Credit Suisse: Pakistan's Wealth Inequality is the Lowest in South Asia

Data released by Credit Suisse with its Global Wealth Report 2017 shows that Pakistan is the most egalitarian nation in South Asia. It also confirms that the median wealth of Pakistani households is three times higher than that of households in India.

Wealth Inequality:

Inequality is measured in terms of Gini index. It ranges from 0% for perfect equality (when everyone has the same wealth)  to 100% for total inequality (when all of the wealth is owned by one person).  On this scale, Pakistan’s Gini index is 52.6%, Bangladesh’s 57.9%, Sri Lanka’s 66.5%, Nepal’s 67.3%, China’s 78.9% and India's 83%.

Data Source: Credit Suisse Graph: Counterview


Household Wealth:

Here is per capita wealth data for India and Pakistan as of mid-2017, according to Credit Suisse Wealth Report 2017 released recently.

Pakistan average wealth per adult: $5,174 vs India $5,976
Pakistan median wealth per adult: $3,338 vs India $1,295

Average household wealth in Pakistan is $15,522 (3 adults) vs India $14,940 (2.5 adults)
Median household wealth in Pakistan is $10,014  (3 adults) vs India $3,237 (2.5 adults)

Pakistan Gini Index 52.6% vs India 83%

Ownership of Appliances and Vehicles: 

Growing household wealth in developing nations like India and Pakistan is reflected in  ownership of consumer durables like computers, home appliances and vehicles. This data is sourced from periodic household surveys like NSS (National Sampling Survey) in India and PSLM (Pakistan Social and Living Standards Measurement) in Pakistan.

Durables Ownership in India and Pakistan. Source: KSBL


India-Pakistan Comparison:

Dr. Jawaid Abdul Ghani, a professor at Karachi School of Business Leadership, has recently analyzed household surveys in India and Pakistan to discover the following:

1.  As of 2015, car ownership in both India and Pakistan is about the same at 6% of households owning a car. However, 41% of Pakistani household own motorcycles, several points higher than India's 32%.

2. 12% of Pakistani households own a computer, slightly higher than 11% in India.

3. Higher percentage of Pakistani households own appliances such as refrigerators (Pakistan 47%, India 33%), washing machines (Pakistan 48%, India 15%) and fans (Pakistan 91%, India 83%).

4. 71% of Indian households own televisions versus 62% in Pakistan.

Durables Ownership Growth in Pakistan. Source: KSBL
Growth over Time:

Dr. Abdul Ghani has also analyzed household data to show that the percentage of Pakistani households owning washing machines has doubled while car and refrigerator ownership has tripled and motorcycle ownership jumped 6-fold from 2001 to 2014.

Income/Consumption Growth in Pakistan. Source: KSBL

Rapid Income Growth:

Rising ownership of durables in Pakistan has been driven by significant reduction in poverty and growth of household incomes, according to Dr. Abdul Ghani's research. Percentage of households with per capita income of under $2 per day per person has plummeted from 57% in 2001 to 7% in 2014. At the same time, the percentage of households earning $2 to $10 per day per person has soared from 42% of households in 2001 to 87% of households in 2014.  The percentage of those earning over $10 per day per person has jumped 7-fold from 1% of households in 2001 to 7% of households in 2014.

Summary:

Credit Suisse wealth data for 2017 shows that Pakistan has the lowest wealth inequality in its region as measured by Gini index. Lower inequality can be seen in terms of rising percentage of households that can afford to buy durables like appliances and vehicles as reported by Dr. Abdul Ghani of Karachi School of Business and Leadership (KSBL).

Related Links:

Haq's Musings

Credit Suisse Wealth Report 2016

Pakistan: A Majority Middle Class Country

Karachi School of Business and Leadership

State Bank: Pakistan's Actual GDP Higher Than Officially Reported

College Enrollment in Pakistan

Musharraf Accelerated Development of Pakistan's Human and Financial Capital

China-Pakistan Economic Corridor

Comments

Riaz Haq said…
#Broadband subscribers including #3G, #4G cross 49 million in #Pakistan. #Internet #Mobile https://dnd.com.pk/broadband-subscribers-including-3g-4g-cross-49-million-in-pakistan/135907 … via @Dispatch News Desk

The total broadband subscribers including 3G and 4G services have crossed around 49 million in the Country till October this year, registering a reasonable growth rate with each passing month.

As per latest figures issued by Pakistan Telecommunication Authority (PTA), of the total number of broadband users, major contribution has been made in shape of 3G and 4G subscribers by Mobile Phone Operators which reached 46 million by October 2017.

The number of broadband subscribers in other technologies included DSL 1,550050, HFC 51,715, Wimax 151,330, FTTH 54,107 and EvDO 55,8,740. The tele-density of total broadband has reached 22.6 per cent while 3G and 4G tele-density of the total subscriber base crossed 21.6 per cent.

Experts of telecom industry are having a viewpoint that portable mobile broadband devices like MiFi and Wingles are one of the main reasons of this growth in 3G/4G subscribers and many more will follow this trend in upcoming days.

Meanwhile, Country’s largest mobile phone operator, Mobilink has overtaken its competitors as 3G/4G player after official figures were released by PTA. Jazz subscribers base was 13.94 million 3G and 1.56 million 4G till the period mentioned.

A senior official of the Company said key to this leading position is consistent investment to further innovate on behalf of subscribers by delivering not just the best 3G/4G and voice network, but also improvements in customer service, and product lines.

As per statistics, the 3G subscribers of Zong have now extended to 8.99 million and 4.78 4G users by end of October 2017. The number of Telenor 3G subscribers was 10.64 million and 1.16 4G users till the period mentioned above.


An increase has also been observed in Ufone subscribers base, reaching 5.45 till the period from 5.3 million 3G users by August 2017.

Meanwhile, the mobile broadband is helping in widespread adoption of social media which has an impact on everyday lives of billions of people around the world.

Social media has also been gaining vast popularity among masses in Pakistan. The introduction of mobile broadband coupled with influx of affordable Smartphones had a catalytic effect on use of social media.

People turn towards social media to voice their opinions, experiences, suggestions and feedback on any topic or constituent of the society.

http://www.pta.gov.pk/en/telecom-indicators
Riaz Haq said…
#Pakistan's bottom quintile #income share has increased from 8.1% to 9.6% since 1990. It is the highest in #Asia, #world, according to UNESCAP Statistical Yearbook. #inequality http://www.unescap.org/sites/default/files/SYB2015_Full_Publication.pdf …

Although more people in China have
lifted themselves out of poverty than any other
country in the world, the poorest quintile in that
country now accounts for a lower percentage
of total income (4.7 per cent) than in the early
1990s (8.0 per cent). The same unfortunate
trend is observed for a number of other
countries, including in Indonesia (from 9.4 per
cent to 7.6) and in the Lao People’s Democratic
Republic (from 9.3 per cent to 7.6).

In a number of other countries, people in the
poorest income quintile have increased their
share of total income including in Kyrgyzstan
(from 2.5 per cent to 7.7), the Russian Federation
(4.4 per cent to 6.5), Kazakhstan (7.5 per cent to
9.5) and Pakistan (8.1 per cent to 9.6).

Riaz Haq said…
Rising Living Standards of the Poorest 20% in Pakistan:

According to the latest World Report titled "Pakistan Development Update: Making Growth Matter" released this month, Pakistan saw substantial gains in welfare, including the ownership of assets, the quality of housing and an increase in school enrollment, particularly for girls.

First, the ownership of relatively more expensive assets increased even among the poorest. In the bottom quintile, the ownership of motorcycles increased from 2 to 18 percent, televisions from 20 to 36 percent and refrigerators from 5 to 14 percent.

In contrast, there was a decline in the ownership of cheaper assets like bicycles and radios.

http://www.riazhaq.com/2016/11/world-bank-reports-big-jump-in-living.html
Riaz Haq said…
#India’s Missing #MiddleClass : Multinational businesses relying on Indian consumers face disappointment. #China #Inequality

https://www.economist.com/news/briefing/21734382-multinational-businesses-relying-indian-consumers-face-disappointment-indias-missing-middle …


https://twitter.com/haqsmusings/status/951542797483499520


For all the talk of wanting to tap the middle class, no firm moving into India thinks it is targeting the middle of the income distribution. India’s mean GDP per head is just $1,700, and 80% of the population makes less than that. Adjust for purchasing-power parity by factoring in the cheaper cost of goods and services in India and you can bump the mean up to $6,600. But that is less than half the figure for China (see chart 2) and a quarter of that for Russia. What is more, foreign companies have to take their money out of India at market exchange rates, not adjusted ones.

Defining the middle class anywhere is tricky. India’s National Council of Applied Economic Research has used a cut-off of 250,000 rupees of annual income, or about $10 a day at market rates. Thomas Piketty and Lucas Chancel of the Paris School of Economics found in a recent study that one in ten Indian adults had an annual income of more than $3,150 in 2014. That leaves only 78m Indians making close to $10 a day.

Meagre market

Even adjusting for the lower cost of living, that is hardly a figure to set marketers’ heartbeats racing. The latest iPhone, which costs $1,400 in India, represents five month’s pay for an Indian who just makes it into the top 10% of earners. And such consumers are not making up through growing numbers what they lack in individual spending power. The proportion making around $10 a day hardly shifted between 2010 and 2016.

Another gauge is whether people can afford the more basic material goods they crave. For Indians, that typically means a car or scooter, a television, a computer, air conditioning and a fridge. A government survey in 2012 found that under 3% of all Indian households owned all five items. The median household had no more than one. How many of them will be anywhere near able to buy an iPhone or a pair of Levi’s if they cannot afford a TV set?

To get in the top 1% of earners, an Indian needs to make just over $20,000. Adjusted for purchasing-power parity, that is a comfortable income, equating to over $75,000 in America. But in terms of being able to afford goods sold at much the same price across the world, whether a Netflix subscription or Nike trainers, more than 99% of the Indian population are in the same league as Americans that count as below the poverty line (around $25,000 for a family of four), points out Rama Bijapurkar, a marketing consultant.

The top 1% of Indians, indeed, are squeezing out the rest. They earn 22% of the entire income pool, according to Mr Piketty, compared with 14% for China’s top 1%. That is largely because they have captured nearly a third of all national growth since 1980. In that period India is the country with the biggest gap between the growth of income for the top 1% and the growth of income for the population as a whole. At the turn of the century, the richest 10% of Indians made 40% of national income, about the same as the 40% below them. But far from becoming a middle class, the latter’s share of income then slumped to under 30%, while those at the top went on to control over half of all income (see chart 3).
Riaz Haq said…
India May Be The World's Fastest Growing Economy, But Regional Disparity Is A Serious Challenge

https://www.forbes.com/sites/salvatorebabones/2018/01/10/india-may-be-the-worlds-fastest-growing-economy-but-regional-disparity-is-a-serious-challenge/#23d049bd53ac

All of India is poor. The GDP per capita of Delhi, the National Capital Territory with a population of 20-25 million, is roughly equal to that of Indonesia at around $4,000. Bihar and Uttar Pradesh, India's poorest states, are on a par with sub-Saharan Africa (less than $1,000). And geographical disparities matter much more in India than in other large countries. In the United States, the richest state (Massachusetts) has roughly twice the GDP of the poorest (Mississippi). In China the ratio is 4-1 between Beijing and Gansu. In India, Delhi's GDP per capita is eight times that of Bihar.

In southern India, Bangalore is famous as India's technology capital, home to companies like Flipkart, Infosys and Wipro, as well as the Indian Institute of Science, India's top-ranked university. Yet the state of which Bangalore is the capital, Karnataka, has a GDP per capita of around $2,400, roughly the same as Papua New Guinea. Tech entrepreneurs drive to work past open sewers and shantytowns. The real Silicon Valley in California has similar problems with inequality, but the scale of inequality in Bangalore is something completely different.

If India's Prime Minister Narendra Modi is serious about his election slogan Sabka Saath, Sabka Vikas (Together with All, Progress for All), then reducing India's regional disparities should be high on his agenda. Modi's GST reform was an indispensable measure to reduce internal trade barriers, and his highway construction program is a good start toward knitting the country together. But India will need a lot more regional growth and much more generous fiscal transfers to its poorer states to overcome its extreme regional disparities.

India as a whole won't reach middle-income status until it unites its poorer states into the same Incredible India economy as the rest of the country. That's a challenge beyond the remit of any one government. But Modi and his BJP government swept to power in 2014 on the votes of India's poorest states, of the people most excluded from India's economic growth. If Modi wants to retain his majority in the next parliamentary elections, he would do well to focus on reducing the regional disparities that played such a key role in bringing him to office in the first place.
Riaz Haq said…
Hold your elephants. The Indian middle class conjured up by the marketers and consultants scarcely exists. Firms peddling anything much beyond soap, matches and phone-credit are targeting a minuscule slice of the population (see article). The top 1% of Indian adults, a rich enclave of 8m inhabitants making at least $20,000 a year, equates to roughly Hong Kong in terms of population and average income. The next 9% is akin to central Europe, in the middle of the global wealth pack. The next 40% of India’s population neatly mirrors its combined South Asian poor neighbours, Bangladesh and Pakistan. The remaining half-billion or so are on a par with the most destitute bits of Africa. To be sure, global companies take the markets of central Europe seriously. Plenty of fortunes have been made there. But they are no China.

https://www.economist.com/news/leaders/21734454-should-worry-both-government-and-companies-india-has-hole-where-its-middle-class-should-be

Centre parting

Worse, the chances of India developing a middle class to match the Middle Kingdom’s are being throttled by growing inequality. The top 1% of earners pocketed nearly a third of all the extra income generated by economic growth between 1980 and 2014, according to new research from economists including Thomas Piketty. The well-off are ten times richer now than in 1980; those at the median have not even doubled their income. India has done a good job at getting those earning below $2 a day (at purchasing-power parity) to $3, but it has not matched other countries’ records in getting those on $3 a day to earning $5, those at $5 a day to $10, and so on. Middle earners in countries at India’s stage of development usually take more of the gains from growth. Eight in ten Indians cite inequality as a big problem, on a par with corruption.

The reasons for this failure are not mysterious. Decades of statist intervention meant that when a measure of liberalisation came in the early 1990s, only a few were able to benefit. The workforce is woefully unproductive—no surprise given the abysmal state of India’s education system, which churns out millions of adults equipped only for menial work. Its graduates go on to toil in small or micro-enterprises, operating informally; these “employ” 93% of all Indians. The great swell of middle-class jobs that China created as it became the workshop to the world is not to be found in India, because turning small businesses into productive large ones is made nigh-on impossible by bureaucracy. The fact that barely a quarter of women work—a share that has seen a precipitous decline in the past decade—only makes matters worse.

Good policy can do an enormous amount to improve prospects. However, hope should be tempered by realism. India is blessed with a deeply entrenched democratic system, but that is no shield against poor decisions. The sudden and brutal “demonetisation” of the economy in 2016 was meant to target fat cats, but ended up hurting everybody. And the path to prosperity walked by China, where manufacturing produced the jobs that pushed up incomes, is narrowing as automation limits opportunities for factory work.

All of which means that companies need to deal with the India that exists today rather than the one they wish to emerge. A strategy of waiting for Indians to develop a taste for products that the global middle class indulges in—cars as income per head crosses one threshold, foreign holidays when it crosses the next—may lead to decades of frustration. Only 3% of Indians have ever been on an aeroplane; only one in 45 owns a car or lorry. If nearly 300m Indians count as “middle class”, as HSBC has proclaimed, some of them make around $3 a day.
Riaz Haq said…
India's Richest 1% Cornered 73% Of Wealth Generated Last Year: Oxfam Survey
Besides, 67 crore Indians comprising the population's poorest half saw their wealth rise by just 1 per cent, as per the survey released by the international rights group Oxfam.

https://www.ndtv.com/india-news/indias-richest-1-corner-73-of-wealth-generation-oxfam-survey-1802968



Besides, 67 crore Indians comprising the population's poorest half saw their wealth rise by just 1 per cent, as per the survey released by the international rights group Oxfam hours before the start of the annual congregation of the rich and powerful from across the world in this resort town.

The situation appears even grimmer globally, where 82 per cent of the wealth generated last year worldwide went to the 1 per cent, while 3.7 billion people that account for the poorest half of population saw no increase in their wealth.

The annual Oxfam survey is keenly watched and is discussed in detail at the World Economic Forum Annual Meeting where rising income and gender inequality is among the key talking points for the world leaders.

Last year's survey had showed that India's richest 1 per cent held a huge 58 per cent of the country's total wealth higher than the global figure of about 50 per cent.

This year's survey also showed that the wealth of India's richest 1 per cent increased by over Rs. 20.9 lakh crore during 2017 -- an amount equivalent to total budget of the central government in 2017-18, Oxfam India said.

The report titled 'Reward Work, Not Wealth', Oxfam said, reveals how the global economy enables wealthy elite to accumulate vast wealth even as hundreds of millions of people struggle to survive on poverty pay.
"2017 saw an unprecedented increase in the number of billionaires, at a rate of one every two days. Billionaire wealth has risen by an average of 13 per cent a year since 2010 -- six times faster than the wages of ordinary workers, which have risen by a yearly average of just 2 per cent," it said.

In India, it will take 941 years for a minimum wage worker in rural India to earn what the top paid executive at a leading Indian garment firm earns in a year, the study found.

In the US, it takes slightly over one working day for a CEO to earn what an ordinary worker makes in a year, it added.

Citing results of the global survey of 120,000 people surveyed in 10 countries, Oxfam said it demonstrates a groundswell of support for action on inequality and nearly two-thirds of all respondents think the gap between the rich and the poor needs to be urgently addressed.

With Prime Minister Narendra Modi attending the WEF meeting in Davos, Oxfam India urged the Indian government to ensure that the country's economy works for everyone and not just the fortunate few.


It asked the government to promote inclusive growth by encouraging labour-intensive sectors that will create more jobs; investing in agriculture; and effectively implementing the social protection schemes that exist.

Oxfam also sought sealing of the "leaking wealth bucket" by taking stringent measures against tax evasion and avoidance, imposing higher tax on super-rich and removing corporate tax breaks.

The survey respondents in countries like the US, UK and India also favoured 60 per cent pay cut for CEOs.

The key factors driving up rewards for shareholders and corporate bosses at the expense of workers' pay and conditions, Oxfam said, include erosion of workers' rights; excessive influence of big business over government policymaking; and the relentless corporate drive to minimise costs in order to maximise returns to shareholders.

About India, it said the country added 17 new billionaires last year, taking the total number to 101. The Indian billionaires' wealth increased to over Rs. 20.7 lakh crore -- increasing during last year by Rs. 4.89 lakh crore, an amount sufficient to finance 85 per cent of the all states' budget on health and education.
Riaz Haq said…
#Pakistan has the highest intergenerational income #mobility and the lowest #inequality among emerging economies. #WEF2018 #Davos https://www.weforum.org/agenda/2018/01/economist-plan-to-heal-fractured-societies/ …

https://twitter.com/haqsmusings/status/958166999166730242

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