Pessimism with Growth, Why?

Urstruly:
I do take your word for it. But that`s not an Indian source, so you haven`t contradicted me.

In fact, I do remember reading a book by him (Ch Mohammad Ali) ages ago. It is possible that it may have been the same book and I may not remember this quote. Was this the book in which he said that India was in the dark ages before the advent of islam and that it did not produce anything of any merit?

Dost Mitter (#61)

``....With booming demand for its commodities in the international markets, Pakistan substantially raised the value of its rupee (40%?); in other words, it wanted India to pay more for its exports to India (jute, cotton, etc.) and pay less for its imports (textiles, etc.). India refused to budge from the rupee parity and the trade between the two countries was reduced to a trickle. On economic reasoning alone, India`s action was probably unwise as it provided a strong protection to Pakistan`s nascent industries.``

Dost Mitter, why would you say that India`s action was unwise. Pakistan used Exchange Rate Mechanism to swing trade to its favor, and India took its demand and supply elsewhare to safe guard its economic wealth. Market`s bias always dominate in capitalistic set up.

I would love to know at what stage the two rupees were brought closer to parity again. May be you or another person know the time and reasons. I know the exchange changed again in late 80`s or early 90`s when Pakistan devalued its Currency.

Thanks
Anil

Dost mitter

I knew you would ask for that. The quote is taken from the book``The Emergence of Pakistan`` by Chowdry Mohammad Ali, PM of Pakistan. It is one of the best written and most authentic book written onthe subject where author has made every effort to make a chrolnological and personal referencein bibligraphy to every quote that he has included. Since the book is not with me at the moment I cannot write the reference to this quote but i will when get the chance. Will you take my word for it until then.

Urstruly#64:
Could you please give the source of Patel`s June 3 statement? It seems astonishing!

dost mitter

`` That Indian leaders wanted Pakistan to fail is an article of faith among Pakistani writers, but I have never seen a corroboration of it by Indian sources.``

Such innocence is charming. Sardar Wallabhbhai patel after the aproval of Cabinet Mission Plan on June 3rd 1947 commented ``I have accepted the Partition only as a last resort when we were about to lose everything. Mr. Jinnah did not want a truncated (sic) Pakistan but he had to take that bitter pill. In addition, I also imposed a condition that trasfer of power must be done with in next two months. If Muslims want a Pakistan then they can have it but then they must suffer the consequences. We, on the other hand will confiscate (sic) every inch of their land that we will be able to lay our hands on so that not only the (Muslims) will feel that idea of Pakistan was a mere stupidity (sic) but it would be impossible for them to survive (economically). When they (Muslims) will get their truncated Pakistan we will make arrangements that they will not be able to survive``.

Two months later, after Partition, Sarddar became the second most important man in the independent India as Deputy PM, Home Minister, Minister of the Affairs of States, and Minsiter of broadcasting and information. Patel made good on his promises by first refusing paksitan to give its fair and agreed share of treasury. These funds were only released after a year when Gandhi went on a hunger strike. Patel, as opposed to his promises that he made in the Cabinet Mission Plan ordered Indian Army to enter, Kashmir, Hyderabad, and Junagadh and annexed all three terrotories by force into India. Patels vision was further carried out by his successors and it resulted in the biforcation of Sovereign State of Pakistan after the naked aggression by India. It is this shortsighted, greed and bigotry of this man that over a billion people in this world are leading a miserable existence. And you say you don`t know about it. It is hard to beleive.

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dost mitter

Fuzair is among those people who think that country was divided on economic basis. I think he will reject rest of your post because of this flaw in the basic premis.

fuzair:
Yes, the boom was important, but the effect of the military alliances was not insignificant either and followed close on the heels of the Korean war.

BTW the boom, I think, killed the large volume of bilateral trade between India and Pakistan which was large at that time. With booming demand for its commodities in the international markets, Pakistan substantially raised the value of its rupee (40%?); in other words, it wanted India to pay more for its exports to India (jute, cotton, etc.) and pay less for its imports (textiles, etc.). India refused to budge from the rupee parity and the trade between the two countries was reduced to a trickle. On economic reasoning alone, India`s action was probably unwise as it provided a strong protection to Pakistan`s nascent industries.

``I`m just curious as to why India, an economic near-basket case itself in the 1940s and 1950s, would want to do so.``

The obvious answer is that the country was not divided on an economic basis. However, I am not absolutely certain of the premise of your question. That Indian leaders wanted Pakistan to fail is an article of faith among Pakistani writers, but I have never seen a corroboration of it by Indian sources. I myself first read about it only at chowk. There is a purported reference of Nehru mentioning to someone in 1960 that he did not expect Pakistan to last that long. Whether expectation also meant wanting is another matter. As for Patel, he is said to have agreed to the partition, saying that when gangerene sets in, it is better to amputate the diseased part, so it wouldn`t make sense to have the diseased part reattached.

That said, the circumstances of the creation of the new country had assured that there was no goodwill for each other in either country and neither was willing to do anything that helped the other even if involved a win-win situation.

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Romair,

While there may be little that is anti-American in your #37, I`ve read enough of your posts to know your general views on this issue. That is why I said that your anti-Americanism is seeping through. Let me concede that you differentiated between debt rescheduling (what actually happened) and debt writeoffs (what Pakistan wanted). However, if the rescheduling is generous enough (and it was pretty generous for Pakistan), it becomes a distinction without a difference.

Here are some figures on Pakistan`s ``savings`` from the debt rescheduling: ``On the basis of ODA interest rate of 2.3 percent and non-ODA interest rate of 4.0 percent, Pakistan will be saving $ 2.7 billion in three years (2001-02 to 2003-04) and $ 8.5 billion during the grace period of ODA debt.``
http://www.paknews.org/main.php?id=4&date1=2003-01-07

So, de facto, Pakistan got a debt writeoff for $2.7 billion during 2001-2004 since it really doesn`t matter why Pakistan didn`t have to pay back the money: rescheduling or writeoff. Furthermore, since the ODA interest rate is 2.3% and wasn`t increased to punitive levels after the grace period (a 15 year long one!!) , this is pretty much a win-win situation for Pakistan.

While this is indeed Paris Club rescheduling, how much of this would have happened if the US hadn`t pushed it? In fact, Pakistan had been trying to get this kind of resceduling before 9-11 and it got barely half of what it did in 2002.

To recap, you said: ``People, specifically Indian commentators (for some reason), tend to overvalue the influence of the USA etc. on Pakistan`s economy. Has any of them, including yourself, ever done a statistical analysis? Or are they just shooting from the hip?``

I was simply providing you some hard data to show that if anything ``saved`` Pakistan (economically speaking) post-9-11, it was the US. Or are you going to argue that if Pakistan was not so economically dependent upon the US, it would do even better?

Nikki777,

Sorry to burst your bubble but the GDP data you cite is in Purchasing Power Parity terms, not actual exchange rate conversions. Using the actual exchange rate conversions, India`s (and Pakistan`s) GDP would decrease by a factor of roughly five (give or take).

And yes, India was a near basket case for a while after Partition. Massive US food aid staved of famine (PL480) staved off near-famine in parts of India.

Regards.

I think the pessimism has largely to do with the sad state of affairs for women in Pakistan.

Even in a city like Karachi, 93% of 200 working women surveyed stated that they faced harassment. Now that`s a real reason for pessimism, regardless of growth.

fuzair #38: ``and the single largest source of worker remittances (31.5% of the total), dwarfing both the UAE and Saudi Arabia (15.8% and 14.8% respectively). These are all offical Pakistani MoF figures which you can check out for yourself (http://www.finance.gov.pk/survey/home.htm).``

I had stated the following, ``Most of Pakistan`s foreign exchange comes in from overseas Pakistanis in the Middle East.``

The comparison I made in remmitances was over a period of thirty years, and I mentioned the Arab countries, as a whole, not separately, as you have done. UAE has a population of 1/100th or so of the USA. Yet it accounts for 50% of the remmitances in comparison to the USA.

The total remmitances are far higher from the Middle East than any other region of the world for Pakistan. So I think my statement remains a fact.

I think you are gettting overly defensive about the USA, as if I am putting down the USA. I actually stated the following also, ``Similarly Pakistan`s economic strategic depth does not lie in the USA nor in India (this is not to say that Pakistan should not do whatever it can to increase trade with these two countries).``

The point I was trying to make was that Pakistan`s rise and fall is dependent on Pakistan, itself. And that the Middle East has and will (probably) pump in a lot more money than the USA will. This is true for remmitances. And is true right now for investment. If I remember correctly, United Bank has been bought by a Middle East based consortium. The main bidder for PTCL is Egyptian (Syrian?). Saudis are ready to put in $1 billiion for steel processing. And I believe Saudis give a lot of discounts on oil also. etc. etc.

Hence giving the USA credit for every good economic performance in Pakistan is inaccurate. This does not mean I am calling the USA an evil empire. It just means that US money, for various reasons, is going elsewhere. This is quite different from saying that the USA has screwed Pakistan. So I really fail to see any anti-Americanism in my comments. I am surprised you see it.........

fuzair #37: ``You dismiss the debt rescheduling as trivial. Nonsense.``

I did not say the debt-scheduling as trivial. I stated the following, ``What 9/11 has given Pakistan is rescheduling of loans. A big help.``

So I am not quite sure where you came up with the, ``Nonsense,`` comment. Do read my posts completely, before commenting. At the same time, Pakistan`s debt is to international institutions. Very little of it is to the USA. So even this debt-scheduling (which I did not claim to be trivial) was from institutions with international representation (though the US does have a lot of reprsentation there). Much of the write-off was from the Paris Club, which includes the USA as one of its 19 members. So perhaps the other 18 members deserve some credit also - or will giving them credit make me anti-American.....

I did say that the US debt write-off of $200 million dollars was trivial. This is the exact amount of the write-off, which over the next x number of years, would have totalled $1 billion dollars. due to interest. Since then the USA has agreed to pump in $500 million more. $200 million to me is a trivial amount for a country of any size.

These are an exchange for, ``serivces provided by Pakistan/`` This is the official US declaration phrase. I doubt it balances out what Pakistan has lost due to 9/11. I know the details of how much it has lost in IT investment.

The point I was trying to get across was not that the USA has screwed Pakistan. It hasn`t. (it has only screwed Arab countries). I have never said the USA has screwed Pakistan, in any of my comments. In fact, I have always stated that the USA has neither helped nor harmed Pakistan much, as a whole, over the years. So perhaps you are being somewhat overly sensitive on this issue.

The point I was making was that too many people automatically jump to the conclusion that any historical or current rise in the Pakistan economy is due to USA aid. I provided statistics and scenarios to prove that this is not the case. Countries like Egypt and Israel get massive aid from the USA. Not Pakistan. And the loans that Pakistan has gotten, due to poor Pakistani leadership, have been more of a hinderance on Pakistan, than help.

The second point I attempted to make was the following, ``the USA also cannot single-handedly improve any country`s economy. It can assist. But it cannot be the main cause.`` This is true. Pakistan will eventually have to sort out its economy on its own.

P.S. I didn`t make a single negative comment against the USA, in my reply, yet you saw anti-Americanism in it. Are people anti-American if they don`t give the USA the main credit for the successes achieved by other countries? If Pakisatn wins the cricket world cup and I say the USA had nothing to do with it, one way or the other, does that make me anti-American?

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