The real threat from NaMo

As Narendra Modi takes the oath of office of prime minister of India, Pakistanis are predictably panicking for precisely all the wrong reasons. Modi’s Hindu nationalism has most Pakistanis riled up in a self-righteous fit of rage against the new leader of the world’s largest democracy even though it will have almost no direct impact on any of us. Meanwhile, we are ignoring what should frighten the living daylights out of any Pakistani concerned about the country’s long-term competitiveness: Modi’s economic agenda.

But first, a bit of background. In 1988, the per capita income of the average Indian was 32 per cent lower than that of the average Pakistani. By 2012, the figures had reversed: the average Indian was 33 per cent richer than the average Pakistani, purchasing power parity terms, according to data from the World Bank. Even more depressing than that reversal? The crossover took place in 2005, a year that was supposed to be one of the best in Pakistani history for economic growth. Simply put: even our best was not good enough to keep pace with the rise of the Indian economy.

The steady, relentless rise of India’s economy started in the early 1990s, when the country was forced to admit the failure and unsustainability of a command-and-control, subsidy-dominated economic agenda and initiate market reforms. That unleashed a tsunami of Indian economic dynamism that propelled their economy forward into the ranks of the world’s largest, leaving Pakistan behind. It was not always so, and indeed, it does not necessarily need to be so.

While Pakistanis should forever banish the idea that our country will ever be as large or as important as India in economic terms, we can and should strive to compete on a per capita basis, especially when considering the fact that the average Pakistani was richer than the average Indian for most of our respective histories. While some of this is due to external support from the United States, much of the difference in the economic performance of Pakistan and India can be attributed to the fact that Pakistan has always had a slightly more open and liberal economy than India. As difficult as it is to be an entrepreneur here, it has historically been even more difficult on the other side of the Wagah.

Indeed, Modi was elected in a wave of popular support precisely because the Indian economy has not opened up nearly enough. The stalled pace of reforms led to a sharp slowdown in the pace of growth from the Indian economy (from eight per cent to just under five per cent, which is still impressive by Pakistani standards) and led to a demand from voters for change. To quote Sadanand Dhume from The Wall Street Journal, they responded to his “Thatcherite mantra of ‘maximum governance, minimum government.’”

As a Pakistani, my concern is not that Modi will be nasty to India’s Muslims. My concern is that he will continue to dismantle the sclerotic legacy of Nehruvian socialism and in turn vault the Indian economy to an even bigger lead ahead of Pakistan than it has now. I am, of course, happy for the prosperity that my Indian neighbours will enjoy if Modi succeeds. I am just afraid of my own country being left behind. We are not exactly good at dealing with economic resentment.

To their credit, the Nawaz leadership has avoided the kind of populist rhetoric that has been all too evident in the media. The prime minister himself appears dedicated to improving ties with India, in particular economic ties.

As the two countries move the dialogue forward, it will be important for Pakistani negotiators to focus on our core economic strengths. That means acknowledging that as trade opens up with India, some industries will benefit while others may suffer or even perish. As Modi takes office, Pakistanis should focus on the economic opportunity his inauguration represents, not any potential impact on civil liberties in India it may have. We do not exactly stand on the moral high ground when it comes to the treatment of minorities.

Published in The Express Tribune, May 21^st, 2014.

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