Showing posts from May, 2009

Aid versus Trade, Investments, Remittances

Relief organizations have calculated that as much as 75% of foreign aid by industrialized nations is directly tied to promoting exports of goods and services that support jobs in donor nations, achieving greater trade access in receiving countries or other economic and political strategies. Some of the aid comes with so many strings attached, including preferential tendering on contracts and the hiring of expensive consultants, that only 30-40% of dollar value is ever realized for the intended recipients. Then the rampant official corruption in the developing world further eats away at a big chunk of what is left. To make matters worse, the increasing percentages of budgets and GDP claimed by debt repayments take away money needed for basic human development needs, such as education and healthcare, in the developing world.

In the United States for example, most of the food aid, including the additional $770m food aid last year, for the poor countries requires the aid recipients to pur…

Can Indian Democracy Serve Its People?

With the clear mandate for his Congress Party in recently concluded general elections, Indian Prime Minister Mr. Manmohan Singh has won the right and responsibility to deal with huge challenges in front of him. In addition to the well-known social problems of hunger, poverty, lack of sanitation and poor infrastructure, Mr. Singh has to contend with the effects of the oppressive and ingrained caste system and religious intolerance as well as the growing nexus between crime and politics in Indian democracy. The new parliament has elected 153 tainted members, some of whom have been convicted or accused of serious crimes, including murder and rape.

Nexus of Crime and Politics:

About 153 members of the new Indian parliament have either been convicted and appealed or currently accused of various crimes. A major problem is that individuals charged with even the most serious crimes are allowed to stand if they have been convicted but their cases are under appeal, according to Times Online. “T…

Indian Stock Market Celebrates Congress Victory

In a resounding vote of confidence for Prime Minister Manmohan Singh's continuing leadership, Indian and international investors are celebrating with 17% jump in the 30-share BSE index, or 2,110.79 points, to 14,284.21 points, for its highest close since Sept. 11. Trade was finally halted for Monday before noon.

Here are the key headlines from Reuters about strong and positive investor reaction in Mumbai:

* Stocks jump 17 pct, biggest rise in 17 years

* Circuit breakers halt trade twice; markets closed early

* Rupee up 9 percent from low in early March

* Morgan Stanley raises stock, growth projections

* Bond yields drop, stake sales seen to fund deficit

Next door in Pakistan, the investor reaction to news of the day was muted and the KSE-100 remained essentially flat. Karachi Stock Exchange (KSE) was up in the morning but then the sellers came in on Monday and the benchmark KSE-100 Index closed 5 points down to 7,172.

Amidst major counterinsurgency operations in and around Swat Valley a…

Can Congress Rise to the Challenge in India?

The convincing victory of Congress party in India has been an embarrassment for the pollsters and the pundits. They predicted a close contest between the Congress-led UPA and BJP-led NDA coalitions. With all but two results declared, the Congress-led alliance is projected to win 260 seats with the BJP on 157. They also said that the Third Front of regional and caste-based parties would determine the ultimate winners in Delhi. In fact, the Third Front has fallen apart, with its main components, the leftists, suffering a huge defeat, according to media reports. The BJP leadership has gracefully conceded defeat and congratulated Prime Minister Manmohan Singh on his party's success in the world's largest democracy.

Congress routed BJP in the major cities of Delhi and Mumbai while the states of Karnataka and Gujarat remained in the BJP column, indicating a split verdict from India's middle class. Unlike Pakistan's ruling PPP whose vote bank is almost entirely rural, it s…

"Loose NBCs" in Pakistan?

"Imagine if the (swine flu) spread were intentional, not natural, and the virus’ lethality had been artificially enhanced. Pakistan has many dangerous diseases and pathogens under its control. The Nunn-Lugar program can help secure the pathogen strains to ensure they do not fall into the wrong hands. Equally important, the U.S. can assist Pakistan in establishing a system designed to detect, characterize and respond to outbreaks of infectious diseases," US Senator Richard Lugar, ranking member of the US Senate's foreign relations committee, said last week.

While Pakistan's nuclear weapons capability is well known, the country has had no publicly known chemical warfare (CW) program in the past. Pakistan has also signed and ratified the 1993 Chemical Weapons Convention (CWC) and remains a member of the Organization for the Prohibition of Chemical Weapons (OPCW) in good standing, according to NTI. Pakistan is self-sufficient in the production of chemicals such as sulfur…

Optimistic Signs For Pakistan's Economy

Amidst major counterinsurgency operations in and around Swat Valley and growing refugee crisis, there are signs of optimism by investors and bond holders in Pakistan's economy. The KSE-100, Karachi's stock index, is up 27 percent this year, compared with a 12 percent gain in MSCI’s emerging-market stock index of 26 emerging economies, including Argentina, Brazil, Chile, China, Colombia, Czech Republic, Egypt, Hungary, India, Indonesia, Israel, Jordan, Korea, Malaysia, Mexico, Morocco, Pakistan, Peru, Philippines, Poland, Russia, South Africa, Taiwan, Thailand, Turkey and Venezuela. The Pakistani rupee, which declined 22 percent against the dollar last year, the second-worst performer in Asia, fell 1.8 percent this year.

Pakistan’s 6.875 percent dollar bond maturing in June 2017 yielded 18.62 percent last month, versus a record high of 26.30 percent on Nov. 3, 2008, according to data compiled by Bloomberg. The price has climbed to 52 cents on the dollar, from as low as 35 cent…

Poverty Alleviation and Microfinancing in Pakistan

During 2002 to 2007, Pakistan's economy grew at an average rate of 7% annually, creating about 2.5m jobs a year, barely keeping up with the number of young people ready to join the work force each year, according to Salman Shah, senior economic adviser to former President Musharraf of Pakistan. However, the current economic slowdown has resulted in significant job losses in almost all private sectors of the economy, increasing visible signs of poverty. According to a BBC report last year, three times a day, hundreds of men, women and children line up outside dozens of Karachi restaurants for meals which are paid for by philanthropists and charity donors. These lines were considerably shorter, or non-existent until early 2008. Many of those lining up are industrial workers who have lost their jobs. Credit crunch has taken its toll on all businesses and consumers, even the microfinance sector helping small entrepreneurs has not been spared. There were about 1.8 million beneficiaries…

Can Shakti Solar Success Inspire Pakistanis?

Reliable 24X7 availability of electricity is taken for granted in most of the developed world. Whenever consumers plug their favorite gadgets into the wall socket, it is assumed that the power will be there. Everyone has access to it. Electrical power outages are extremely rare.

Electricity empowers consumers by enhancing their lives through better learning and entertainment, higher productivity and income, greater comfort, increased safety, superior health, and improved economy. People in the developed world live with the benefits of electricity everyday. While most people give little thought to where electricity comes from, there are many different ways to generate electricity - including coal, oil, gas, hydroelectric, nuclear, wind and solar. It is delivered to individual homes by extensive national grid systems.

In most of the developing nations, however, the availability of electricity to majority of the population is either unreliable or non-existent. The lack of such an essent…