How the world observes India and Pakistan

India and Pakistan are in the news in the West

Shahid Javed Burki February 06, 2023
The writer is a former caretaker finance minister and served as vice-president at the World Bank

Once again, India and Pakistan, the sister states carved more than 75 years ago by the British out of their large South Asian colony, are in the news in the West. India is being widely written about as the world’s most populous country and its largest democracy. In terms of the size of its population, it overtook China in the beginning weeks of 2023 and while the size of the Chinese population has begun to decline, that of India would continue to grow. India has both very rich and very poor people with a large middle class that is growing in size and spends a great deal on goods that are beyond the reach of the poor. This growing demand is attracting foreign firms to start production and distribution in the country.

India is now the world’s fifth-largest economy. Its expansion is being encouraged by the government which has pulled back from several parts of the economy, leaving space into which private entrepreneurs have moved. Among those who have contributed to the growing economy is Gautam Adani, an industrialist who has built a large industrial empire that uses coal as a source of energy.

The economic and financial rise of Gautam Adani, from the Indian state of Gujrat which is also the home state of Narendra Modi, the country’s prime minister, has begun to attract attention from the Western media. In mid-January 2023, Hindenburg Research, a short-seller firm based in New York, published a lengthy report that accused Adani of, among other things, artificially boosting the company’s shares over several decades by using a network of overseas shell companies linked to his relatives. The report said that the Adani companies were seriously overvalued, perhaps by as much as 80%. The Hindenburg report was picked up by a number of newspapers including the Washington Post which reported that the Adani group’s holding company’s shares fell by more than 18%, while several of its subsidiaries also suffered severe losses. According to Bloomberg News, publicly traded Adani companies lost roughly a combined $50 billion in market capitalization by the end of January 27. Adani Enterprises’ difficulties had consequences for other sectors of the Indian economy. For instance, public and private sector banks held a total of about 40 % of the Adani Group’s debt which led to a fall of 2.5% in their capitalization on one day, January 27.

Pakistan is also being noticed by the Western Press. While most of the reporting on India is positive much of what is being written about Pakistan is negative. It is not viewed as a country with considerable potential which could become the center of economic activity and commerce in a highly troubled part of the world. There are many analysts in the West who have written of this country of some 220 million people as a rapidly failing state. Even some well-informed Pakistanis believe that the country may soon fragment into a bunch of small states. Pakistan lost a good part of its territory when its Bengali citizens left to form a new state, Bangladesh.

The Bengali departure demonstrated that ethnicity is a powerful foundation for building a nation. Ethnicity is at work again in what is now Pakistan. The growing activity attributed to the Baluchistan Liberation Front, the BLF, which is openly campaigning to create an independent Baluchi state that will have a large area with the likelihood of rich deposits of iron, copper and gold. Exploiting these riches would result in a type of economy that have emerged in the Gulf.

Ethnicity is not the only problem Pakistan faces. The other is the return of terrorism promoted by Islamic extremists. This too is receiving a great deal of attention in the Western press. For instance, the January 31, 2023 issues of both The New York Times and The Washington Post gave extensive coverage to the bombing of a mosque in Peshawar which killed more than 100 worshippers and injured another 160. The Post placed a picture of the destroyed mosque on its front page. In the accompanying story, the writers described the terrorist operation as “one of the deadliest militant attacks ever on Pakistani forces.” The responsibility for the attack was claimed by two officials of Tehreek e Taliban Pakistan (TTP) which has waged a war against the government for years and recently broke off a truce that had been negotiated last year. The group has a close alliance with the Afghan Taliban, now ruling Afghanistan, but operate independently.

In my own writings, I have taken a largely positive view of Pakistan’s future once it is able to stabilize its highly fractured political system. Pakistan sits on top of India and borders China. Through Pakistan, the landlocked countries of Central Asia can gain access to the sea. Gwadar on the Baluchistan coast is being developed as a part of the China-Pakistan Economic Corridor program of investment. Once it is fully operational, it would become a major port on the Asian mainland. Much of Chinese and Japanese international trade would flow through the port, avoiding the long-haul passage through the Strait of Malacca, a narrow artery that adjacent to Singapore.

Providing space for international commerce is not the only advantage Pakistan has for inviting international interest including foreign investment. It also has considerable agricultural potential that is used for producing grain on land fed by canal irrigation. In the world’s major grain producing areas such as the United States, Russia and Ukraine, grain is grown on rainfed land. Land that relies on irrigated water should be producing high-value crops such as fruits and vegetables. There is a growing demand for these products in the rapidly developing western provinces of China.

Pakistan also has the potential to feed China’s large industrial enterprises with products that use relatively cheap labour. With the rise of wages in China, the supply chains have extended to the countries in Southeast Asia. Even India has been pulled into this structure. Pakistan should try to partner with large Chinese producers and enter the growing field of international system of production. Realization of the positives would require serious public policy work.

Published in The Express Tribune, February 6th, 2023.

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