Tag Archives | state

Vertical bypass

A better ride between Bangalore and Mysore

Driving on the Bangalore-Mysore highway frequently, this blogger couldn’t help but notice why modernising the highway has not reduced travel times by as much as it could have. The dream of a 90 minute drive largely remains elusive, not least because getting out of Bangalore city limits has become a painful experience.

Like in most parts of the country, the highway bisects the towns and villages en route, becoming the “main road” in places like Maddur and Mandya, with commercial establishments, schools, offices and busy traffic intersections. This means that the highway traffic has to inevitably slow down to the speed of the local town traffic until it exits the town limits, before picking up speed again. And because drivers might not slow down in time, traffic police have created enormous road humps and placed double barricades outside the town/village limits, ensuring that you must slow down to nearly zero speed before every town and village along the way. It is not uncommon to see people, bicycles, carts and other vehicles attempt to cross the highway, raising the risk of accidents.

Obviously, this causes highway traffic to slowdown and accidents to increase—when people try to avoid the humps, or when they crash into the barricades especially at night.

How might things be improved? The first way, adopted by many countries around the world, involves making the highway bypass towns and villages by skirting around them or following a different route altogether. The problem is: given how complex and time-consuming land acquisition has become, especially in Karnataka, this is unlikely to work. The travails of the NICE road, part of the Bangalore-Mysore Infrastructure Corridor, indicate how fraught re-routing is.

The second way might be to bypass the towns and villages vertically. In other words, build flyovers across the stretch of the highway that passes through town and village limits. This does not require new land to be acquired. In fact, this might be a faster and cost-effective way to modernise India’s highway infrastructure.

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Is Saranda Development Authority a good idea?

The development model in maoist-affected area needs to be scalable and replicable

In a letter to the Jharkhand Chief Minister, Union Rural Development minister, Jairam Ramesh has suggested that the state government create a separate Saranda Development Authority. (Read this blogpost about the Saranda Action Plan, a development plan put in action by the government for this erstwhile Maoist-affected area.)

“Apart from the core area, some gram panchayats in the fringe area of Saranda should also be included in the plan. There can be a separate agency, Saranda Development Authority, which can implement the development plans in an integrated manner with a clear mandate,” Ramesh said in the letter.

The Saranda Development Authority can be headed by a nodal officer, assisted by a young IAS officer. All departments working in the area should report to this authority so there is a single focused approach for development of the region.

“The district level and the state level monitoring committees (including representatives from police and central paramilitary forces) can regularly meet and monitor and coordinate activities of this authority. A realistic time frame is also required for achieving the various developmental goals,” he said in the letter.[Telegraph]

On the face of it, Mr. Ramesh seems to be making all the right arguments. A dedicated Saranda Development Authority will achieve better results for Saranda’s 36,000 tribals. The reason for the proposal is obvious. Mr. Ramesh has “taken this Saranda project as a challenge and as a way of demonstrating how development and security can and should go hand-in-hand.”

But there are two issues which need to be kept in mind here.

One, Saranda is not merely a showpiece of government’s success. It is a model which has to be scaled up and replicated across all the Maoist-affected areas. Is it possible to create such dedicated development authorities for each group of 60 villages across the country?

Two, what about the existing structures of governance in that area? If they are unable to adapt and deliver on a plan which is being personally monitored by a union cabinet minister, the government officials need to be either sacked or systems and processes of governance suitably modified. This should be paid as much attention as the execution of the Saranda Development Plan.

It is extremely important that Saranda Development Plan succeeds. But it is also equally important that the execution of this plan fits in with the bigger picture of developing Maoist-affected areas. If it stands out as an isolated success-story among a sea of failures, we would have lost another great opportunity to finish the Maoist menace.

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Food Security Bill and the Bhagwad Gita

There is a connection between the two

The debate over the Food Security Bill is of little consequence now. The Bill has already been placed in the parliament and will soon become a law. The sole winning argument in its favour is ‘good intentions’. How can any proposal that intends to help the hungry and the undernourished be opposed by anyone? This trait was identified by Pratap Bhanu Mehta in his 2003 book, The Burden of Democracy.

The Indian state almost never evaluated policy by consequences, almost always by its own intent; if the tribunal of its own intentions had been satisfied, nothing else mattered. If it thought rent control helped the poor get housing, or curbs on investment were producing more prosperity, this was so regardless of whether it, in fact, did; particular projects were a success simply because the state had made an allocation for them, not because they reached their intended targets and beneficiaries. The habit of state officials to respond to every query — say why child labour exists — is simply to say that a law exists to deal with the problem. This is not just a last-ditch defensive gesture, it is symptomatic of the way in which the state can become oblivious to the concrete efforts of its own action or inaction. The state has internalized the message of the Bhagwad Gita: only intentions and not consequences matter.[Pages 125-126]

The NAC’s Food Security Bill is in total consonance with the message of the Bhagwad Gita: only intentions and not consequences matter. How can anyone ever argue with that? The NAC wins. India loses.

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Can you engage Syed Geelani?

There is no common meeting ground between Syed Geelani and the Indian state

Syed Ali Shah Geelani, leader of his faction of the Hurriyat Conference, quoted speaking in a seminar at his residence in Srinagar yesterday:

“We should resist as per our capabilities and those who pick up arms are better than others. They don’t need our certificate as Allah has given them certificate.”[GK]

This is an unequivocal statement by Mr Geelani in support of the Pakistan-backed and -supported terrorists who have wrecked havoc in Kashmir over the last two decades. The very same terror which has led to the death of 43,460 people in the state between January 1990 and April 2011 (as per the Jammu & Kashmir government). More than 27,000 women have been widowed and 22,000 children orphaned during this period of terror.

But this should not surprise close observers of Kashmir. Mr Geelani led the prayers held in the honour of slain al Qaeda chief, Osama bin Laden in a Srinagar mosque earlier this year. He has been against an independent Kashmir but has always batted for its merger with Pakistan (see this blogpost). He has been in touch with Hafiz Saeed, the chief of the Jammat ud Dawa/ Lashkar-e-Taiba and addressing their anti-India rallies across Pakistan by telephone. Not only that, he has openly expressed his views about establishing a Nizam-e-Mustafa in Kashmir. This blogger had highlighted Geelani’s statement about an Islamic system in an old blogpost:

Ever since my release from prison on August 7, 2004, I have been spreading my message across Kashmir. I have a three-point programme.

First to impose an Islamic nizam (Islamic system) [in] Kashmir. Islam should govern our lives, be it in our political thought, socio-economic plans, culture or [other…].

The creed of socialism and secularism should not touch our lives, and we must be totally governed by the Koran and the Sunnat (precedents from Prophet Mohammad’s life).

“Secondly, I have been propagating that we must fight against anti-Islamic forces. These forces come in our way under the garb of nationalists, secularists, racists, linguistic chauvinists, and so on.

… Osama has come only during the last few years. People like me have been fighting for this all our lives. I do not want to be compared with Osama.[Link]

Many Indian commentators and analysts, particularly during the trouble in summer of 2010, spoke about Geelani’s leadership in Kashmir and India’s failure to engage him. They gloss over the fact that he is a rabid Islamist, a supporter of Pakistan who has consistently justified and promoted the use of terror by Pakistan in Kashmir. There can be little meeting ground between him and the Indian state: unless the Indian state chooses to turn its back on the ideals on which the Indian Republic has been founded. You can only reconcile the reconcilables. The irreconcilable will have to be shunned and marginalised. There is no other choice.

This leaves the moderate voices of Kashmiri separatism which are repeatedly tom-tommed by Delhi-based media. For one, these so-called moderates hold little sway, if any, over the anti-Indian section in Kashmir Valley. Two, they have no courage of conviction to take on the likes of Geelani over his pronouncement of religious sanctity for terrorist violence. Those who dare to speak out meet the fate of Maulvi Mohammad Farooq, Abdul Gani Lone, Maulvi Mushtaq Ahmed or Fazal Haq Qureshi. Three, these so-called moderates are more interested in garnering invitations and donations for conferences and visits from exotic foreign locations. It is thus in their own parochial interest that the Kashmir issue continues to simmer. Engaging them would serve no purpose as they neither have any interest nor the capacity to resolve the issue.

This blogger’s one final peeve is over a myth that Yasin Malik is trying to perpetuate. A self-styled ‘Gandhian’, he is fond of proclaiming that Kashmiris willingly gave up the path of violence in 2008 but the international community hasn’t responded to it favourably. Nothing could be farther from the truth. Read this blogpost to understand how the fencing on the Line of Control and Indian Army’s three-tier deployment brought the violence down in the state. Never have we seen a moderate leader come out with a strong statement, leave alone on to the streets with his supporters to protest against terrorists, their masters across the border in Pakistan or their local supporters in Kashmir.

The edifice of Kashmiri separatism is built upon a foundation of myths, lies, half-truths and concocted facts. It needs to be treated with the contempt that it deserves. The answer lies not in placating these congenital liars and mischief-makers but in strengthening the mainstream parties and politicians in the state — the National Conference, the People’s Democratic Party, the People’s Conference, the Congress party, the Bhartiya Janata Party and the Communist Party of India. Let it be clear. Like it or not, the route to permanent peace, stability and normality in Kashmir passes through Abdullahs, Muftis, Lones, Azads, Bhim Singhs and others of their ilk.

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The only accountable interface with the state

Much-despised Members of Parliament for the vast multitude of India’s masses

Today is the third consecutive day when the winter session of the parliament has been stalled. Of course, this is appalling and reflects poorly on our parliament and parliamentarians. On a lighter note, it is still not as bad as South Korea where one member of a minority party actually set off a tear gas shell in the parliament before a vote, turning the hallway into a melee.

This, however, reminded me of an interview conducted a few days ago by my fellow blogger, Nitin Pai with Jayant Choudhry, the Rashtriya Lok Dal MP from Mathura in Uttar Pradesh. He was the only legislator who expressed in the Lok Sabha concerns raised by citizens against the draconian Information Technology Rules (IT Rules) that came into effect this year. In the interview (watch at 4:12 here), Mr. Choudhry explains that most of his constituents are not aware of the legislative duties of a member of parliament. They expect him to intervene in issues which do not fall in the domain of a Member of Parliament.

This points to two simple conclusions. One, the angst in our middle-class and english language media about the role of our parliamentarians and their obvious lack of interest in formulating legislation is disconnected from the realities of electoral politics. The member of parliament is in the ultimate free-market where he has to deliver what the consumer wants. Thus his lack of focus on his constitutional role — of formulating legislation for the complete country. He or she is first focused on his constituency, on his party and his state — the priority in the mix varying with the issue under consideration.

Second, and this is the real issue here. Most organs of the Indian State have become dysfunctional. Members of parliament and members of legislative assembly perhaps remain the only responsive and accountable interface of the Indian state for the common masses. Unless other organs of the Indian state become responsive, approachable and accountable to the majority of the public, the average Indian voter will continue to look towards his or her elected representatives to fill that vacuum. And the MP, who has go to the same voter every five years to renew his mandate, will focus on what his constituents want from him. This ends up creating an elaborate network of patronage, caste and religious affiliations and manipulation by power-brokers that weakens our electoral democracy.

This argument is also borne by an observation made by Raj Cherubal in his talk at the Takshashila Shala in Chennai (watch the video of his talk here). When he stood for the local body elections in Chennai earlier this year, he observed that invariably 100 percent of the poor slum-dwellers had their voting IDs while a fairly large number of middle class didn’t possess one. The middle class, in the first place, tries to avoid dealing with the state and where it is forced to deal with the state, it chooses to facilitate its dealing by using means at its disposal;  a paid agent, or a classmate or relative or acquaintance in bureaucracy can always help matters. The poor have no such choice and that voter ID is their premier tool of holding their elected representative accountable.

Yes, this is not the way democracy was designed to function in India.Yes, this means that “the voter’s expectation of rewards and benefits is associated not primarily with parties nor with the general outcome in the electoral and political system, but with those who manipulate his votes.” Yes, he will elect those MPs who can help him deal with the state, the state which supposedly exists to look after poor people like him. Like it or not, but this is a harsh reality of our system.

We can continue to hold our politicians and politics  in contempt. We can even treat our representative democracy with disdain. We can be smug in our belief that non-elected institutions which do not involve politicians are somehow the only ones that can be trusted. But these laments will not provide the answer. The answer will come from a state where an average citizen — and he or she is not the average reader of this blog — doesn’t have to bank on only his MP as an interface to deal with various instruments of the state.

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Slippages in the sea

Huge cost and time over-runs in India’s naval projects

Now that India has decided to go ahead with its plans for oil-exploration in the South China Sea, much against the Chinese wishes, the focus should be on the new projects of the Indian Navy. Here is an overview of four such projects (as reported by the Parliamentary Standing Committee in its latest report):

You can read the complete saga of Admiral Gorshkov aka INS Vikramaditya here. For all the other projects, this detailed reply furnished earlier this month by the Union Defence Minister in the Lok Sabha provides the details.

The state of Indian Navy’s submarines is indeed alarming.

Indian Navy has seen a steady decline in its submarine fleet lately and its ORBAT (order of battle) of submarines is down to 14 and some of them are on the verge of retirement. The existing ones include four Dr Gabler 1500 HDW/IKL designed submarines inducted between 1986 and 1994, and 10 Kilo-class double decked boats from Moscow, supplied between 1986 and 2000. The Indian Navy has acquired just two submarines since 1990. Of the ten Kilo-class submarines, the last, INS Sindhushastra (S 65), was commissioned in June 2000, as the fully converted submarine capable of firing Uran missiles. It has been assessed that the Indian Navy will have only five of its existing 10 Russian Kiloclass and four German HDW submarines by 2020. The older six Kilo- class submarines are over two decade’s old and reaching obsolescence.[Link]

Not that the state of aircraft careers with the Indian Navy is any better.

INS Viraat (29,000t light carrier, formerly HMS Hermes, last of the Centaur class) was scheduled to retire in 2009, but events forced India to extend that schedule with another refit, leaving the country without a carrier for almost a year. Even with the refit, Viraat nearing the limits of her mechanical life, even as shortages of flyable Sea Harrier fighters are creating issues of their own. Meanwhile, the delivery date for India’s locally-built 37,000t escort carrier project appears to be slipping to 2015 or so. This leaves India’s Navy with a serious scheduling problem, and no significant carrier force.[Link]

To be honest, this doesn’t inspire much confidence about taking the Chinese on in the high waters. But there is hope. As my fellow blogger, Nitin Pai explained in his Business Standard column today, it is geo-economics which provides India with many more opportunities in East Asia.

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All is well (The stolen ATM edition)

Anecdotal evidence from Srinagar

The sceptics can dismiss all the other indicators — declining violence figures in the state, the record number of tourist arrivals, the extremely high percentage of polling in elections to local bodies — but not this anecdote which tells you that things are actually getting back to normal in Kashmir. Thieves decamped with an ATM in the middle of the night from uptown Srinagar.

An ATM machine along with cash was stolen in the uptown area of the city, a police spokesman said here this afternoon. He said during the intervening night of August 29 and 30, some unidentified persons took away an ATM machine and cash at Paraypora on Srinagar-Airport road in the uptown. He said exact details about the cash looted by the thieves was not known.[UNI]

Courtesy: Cave News

Even though this sounds counterintuitive, it is a crime worth rejoicing over. After all, criminals wouldn’t dare to decamp with an ATM in the night if the town was infested with terrorists and trigger-happy security forces ready to nab them. Alas, the law will punish them for their crime — as it should — but these burglars have sent a larger message to all of us: things are indeed getting back to normal in Kashmir.

Yes, ATM machines get decamped in normal societies. If you don’t believe it, take a look at this Time magazine report from 2010 about the rise in theft of whole ATM machines in the US. If you are looking at India, here are reports of stolen ATM machines from Pune, Allahabad and Jaipur.

Oh, of course you wouldn’t buy that argument if you are a Non-resident Kashmiri novelist sitting in New York or London. After all, a normal Kashmir wouldn’t allow you to peddle your tales of conflict, violence and trauma. Kashmir and Kashmiris be damned!

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The bigger challenge

A crisis of confidence in the government of the day shouldn’t end up as a crisis of legitimacy of the state.

On this, there can be no two opinions. The dead cat has been left at the doorstep of the UPA government and the Congress Party, and deservedly so. This metaphor comes from the repeated failures of Israel-Palestine talks where the other side is left with what former US Secretary of State James Baker once referred to as the “dead cat” of prospective blame. With the caveat (of the UPA government’s inept political handling and continuous flip-flops being at the root of this crisis) out of the way, it is time to focus on some of the larger questions thrown by this agitation.

A theory has been put forth, and is being recycled continuously, that it is the political awakening of the new Indian middle class, a middle class often decried for its apathy towards the Indian state and democracy. Nothing could be farther from the truth. This is not the political engagement of the new middle class with India’s democratic system and processes. It is in fact a rejection of India’s democratic politics of 64 years. The message driven home has been: the elections and elected representatives don’t matter, the middle class votes don’t matter — because in any case, either the poor sell the vote or the rich buy out the politicians. There is no need for middle class to engage with the system. The system should instead be captured or subverted by street protests and public blackmails, with the help of the news television channels which can act as a force multiplier. When you mobilise supporters telling them that their votes don’t matter, and only street protests and blackmail do, these people are not going to stand up in queue to vote in the next elections.

It is for this precise reason that the current agitation is different from the earlier political movements in this country —- one led by Jai Prakash Narayan against the emergency imposed by Mrs. Indira Gandhi in 1975, and the other launched by Mr. V.P. Singh against corruption in 1987. Both were ‘political’ movements where the leaders were proposing an alternative political formulation in front of the electorate. By seeking votes against the ruling establishment, they were reposing their faith in India’s democratic system. In contrast, Mr. Hazare’s handlers are self-righteous activists with a disdain for politics and politicians. The basic belief arising from the nature of their work with the NGOs is that politics and government cannot deliver, and only they can do a better job. In following their beliefs, the current movement is being assiduously apolitical, where its leadership is subverting — if not overtly rejecting — the democratic institutions like the Parliament and established legislative processes.

With its implicit message of subversion in a democracy, it illustrates the paradox of the current movement. The enthusiasm and commitment of the people in coming to the streets for a non-sectarian cause in a democracy is breathtaking. Yet this is a movement without an agenda beyond pushing its own version of the Jan Lok Bill. It could bend towards a new political party the way V.P. Singh’s Jan Morcha evolved into the Janata Dal, or it could be sophisticatedly co-opted by the UPA government as a new National Advisory Council. The essential truth is that nobody can predict just where this upheaval is heading. The political parties are being wise in moving carefully — and avoiding the facile embrace of a movement whose trajectory is unknown.

As the victory procession of this movement traverses the streets of Delhi, it’s a good time to take stock — and to remind ourselves that there won’t be any automatic movement toward prosperity and rule of law. This movement will probably retard the process of economic reform in India. The populist anger is understandable, but this public sentiment of a dysfunctional state will neither help India  get much-needed international investment nor push the government towards the next generation of economic reforms. As the middle class gets further alienated from the government, the reflexive response of the UPA government would be to embrace political populism — open its coffers for schemes for the poor and the disadvantaged, leading to a fiscal catastrophe. Remember the loan melas for farmers organised by Janardhan Poojary in the 1980s to counter V. P. Singh’s challenge. And the electoral promise by the opposition parties to waive the loans off which brought India to the doorstep of the economic crisis of 1991.

However there is a fundamental threat that should worry us all: in harvesting the anger generated by this confrontation, a crisis of confidence in the government of the day shouldn’t end up as a crisis of legitimacy of the state. By constantly invoking the Right to Protest, there is a danger of seeing protests as an end by themselves, and not the means to an end. The middle class protesters have come onto the streets to demand a corruption-free life; they believe it will magically transform India in one stroke — and they want it now. Mr Hazare has promised them a magic wand. The protesters will soon realise that no such wand exists. The leaders of this movement could then end up joining the Indian democracy in disappointing the impatient middle class. Mass movements, devoid of intellectual clarity and bereft of an enlightened leadership, that start off calling for a revolution often produce the opposite.

We are in the danger of ending up with an even more disillusioned and disenchanted middle class which doesn’t believe in a social contract with the Indian State. While the existing social contract seems to have lapsed, there are no alternatives being articulated by the leaders of the current movement.

This a huge challenge for the political class. But it also provides them with an opportunity. The political class can restore sanity by changing its conduct and by regaining credibility. The government requires creative political thinking instead of waiting to tide over what it can dismiss as a momentary formation, a mere situational effect. The need of the hour is a political leadership prepared to marshal the toughness, reassurance and commitment to lead the way.

A representative parliament must also become a responsible and responsive parliament, which has the credibility and earns the respect of the masses by its actions. And India needs an engaged government — a government that doesn’t wait for five years to communicate to its people what and why of what it is doing, and what it intends to do. If at least this much can be achieved, it would be the proverbial silver lining amidst the dark clouds of the current movement.

It is true that the moral standing of the Indian state amongst its own population has declined over the years. Much of this pain has been self-inflicted by short-sighted politicians, inept bureaucrats and an ineffectual judiciary. The effect has been cumulative and devastating. India is an imperfect democracy. The answer doesn’t lie in jettisoning that democracy but in refining, reforming, improving and strengthening the democratic institutions and processes. Anything else paves the way for systems of governance which are far more dangerous than an imperfect democracy.

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The Maoist millstone around our kids’ necks

We will continue to slip into state failure and co-exist with the Maoist insurgency

Over at the ZenPundit, good man Mark Safranski tells us some harsh truths about the nature of the modern state, non-state actors and insurgencies.

The state as an organization of coercion and defense is unrivaled in human history by any other political form except the tribe. The state is fine-tuned to be a beast of prey and open challenges to the state, in all it’s panoply of might, without a long preparatory period of eroding it’s legitimacy and attriting it’s will to power, seldom turn out well unless the challenger is another state. Non-state actors who challenge state authority tend to survive and thrive initially only by being elusive, deceptive, adaptive, faster and by inflicting moral defeats until they accumulate enough armed power to co-opt, thwart, deter or topple the state by force. This requires the challenger engaging the state in such a way that it habitually reacts with excessive restraint punctuated by poorly directed outbursts of morally discrediting excessive violence (see Boyd’s OODA Loop).

When non-state actor challengers gain sufficient political momentum and break into a full-fledged armed insurgency, a dangerous tipping point has been reached because insurgencies are generally very difficult, expensive and bloody to put down, often representing a much larger pool of passive political discontent. The advantage begins to turn to the challenger because the mere existence of the insurgency is itself an indictment of the state’s competence, authority and legitimacy. Some states never manage to regain the initiative, slipping into state failure and co-existing with the insurgency for decades or being ignominiously defeated.[Link]

Two points are worth noting here, particularly in the context of the challenge of Maoist insurgency India faces today. One, India is a state which habitually reacts with excessive restraint punctuated by poorly directed outbursts of morally discrediting excessive violence. And two, the mere existence of the Maoist insurgency is itself an indictment of the state’s competence, authority and legitimacy.

Another point, perhaps more pertinent to India, is the nature of its instruments of governance (including the instruments of internal security). They are blunt instruments. When these blunt instruments are hastily applied to the problems — whether under directions of the judiciary, or under pressure from the civil society and the media — they end up causing more grief instead of solving the problems. Applying more force to these blunt instruments only tends to worsen the situation, after the initial applause for boldly using the instrument has subsided.

Finally, the way India (the union and the affected state governments) is handling, or mishandling, the Maoist insurgency, it seems unlikely to regain the initiative any time soon. We are destined to continue to slip into state failure and co-exist with the Maoist insurgency for decades. Alas.

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Breaking-up with the IMF

Pakistanis must celebrate this Independence Day.

Pakistan has given up its hopes of getting the last two tranches of $11.3 million loan from the International Monetary Fund. The loan has been suspended since May 2010 and could have been resumed till September this year. What does this breaking of ties with the IMF mean for Pakistan?

  • No budgetary support for Pakistan from other multilateral donors including the World Bank, the Asian Development Bank (ADB) and the Islamic Development Bank (IDB) because Pakistan can not provide the “letter of comfort” from the IMF.
  • Moody’s credit ratings for Pakistan are B3, and Standard & Poors credit rating is B-, which are both classified as junk status. This means that Pakistan has very limited ability to borrow money on the markets at reasonable rates.
  • Higher inflation (around 20% or so) as the government of Pakistan will continue to borrow more heavily from the State Bank of Pakistan for budgetary support.
  • Stalling of economic reforms in Pakistan which could have reduced the fiscal deficit (currently estimated at 6.5%) and put Pakistani economy back on track. These reforms include widening of the tax base (current tax-to-GDP ratio in Pakistan is 8.5%) and trimming of energy subsidies (currently at 1.5% of GDP).
  • An impending economic crisis as Pakistan starts repaying its IMF loans in February 2012. The seemingly healthy foreign exchange reserves of now will then get depleted to alarming levels. The impact will be exacerbated with the US stopping PCCF and CSF payments to Pakistan.
  • Poor foreign exchange reserves would restrict Pakistan’s ability to import items, including crude oil (a fair share of it is on deferred payment basis from Saudi Arabia).
  • This will lead to further weakening of the Pakistani rupee and an increase in the trade deficit.
  • Slashing of development budget as Pakistan’s defence budget would continue to be supported fully by the treasury, both overtly and through circular funding.
  • All this will lead to low economic growth — probably in the range of 3% per annum. This would adversely impact the already poor Human Development Indices in Pakistan.

Higher inflation, lesser development budget, high military budget, low growth rate — this is a recipe for economic disaster. Add the problems of Islamist militancy and radicalisation of Pakistani society and you can imagine the magnitude of the problem India has on its western borders.

Does the solution to this problem lie with the West or with the multilateral aid agencies? No. The problem is of Pakistan’s own creation and the solution also lies with Pakistan. No amount of external aid or soft loans can help Pakistan unless the government of Pakistan can generate greater resources of its own steam and match its expenditure (mainly consumed by the military) to the resources available. This needs structural reforms in the economy which the current Pakistani government is singularly incapable of pushing through. In fact, no other government would be in a position to do better. This exposes an endemic weakness of the Pakistani state itself: the military, landowning and political elite are getting richer at the expense of the state.

In these circumstances, the future of Pakistan’s economy — and consequently its people — doesn’t look all that bright. But today is a day of celebration for them. They must celebrate today for the rest of the year may not give them much to celebrate about, at least economically. Happy Independence Day, Pakistan!

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