3 to 4 billion dollars export with china and other countries.

2. ECONOMY OF PAKISTAN:
“Pakistan presents one of the most complex and difficult challenges facing US diplomacy.
Its political instability, entrenched Islamist extremism, economic and social weaknesses and
dangerous hostility towards India have cast dark shadows over this nuclear-armed
nation”1. After partition and its following decades Pakistan was very unstable with high poverty
rates, but it is in one of the few developing countries that had achieved an average growth rate of
5 percent in the past four or five decades ending in 1988-89. The poverty rates have declined
from 40 percent to 18 percent by the end of the 1980s. With a population of around 30 million
people in 1947 Pakistan couldn’t feed itself and had to import all its food requirements from
abroad. Pakistan was even lacking grains such as wheat and rice but now the country is exporting
200,000 tons of wheat, the same amount as in 2020-21. Production of rice in 2021-22 is forecast
at 7.8 million tons, up from 7.6 million the year before. Exports of rice in 2021-22 are put at 4.2
million tons, up from 4 million2. An average Pakistani earned about 100$ in 1947 but now
according to World Bank an average Pakistani earns about 1300$3. Pakistan hardly had any
manufacturing industries in 1947. As for the manufacturing product index it was 100 in 1947 but
has reached almost reached 13000. Pakistan Industrial production index growth rate YoY data is
updated monthly, available from May 1998 to Dec 2021, with an average rate of 3.9 %. The data
reached an all-time high of 76.5 % in Sep 2000 and a record low of -41.1 % in Apr 2020. Per
capita electricity generation was 100 in 1947 and has reached 37 thousand kwh . Increase
electricity would also help in irrigation. Pakistan’s large irrigation network of large storage
reserviors and dams, barrages, link canals constructed during the last six decades has enabled the
country to triple the area under cultivation. Tube well irrigation provides almost one third of
additional water supplement canal irrigation. the road and highway network spans 260000 km
which is more than five times it was in 19474.

3. ECONOMY OF INDIA:
India’s economic achievements during the last sixty years can be
divided into two distinct phases. In the first phase that covered the period 1947-90 the country
pursued an inward looking strategy that relied on public sector commanding the heights of the
economy. A highly regulated and protected industrial sector, inefficient agriculture and lower
trade ratios kept the economy much below its potential. In this phase, however, Pandit Nehru had
the vision and foresight to establish several premier institutions of higher education, science and
technology in the country. These institutions particularly the Indian Institutes of Management
(IIMs) and Indian Institutes of Technology (IITs) – have turned out to be global centers of
excellence. Economic growth rate in this first phase got stuck at a low 3.5 percent per year i.e.
the Hindu rate of growth. Poverty rates remained high and stagnant1. The second phase, starting
from around 1965-6 is characterized by a slowing of the rate of growth to an average of 3.5%
per annum. This phase lasted till about 1978-9, when the Reform phase started2. GDP Annual
Growth Rate in India averaged 5.81 percent from 1951 until 2021, reaching an all time high of
20.30 percent in the second quarter of 2021 and a record low of -24.40 percent in the second
quarter of 20203. Regarding agriculture India is producing cereals( wheat, rice etc)
approximately 297.5 million tones which is a record for themselves4. According to IMF the per
capita income of an Indian is 2191 US dollars; India is at 144th position in terms of GDP out of
194 economies5. Manufacturing product index of India had averaged 6.08 percent from 1994
until 2022, reaching an all time high of 133.50 percent in April of 2021 and a record low of -
57.30 percent in April of 20206. The total Power Generating Capacity of (utilities & non utilities)
has increased from a meager 1362 MW in 1947 to about 448.11 GW at the end of March, 2020.
The Per Capita Electricity Consumption which was a mere 16.3 units in 1947 has increased
to 1208 units in 2019-20.

4. FUTURE OF BOTH ECONOMIES:
There lies a big difference between these two economies
from the very first day. We can blame the imperial British government for this difference but the
ruler’s especially party leaders of that time were seemingly responsible for this. Now question
arises where are both these economies going to end, will Pakistan surpass the Indian economy?
Or will India become the largest economy in the world? Or will Pakistan become the largest
economy of Asia or the whole world? Or can islamization of the economy in Pakistan be
beneficial for the growth of economy?. All of these assumptions can come true but it depends on
the trajectory that both of these economies follow. Let’s consider some of the steps that both the
countries have taken to stabilize their economies.
STEPS TAKEN BY PAKISTAN:
Pakistan is taking help from China in every sector (military
or non military) to make his economy stable. Internationally big contracts like CPEC were
signed with China which would enormously grow the economy of Pakistan, denying its land
locking aspect. Beside making roads Chinese company will make amendments in pharmaceutical
companies. Having provided over 20 million doses of vaccine made in Pakistan, we expect to
deepen cooperation with this country”, said Mr. Xin Chunlin from CanSino at a CPEC
B2B Conference. CanSino is a renowned Chinese pharmaceutical company that has launched
the single-dose CanSino COVID-19 vaccine branded PakVac locally produced in Pakistan last
year1. The Gwadar Development Authority (GDA) has prepared a draft to acquire tax-free
status for the proposed SED for a period of 30-35 years under the master plan. The draft aims to
provide similar benefits and incentives to foreign investors and traders given to local businesses
in special economic zones across the country2. Chinese plants owner have also assured to about a
legitimate on coal prices3. Is Pakistan economy getting better? Growth in Pakistan surprised
on the upside last year, supported by improving domestic demand, record-high remittance
inflows, a narrow targeting of lockdowns, and accommodative monetary policy, says a
World Bank report releasedon Wednesday. The bank’s Global Economic Prospects report
2022 projects that growth in the South Asian region (SAR) will accelerate to 7.6 percent in 2022,
as pandemic-related disruptions fade, before slowing to 6.0 percent in 2023. The report projects
that Pakistan’s economy will grow by 3.4 percent in the current fiscal and at 4 percent in 2022-
23, benefiting from structural reforms enhancing export competitiveness and improving the

5. financial viability of the power sector4.
STEPS TAKEN BY INDIA:
Indian economy is very much stable than other south Asian
economies. India’s economy is mainly dependant on public sector, its labor force is very much
helpful in building his economy. Due to license raj Indian economy was very suppressed and the
middle and lower class labors were bounded to the rule but after the abolition if license raj in
1991 and the induction of liberalization policy strict rules were dismantled. Recently India has
signed international contracts with Brazil, Belarus. The signing of RELOS agreement between
India and Russia would open India's access to Russian Arctic naval ports and military bases from
Vladivostok to Murmansk and beyond. India and Israel on Thursday signed a cultural
agreement that outlines a three-year programme of cooperation to further strengthen their
strategic bilateral relations by promoting greater people-to-people exchanges5. U.S.-India
defense trade cooperation continues to expand with the Logistics Exchange Memorandum of
Agreement (LEMOA), Communications, Compatibility and Security Agreement
(COMCASA), and the Industrial Security Agreement (ISA) now in place6. With all these
agreement think tanks says the India is going to end world’s 5th largest economy by 2025 and
world’s 3rd largest economy by 2030.

6. CONCLUSION:
An economy this big is not made in a decade or two, it requires unending
continuous struggle. Economy of a state is effected by both the internal and external conditions,
internal conditions are very affective in shaping the economy ( labor forces), but external forces
are also playing a decisive role in shaping the economy( imports, exports, loans etc). Both
countries and struggling hard to build a large economy, by the time they are focusing on building
military status in the world. As the world divided between two orders the European Union and
the Russia And China, India is supporting America which means that they are with the European
Union and on the other hand Pakistan, which is showing itself neutral is standing with china(
taking J10 fighter jets from China). It concludes that Pakistan is seeking help either we can say a
reciprocal altruistic relation with china and India is doing the same thing with European Union.