Misery Index: Who's Less Miserable? India or Pakistan?

Pakistanis are less miserable than Indians in the economic sphere, according to the Hanke Annual Misery Index (HAMI) published in early 2021 by Professor Steve Hanke. With India ranked 49th worst and Pakistan ranked 39th worst, both countries find themselves among the most miserable third of the 156 nations ranked. Hanke teaches Applied Economics at Johns Hopkins University in Baltimore, Maryland. Hanke explains it as follows: "In the economic sphere, misery tends to flow from high inflation, steep borrowing costs, and unemployment. The surefire way to mitigate that misery is through economic growth. All else being equal, happiness tends to blossom when growth is strong, inflation and interest rates are low, and jobs are plentiful". Several key global indices, including misery index, happiness index, hunger index, food affordability index, labor force participation rate,  ILO’s minimum wage data, all show that people in Pakistan are better off than their counterparts in India.   

Hanke's Misery Index: 

Hanke's Annual Misery Index (HAMI) ranks Pakistan 49th (32.5) and India 39th (35.8) most miserable for year 2020. Bangladesh is significantly better than both India and Pakis­tan with a misery index of 14 and rank of 129. Venezuela ranks number 1 as the world's most miserable country followed by Zimbabwe 2nd, Sudan 3rd, Lebanon 4th and Suriname 5th among 156 countries ranked this year.  The rankings for the two South Asian nations are supported by other indices such as the World Bank Labor Participation data, International Labor Organization Global Wage Report, World Happiness Report, Food Affordability Index and Global Hunger Index.  


Hanke's Annual Misery Index 2021. Source: National Review

Employment and Wages:

Labor force participation rate in Pakistan is slightly above 50% during this period, indicating about 2% drop in 2020.  Even before COVID pandemic, there was a steep decline in labor force participation rate in India. It fell from 52% in 2014 to 47% in 2020. 

Labor Force Participation Rates in Pakistan (Top), India (bottom). Source: Trading Economics

The International Labor Organization (ILO) Global Wage Report 2021 indicates that the minimum wage in Pakistan is the highest in South Asia region. Pakistan's minimum monthly wage of US$491 in terms of purchasing power parity while the minimum wage in India is $215. The minimum wage in Pakistan is the highest in developing nations in Asia Pacific, including Bangladesh, India, China and Vietnam, according to the International Labor Organization.

Monthly Minimum Wages Comparison. Source: ILO

Global Food Security:

Pakistan (with 52.6 points) has scored better than  Bangladesh (48.8), Nepal (48.3) and India (50.2 points) in terms of food affordability.  Sri Lanka scored higher with 62.9 points in this category on the GFS Index 2021,  according to a global report released by Economist Impact and Corteva Agriscience recently. 

Ireland, Australia, the UK, Finland, Switzerland, the Netherlands, Canada, Japan, France and the US shared the top rank with the overall GFS scores in the range of 77.8 and 80 points on the index. 

In overall food security, Pakistan ranked 75th with a score of 54.7, ahead of Sri Lanka (77), Nepal (79) and Bangladesh (84), but behind India ranked 71st with a score of 57.2 points on the GFS Index 2021 ranking 113 countries.

Pakistan improved its GFS score by 9 points (to 54.7 in 2021 from 45.7 in 2012) while India’s score improved only by 2.7 points to 57.2 in 2021 from 54.5 in 2012.  Nepal improved by 7 points (to 53.7 points in 2021 from 46.7 points in 2012) and Bangladesh by 4.7 points (to 49.1 in 2021 from 44.4 points in 2012). China’s score improved by 9.6 points to 71.3 in 2021 from 61.7 in 2012, the report said. “The GFSI looks beyond hunger to identify the underlying factors affecting food insecurity around the world,” said Tim Glenn, Executive Vice-President and Chief Commercial Officer, Corteva Agriscience.

The cost of living in Pakistan is the world's lowest despite recent inflationary trends, according to the Cost of Living Index for mid-2021 as published by Numbeo.  Numbeo Grocery Index reports that the food prices in Pakistan are the second cheapest in the world. 

History of Inflation in Pakistan. Source: Statista



Global Hunger Index:

Global Hunger Index 2021 report has ranked Pakistan 92nd, ahead of India ranked 101st among 116 countries.  Pakistan's other South Asian  neighbors are ranked better: Nepal (76), Bangladesh (76), Myanmar (71). 

Hunger Trends in South Asia. Source: Global Hunger Index 

Pakistan has been reducing hunger at a faster rate than India but slower than other South Asian neighbors like Bangladesh and Nepal.  

World Happiness Index: 

Amid the COVID19 pandemic, Pakistan's World Happiness ranking has dropped from 66 (score 5.693) among 153 nations last year to 105 (score 4.934) among 149 nations ranked this year. Neighboring India is ranked 139 and Afghanistan is last at 149. Nepal is ranked 87, Bangladesh 101, Pakistan 105, Myanmar126 and Sri Lanka129. Finland retained the top spot for happiness and the United States ranks 19th. 

Pakistan Happiness Index Trend 2013-2021


One of the key reasons for decline of happiness in Pakistan is that the country was forced to significantly devalue its currency as part of the IMF bailout it needed to deal with a severe balance-of-payments crisis. The rupee devaluation sparked inflation, particularly food and energy inflation. Global food prices also soared by double digits amid the coronavirus pandemic, according to Bloomberg News. Bloomberg Agriculture Subindex, a measure of key farm goods futures contracts, is up almost 20% since June. It may in part be driven by speculators in the commodities markets. These rapid price rises have hit the people in Pakistan and the rest of the world hard. In spite of these hikes, Pakistan remains among the least expensive places for food, according to recent studies. It is important for Pakistan's federal and provincial governments to rise up to the challenge and relieve the pain inflicted on the average Pakistani consumer.  

Pakistan's Real GDP: 

Many economists believe that Pakistan’s economy is at least double the size that is officially reported in government's Economic Surveys. The GDP has not been rebased in more than a decade. It was last rebased in 2005-6 while India’s was rebased in 2011 and Bangladesh’s in 2013. Just rebasing the Pakistani economy will result in at least 50% increase in official GDP.  A research paper by economists Ali Kemal and Ahmad Wasim of PIDE (Pakistan Institute of Development Economics) estimated in 2012 that the Pakistani economy’s size then was around $400 billion. All they did was look at the consumption data to reach their conclusion. They used the data reported in regular PSLM (Pakistan Social and Living Standard Measurements) surveys on actual living standards. They found that a huge chunk of the country's economy is undocumented. 

Pakistan's service sector which contributes more than 50% of the country's GDP is mostly cash-based and least documented. There is a lot of currency in circulation. According to the State Bank of Pakistan (SBP), the currency in circulation has increased to Rs. 7.4 trillion by the end of the financial year 2020-21, up from Rs 6.7 trillion in the last financial year,  a double-digit growth of 10.4% year-on-year.   Currency in circulation (CIC), as percent of M2 money supply and currency-to-deposit ratio, has been increasing over the last few years.  The CIC/M2 ratio is now close to 30%. The average CIC/M2 ratio in FY18-21 was measured at 28%, up from 22% in FY10-15. This 1.2 trillion rupee increase could have generated undocumented GDP of Rs 3.1 trillion at the historic velocity of 2.6, according to a report in The Business Recorder. In comparison to Bangladesh (CIC/M2 at 13%), Pakistan’s cash economy is double the size. Even a casual observer can see that the living standards in Pakistan are higher than those in Bangladesh and India. 

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Comments

Riaz Haq said…
The currency in circulation (CIC) has increased to over Rs. 7 trillion in Pakistan, representing the growth in the size of the economy and the traditional use of cash among the citizens as money.

https://propakistani.pk/2021/11/01/pakistans-currency-in-circulation-soars-above-rs-7-trillion/

According to the State Bank of Pakistan (SBP), the currency in circulation has increased to Rs. 7.4 trillion by the end of the financial year 2020-21 as compared to the previous level of the last financial year in which it stood at Rs. 6.7 trillion, showing a double-digit growth of 10.4 percent year-on-year.

The currency in circulation is the overall currency consisting of various denominations of banknotes being used as money in an economy for the exchange of goods and services and informal savings, excluding the financial sector.

The size of Pakistan’s economy has increased significantly, which showed the double-digit growth in currency in circulation, said Tahir Akbar, Head of Research at Arif Habib Limited. It is pertinent to mention here that Pakistan’s GDP grew by 3.94 percent, which was well above the target set for the financial year 2020-21 of 2.1 percent, and COVID-19 induced contraction of 0.47 percent in FY20.

Accordingly, the banking regulator issued currency notes in order to meet the requirements of the local economy. The banknote printing charges of SBP increased to Rs. 15.762 billion in FY21 from Rs. 13.325 billion in FY20, thereby registering an increase of 18 percent mainly due to larger volumes of printing and an increase in printing rates.

The CIC of the country stands from 28 to 30 percent viz-a-viz the volume of broad money size, he further said. This is the average percentage of CIC when Pakistan is compared with similar economies. On the other hand, the CIC percentage is less than 20 percent of the broad money in most of the developed countries, where the digitization of the economy is much higher than in Pakistan.

Besides, the currency in circulation stands at Rs. 7.4 trillion, the value of money deposits maintained by the banking system of the country stood at Rs. 19.2 trillion, which is in addition to the value of assets and investments made by the country.

Financial Inclusion and Digitization of Banking System

The higher currency in circulation also means that the size of Pakistan’s undocumented economy is huge. Besides, the cash available in the economy also causes a factor of money-led inflation.

Since the last decades, the banking regulator along with the private sector has been working aggressively towards the financial inclusion of the economy through introducing various new avenues such as branchless banking, mobile and internet banking, payment cards, payment gateway operators, POS operators, digital wallets, QR payments, etc.

The use of digital means for the transaction of money has increased tremendously, but there is a big room for improvement, which needs customers’ confidence over these tools on the one hand, whereas the literacy of electronic banking is also needed on the other hand.

A senior banker and founder of branchless banking in Pakistan, Nadeem Hussain, told ProPakistani,

Yes, the cash in circulation is increasing because the parts of our economy which are not under the tax net usually accept cash and the volumes are growing. This means the service sector especially real estate , Kiryana stores, freelancers , plumbers/dentists/electricians,

He pointed out that the country’s service sector constitutes 50 percent of the economy and the bulk of it is cash-based.

In FY20, the volume of paper-based transactions within the banking sector stood at Rs. 151 billion as compared to transaction volume through electronic or digital banking standing at Rs.86 billion. The electronic banking transactions registered year-on-year growth of 31.1 percent, which implies an increase in the adoption of digital means for payments.
Riaz Haq said…
A base year is a benchmark with reference to which national account figures such as GDP, gross domestic saving and gross capital formation are calculated.

According to the new base year, Bangladesh was an economy of Tk 34,840 billion in current prices in FY21, up 15.7 per cent from Tk 30,111 billion as per the previous base year.

https://www.thedailystar.net/business/economy/news/gdp-size-growth-down-new-base-year-takes-effect-2211826



"The size of our economy is huge, and the new base year will reflect it," he said, adding that a real scenario would allow the government to make more informed policy decisions.

Zahid Hussain, a former chief economist of the World Bank's Dhaka office, also welcomed the new base year.

He said timely revisions to data on GDP and its components determine the accuracy of national account estimates and their comparability across countries.

With the finalisation of the new series, Bangladesh will be ahead of all other Saarc countries in terms of the recency of the national account's base year.

Only the Maldives (2014) and India (2011-12) come close, while Pakistan (2005-06) and Sri Lanka (2010) are well behind.

"Improved data sources increase the coverage of economic activities as new weights for growing industries reflect their contributions to the economy more accurately," said Hussain.

The last revision was done in 2013.

The size of the agriculture, industry and services sectors has expanded as per the new base year.

The new base year uses data on about 144 crops while computing the contribution of the agriculture sector to the GDP, which was 124 crops in the previous base year.

The gross value addition by the agriculture sector rose to Tk 4,061 billion in current prices in the last fiscal year, up from Tk 3,846 billion in the old estimate, the BBS document showed.

The industrial sector saw the addition of the data on the outputs of Ashuganj Power Station Company, North-West Power Generation Company, Rural Power Company, cold storage for food preservation, Rajshahi Wasa, and the ship-breaking industry.
Riaz Haq said…
If you walk into a clothing store in any shopping mall in a major Chinese city – whether it is an international or a local brand – “Country of Origin: Pakistan” hang tag is not uncommon.

Especially in the jeans wear section, these high-quality Pakistani products are increasingly popular with Chinese consumers.

https://tribune.com.pk/story/2330653/china-to-bolster-textile-sector

According to the Pakistani government, the textile industry contributes nearly 60% to the country’s total exports. Denim fabric, as one of Pakistan’s main garment products exported to the world, occupies a pivotal position in its garment industry chain.

According to the Pakistan Bureau of Statistics (PBS), exports of denim fabric from Pakistan reached Rs96.92 billion during the year 2017-18, a commendable performance of the denim sector.

However, whether it is jeans wear or other garment products, the impact of recent global cotton prices and other factors cannot be ignored.

Pakistani industrialists argue that the textile and garment industry of the country faces a series of challenges, including low production of cotton and difficulty in obtaining financing for new facilities.

Cotton industry: China-Pakistan cooperation

Pakistan, one of the world’s largest cotton producers, is finding it increasingly hard to meet its own needs.

“Last year, we had to import more than 50% of cotton,” said Sapphire Fibre Executive Director Muhammad Abdullah. Low production and quality force the local industry to choose imports.

“So far, the domestic consumption of cotton is 14 million bales. Nevertheless, Pakistan only harvested 5.6 million bales of cotton in the last season,” he said.

“As far as I am concerned, the seed of high quality must be the top priority. Unless we can increase the yield per unit area, the demand cannot be met,” he added.

The idea of Muhammad Abdullah was echoed by Central Cotton Research Institute Director Zahid Mehmood. “Under CPEC, we hope to see the plan between China and Pakistan in cottonseed cooperation soon,” he said.

Regarding this, Xinjiang Agricultural University Deputy Dean Chen Quanjia introduced further planning during an interview with China Economic Net.

“Local high temperature-resistant cotton varieties in Pakistan are of great use to us,” Quanjia said. “In Xinjiang, the heat resistance of cottonseed is particularly indispensable when facing the extreme high temperature. At the same time, our high-yielding cotton varieties are also needed for Pakistani farmers,” he said.

Recently, international cotton futures have remained high, and China’s domestic cotton futures prices have also risen simultaneously.

According to a survey conducted by the China Cotton Association, the country’s cotton planting area this year has dropped year-on-year, but due to favourable weather conditions, the total output remains relatively stable.

It is expected to be 5.83 million tons, down 1.5% year-on-year. Improving cotton production to maintain the stability of the futures market will be a problem, demanding prompt solutions from China and Pakistan.

Besides, the impurity, which is caused by 100% manual picking, also worsens the dilemma of Pakistan cotton.

Sapphire Fibre cotton field supervisor Kamran Razaq said that the impurity content of imported cotton is 4.5%, while the counterpart in Pakistan cotton is 8-9%, which is well below the criteria of textile mills.

Accordingly, Xinjiang Agricultural University and University of Agriculture Faisalabad (UAF) have set up experimental fields in Faisalabad and plan to test mechanical picking in Pakistan.

“In north Xinjiang, one of the biggest cotton areas in China, the mechanisation can reach 90%. We use machine picking everywhere so as to decrease the impurities,” Chen Quanjia said, adding that in future, China’s advanced cotton pickers can play a role in Pakistan as well.


Apart from raw material shortage, financing difficulty is also a restraining factor in Pakistani textiles. In this regard, China and Pakistan are seeking for a wider cooperative space.
Riaz Haq said…
From Twitter:

Kamran Khan
@AajKamranKhan

پاکستانی رپے کی ڈالر مقابل قدر میں یقینناً بڑی کمی ہوئی مگر پورے سال 2021 کا جائزہ لیں
توکئی کلیدی کرنسیز کے مقابلے میں پاکستان رپے کی 8.3 فیصد کمی بہت چونکا دینے والی نہیں ترکی کا لیرا 42 فیصد ارجنٹائن پیسو 16.2 جاپانی ین 10.2 ہنگری پولینڈ وغیرہ کی کرنسی قدر لگ بھگ اتنی ہی گریں

https://twitter.com/AajKamranKhan/status/1463147578976051202?s=20
Riaz Haq said…
#India has 46, #China 42, #Pakistan 6 & #Bangladesh 4 cities among the top 100 most polluted cities in the world. #Lahore ranks third behind #Dhaka, the capital of #Bangladesh, and #Mongolia’s capital #Ulaanbaatar on the #pollution index. #AirQuality https://www.aljazeera.com/news/2021/11/22/infographic-the-worlds-100-most-polluted-cities-interactive

https://twitter.com/haqsmusings/status/1463309813983571972?s=20

Every year, a thick smog covers India’s capital New Delhi. Last week, it got so bad for the 20 million residents that authorities shut schools.

New Delhi’s concentration of PM2.5 particles, which damage people’s lungs, is 34 times the World Health Organization’s (WHO) acceptable levels. The toxic haze is especially bad during the winter as farmers burn stubble left in their fields.

Air quality is determined by the levels of air pollutants PM2.5, PM10, ozone, nitrogen dioxide, sulfur dioxide, and carbon monoxide.

Particulate matter (PM) comprises tiny particles that negatively impact health. PMs vary in size, most damaging are PM2.5 and PM10 – with a diameter of less than 2.5 μm and 10μm respectively. A human hair’s diameter is 50-70 μm.

PM2.5 levels lower than 12 are considered good, 55-150 unhealthy and 250 or above is hazardous.

In 2020, India had 46 of the world’s 100 most polluted cities, followed by China (42), Pakistan (6), Bangladesh (4), Indonesia (1), and Thailand (1), according to air quality tracker IQAir. All these cities had a PM2.5 air-quality rating of more than 50.

Nine out of the top 10 most polluted cities are in India.

Hotan, in western China’s Xinjiang, had the worst average air quality in 2020, with 110.2.

In 2019, 1.67 million deaths in India were caused by air pollution, according to the Lancet.

While replacing solid fuels with alternatives has lowered deaths linked to household air pollution since 1990, deaths related to ambient PMs have increased.

Fifteen of the 20 most polluted cities are in India, mostly in the north. Stubble burning spikes pollution in autumn and winter. Vehicle emissions, industry, and burning rubbish also contribute to high levels of PM2.5 and other pollutants.

Some Indian and Chinese cities have installed smog towers to try to tackle air pollution

New Delhi installed two after an order by India’s Supreme Court – one is in a busy shopping area.

The $2m 25-metre (82-foot) high tower’s 40 fans take in particle-laden air at 1,000 cubic metres (35,000 cubic feet) per second and pass it through filters.

The smog tower works within a one kilometre (0.6-mile) radius, supposedly cutting PM2.5 levels by 50 percent. But questions remain over how efficient they really are.


According to the WHO, some 7 million people die annually as a result of air pollution. More than 90 percent of the world’s population lives in areas where air pollution exceeds WHO limits.


Air pollution is linked to a number of illnesses including asthma, diabetes, and heart disease.


Riaz Haq said…
"Pakistan’s ..demonstrated access to external financing...offset rising external risks from a widening current-account deficit..reforms...could create positive momentum for the sovereign’s ‘B-’ rating, which we affirmed in May 2021 with a Stable Outlook"
https://www.fitchratings.com/research/sovereigns/reforms-financial-support-ease-pakistan-sovereign-risks-24-11-2021

Fitch Ratings-Hong Kong-24 November 2021: Fitch Ratings believes Pakistan’s recent policy adjustments and demonstrated access to external financing, as well as its commitment to a market-determined exchange rate, offset rising external risks from a widening current-account deficit. Ongoing reforms, if sustained, could create positive momentum for the sovereign’s ‘B-’ rating, which we affirmed in May 2021 with a Stable Outlook.

Increases in global energy prices and a strong domestic recovery from the initial Covid-19 pandemic shock have put additional strains on Pakistan’s external position. The current-account deficit in the fiscal year to June 2022 is set to be wider than our previous forecast of 2.2%. The State Bank of Pakistan (SBP) on 19 November 2021 raised its policy rate by a significant 150bp to 8.75%, pointing to rising risks related to the balance of payments and inflation.

We think external liquidity pressures should be manageable in the near term, despite the wider current-account deficit, given Pakistan’s adequate foreign-exchange reserves and success in accessing financing.

Official reserve assets nearly doubled to USD24.1 billion by end-September 2021 from USD12.6 billion two years ago. However, liquid foreign-exchange reserves have dropped since mid-September, which we believe may partly reflect debt repayment.

Pakistan’s near-term financing efforts have been supported by Saudi Arabia, which plans to place USD3 billion on deposit with the SBP and provide an additional USD1.2 billion oil-financing facility under a one-year support package. Its foreign reserves also received a USD2.8 billion boost in August from the IMF’s one-off global allocation of Special Drawing Rights.

Funding from these sources followed Pakistan’s successful international debt issuance through a USD2.5 billion bond in March 2021 and a follow-on USD1 billion bond as part of its global medium-term note programme. Pakistan aims to tap debt markets more regularly through the scheme, which could reduce the costs of coming to market. The authorities also plan new sukuk issuance in 2021.
Riaz Haq said…
The country’s economy rebounded during the fiscal year 2021-21 with real GDP growth rising to 3.9%, reported the State Bank of Pakistan (SBP).

https://www.geo.tv/latest/384001-pakistans-economy-rebounded-during-fy21-sbp

Pakistan’s economy rebounded during FY21: SBP
In its annual report titled ‘State of Pakistan’s Economy’ — which reviewed FY21 — the central bank stated that the expansion in economic activity was accompanied by a 10-year low current account balance that contributed to a significant build-up in foreign exchange reserves.

“The fiscal deficit also edged down despite COVID-related spending, leading to an improvement in the public debt-to-GDP ratio, unlike the experience of most countries across the world,” a statement issued by the SBP read.

Inflation eased
Per the report, headline inflation — based on the consumer price index (CPI) — also eased during the year mainly due to “relatively stable prices of non-food and non-energy items.” However, overall price levels, especially of food items, remained high owing to supply-side challenges.

Furthermore, average headline CPI inflation fell to 8.9% in FY21 — within the SBP’s forecast range of 7-9%.

“The resurgence in domestic demand did not translate into inflationary pressures amidst the presence of some spare capacity in the economy,” it stated.

It is pertinent to mention here that the inflation remained volatile during the year, because of the impact of the increase in fuel prices and power tariffs.

The report notes that the economic turnaround was facilitated by management of the COVID health pandemic, as well as a prompt and targeted monetary and fiscal response to counter its impact on economic growth and livelihoods.

The SBP’s liquidity support amounted to around 5% of GDP by the end of FY21, featuring a combination of policy rate cuts as well as several targeted and time-bound measures, such as the Temporary Economic Refinance Facility (TERF) for promotion of new investment, Rozgar payroll financing scheme to prevent layoffs, the Refinance Facility to Combat COVID to provide concessional financing to construct hospitals and facilities to fight against COVID, and temporary loan deferments and restructurings to provide temporary liquidity relief to small and big businesses as well as individual borrowers.

The report highlights that a broad-based recovery in real GDP growth was recorded. Led by the favourable supply and demand dynamics as well as a low base effect from the COVID-led contraction in FY20, large-scale manufacturing posted a 14.9% increase in FY21.

It further revealed that although the growth in agriculture was slightly lower than in FY20, the production of wheat, rice and maize rose to historic levels.

“The cumulative increase in the production of these crops offset the decline in cotton production," it noted.

"The improvement in the commodity-producing sectors and a surge in imports led to a sharp recovery in wholesale and trade services in FY21,” the statement read.

The central bank’s report also notes that the economic rebound was achieved without a worsening of macroeconomic imbalances, as the overall policy mix was “still prudent”.

The current account deficit reduced substantially amid record-high workers’ remittances and export receipts and contributed to the $5.2 billion increase in the SBP’s foreign exchange reserves during the year. The country also retained access to sizable external financing, with inflows received from the IMF and other multilateral and bilateral creditors; the issuance of Eurobonds after a long hiatus; and deposits and investments from non-resident Pakistanis via the Roshan Digital Accounts.

The central bank points out that the recovery in exports was driven by the “continued adherence to the market-based exchange rate system; provision of subsidised inputs; lower duties on imported raw materials; and the fast-tracking of GST refunds”.
Riaz Haq said…
The country’s economy rebounded during the fiscal year 2021-21 with real GDP growth rising to 3.9%, reported the State Bank of Pakistan (SBP).

https://www.geo.tv/latest/384001-pakistans-economy-rebounded-during-fy21-sbp

During FY21, the higher exports partially offset a significant rise in import payments, which surged amidst the upswing in economic activity; supply-side challenges in wheat, sugar and cotton; and elevated international commodity prices.

“These pressures became more prominent towards the end of the year, leading to a 3% depreciation of the Pakistani rupee against the US dollar during the fourth quarter (July-March),” the central bank reported, noting that the local currency had appreciated 10%, mainly due to the “accumulated current account surpluses”.

Meanwhile, the fiscal deficit reduced to 7.1% of GDP, from 8.1% in FY20. “Restrained non-interest current expenditures allowed for undertaking spending on social safety nets, the economic stimulus package and provision of targeted support to various sectors of the economy,” said SBP.

Tax collection improved
On the revenue side, the Federal Board of Revenue’s tax collection improved sharply, in the wake of the economic rebound, a surge in imports, and efforts to streamline tax administration.

The report noted that with the containment of the twin deficits and currency appreciation, the public debt-to-GDP ratio declined to 83.5% in FY21.
Riaz Haq said…
Modi’s Reform Momentum Has Hit a Wall in #India. Big chunks of #Modi’s #economic agenda could get delayed or scrapped. The reversal of #FarmLaws and a possible stalling of the new #labor codes could be the beginning of two years of inertia. #economy #BJP https://www.bloomberg.com/opinion/articles/2021-11-25/modi-s-reform-momentum-has-hit-major-political-road-bumps-in-india?tid=ss_tw

https://twitter.com/haqsmusings/status/1464822103346061312?s=20

Investors must be wondering what promise New Delhi will break next as the ruling party tries to win upcoming state elections. First, the government made a U-turn on the three laws that Prime Minister Narendra Modi wanted to use to shake up the stagnant farm economy. Next, he may delay implementing the four codes that have been billed as the “biggest labor reforms in independent India,” as Bloomberg News reported. Has the Modi momentum finally come up against a wall?

Take the labor laws passed by parliament in September last year. So far, only 10 out of India’s 28 states have followed through by finalizing rules on industrial relations, wages, social security and workplace safety. Considering Modi’s party is in power in 17 states, politicians clearly fear resistance.

It’s been a longtime demand by the business community that industrial units with fewer than 300 workers shouldn’t require government permission to fire employees. (The federally mandated limit currently affects factories employing more than 100 workers, acting as a perverse incentive against growth, though some states have relaxed the rules.) Still, codifying this concession won’t exactly win votes. Similarly, giving a legal boost to retirement nest-eggs — as the new rules demand — will ultimately benefit employees. Yet they won’t be thrilled if it means lower take-home pay now.

Why is it so hard for a powerful — and, after more than seven years in the top job, still highly popular — leader to enforce his will? Modi promised sweeping, productivity-enhancing changes to factors of production — land, labor and capital. He also pledged a revamp of crucial commodity markets like food. In each instance, being perceived as pro-big business was the undoing of his policies.

The first setback was land. The previous government, battling popular anger for allowing land grabs in the name of special economic zones, had passed an acquisition law in 2013 that big business found too restrictive. Within a year of becoming prime minister, Modi tried to tilt the balance so that village plots could be acquired more easily for infrastructure or affordable housing. But opposition leader Rahul Gandhi mocked him in parliament for favoring crony capitalists dressed in “suits and boots.” Modi gave up the idea.

Ditto the controversial agriculture laws. Modi backed them to the hilt against relentless protests by farmers. But since the overall package gave the impression that the state was going to retreat from grain procurement, leaving farmers at the mercy of large business groups, it became too hot a potato to hold through next year’s state elections in Uttar Pradesh and Punjab. So Modi dropped his ambitious plan, closing the door at least for some years on reforms of the subsidy-ridden farm and food economy. Now it looks like the new labor codes are going into cold storage, too.

Meanwhile, reforms to improve capital allocation in the economy are a mixed bag. Despite opposition from bank employees’ unions, a bill — to be introduced in the upcoming winter session of parliament — will pave the way for privatizing two state-run lenders. Investors will pay attention to the fate of this law. They should also closely watch the government’s 6 trillion rupees ($80 billion) asset recycling plan. This, too, could potentially become a political minefield.
Riaz Haq said…
#Saudi Fund for Development signs 2 deals with #Pakistan worth $4.2 billion, including $ 3 billion deposit to the State Bank of Pakistan to bolster its reserves and $1.2 billion to finance Pakistan's #oil imports. #economy #currency #energy #SaudiArabia https://www.arabnews.com/node/1977671/business-economy

The Saudi Fund for Development on Monday signed two agreements worth $4.2 billion with Pakistan. The deals aim to support the Pakistani economy.

The first agreement includes a $ 3 billion deposit to the State Bank of Pakistan to support the country’s foreign currency reserve levels and mitigate the impact of the coronavirus disease pandemic. The second deal seeks to support Pakistan in financing oil derivatives trade with $1.2 billion.
Riaz Haq said…
Heartland misery: Four states hosting 30% of Lok Sabha seats are among the poorest. That’s a message for India

The South appears better placed. In 1991, on economic reform-eve, Bihar and Tamil Nadu were nearly at par in per capita GDP. Three decades later, TN has whittled down its multidimensionally poor to 4.9% of population while Bihar languishes at 51.9%. Jharkhand follows with 42%, UP 38% and MP 37%. The cruel governance irony of these numbers is that the four laggard states cumulatively account for 30% of seats in Lok Sabha and their electoral outcomes play a decisive role in national government formation. https://timesofindia.indiatimes.com/blogs/toi-editorials/heartland-misery-four-states-hosting-30-of-lok-sabha-seats-are-among-the-poorest-thats-a-message-for-india/


The heavy poverty burden, despite tremendous political heft and massive welfare funding, indicts heartland netas. Poor states cannot afford their enduring obsession with identity politics, but a shift in discourse towards economic development looks unlikely. Meanwhile, farm laws’ reversal makes poverty eradication in villages harder. Accounting for nearly 5 crore of India’s 12.5 crore unviable agricultural land holdings under 2 hectares, the failure of these four states to call out the subsidised big farmers and lead the clarion call for agri-reforms was another missed opportunity for their political economy.

The multidimensional poverty index constructed on health, education, and standard of living indicators like nutrition, years of schooling, and amenities like cooking fuel, electricity, pucca housing, sanitation, household assets etc, claims to better the erstwhile methodology of pegging a poverty baseline in monetary terms. Performance here depends to an extent on India’s sprawling welfare state, which has admittedly gained more mastery in delivering household amenities to the poor. But NFHS-5 findings of 60% women and young children facing malnutrition uncovers the limitations of welfarism, and conversely, the importance of economic growth to create enough jobs. Over to Nitish, Soren, Yogi, Shivraj, Akhilesh, Tejashwi and Kamal Nath.
Riaz Haq said…
#Pakistan elected G77 chair, seeks #debt restructuring & allocation of more resources for developing nations to rejuvenate the post-#COVID global #economy. G77 plus #China is a loose alliance of developing countries established on June 15, 1964. https://www.dawn.com/news/1661335

Pakistan is a founding member and Tuesday’s election was held by acclamation.

Addressing the group's 45th annual meeting at the United Nation's headquarters in New York, Foreign Minister Shah Mahmood Qureshi urged developing nations to promote a common development agenda to return to the path of sustained and sustainable growth.

As the new chair, "Pakistan hopes to collaborate with members of the group to promote a common development agenda for developing countries that includes debt restructuring, redistribution of the 650 billion new special drawing rights (SDR) to developing countries, and larger concessional financing,” Qureshi said.

SDRs are supplementary foreign exchange reserve assets defined and maintained by the International Monetary Fund (IMF).

The minister also called for the mobilisation of the $100 billion in annual climate finance by developed countries, ending the billions in illicit financial flows from developing countries and the return of their stolen assets.

Qureshi also underlined the need for creating an equitable and open trading system along with a fair international tax regime.

The primary goals of the G77 are to maintain the independence and sovereignty of all developing countries, to defend the economic interests of member states by insisting on equal standing with developed countries in the global marketplace.

It also seeks to establish a united front on issues of common concern, and to strengthen ties between member countries.

As a founding member, Pakistan has contributed consistently to the shared objectives and interests of the group and has had the distinct privilege to chair the group in New York on three occasions in the past.

Qureshi reminded the international community that the world was facing a triple challenge: the Covid-19 pandemic and its consequences, the realisation of sustainable development goals (SDGs) and climate change.

He pointed out that the pandemic and climate change have had a disproportionate impact on developing countries and reversed their progress towards achieving the SDGs by 2030.

Qureshi noted that rich nations had injected over $26 trillion to stimulate their economies and recover from the Covid-19 crisis but “the developing countries have been unable to mobilise even a fraction of the $3-4 trillion they need for economic recovery”.

Noting that the developing world was home to 80 per cent of the world's population, he warned that the disruption of supply chains, and the revived demand in developed economies, had triggered global inflation, compounded the plight of the poor and complicated the debt and liquidity problems of the developing countries.

“Unless the challenges confronting developing countries are addressed and overcome, the world economy will not be able to return to the path of sustained and sustainable growth,” he said. “Islands of prosperity cannot co-exist within an ocean of poverty.”

"The world economy will not succeed in overcoming these challenges, unless developing countries generate adequate financial support to address their debt," Qureshi said, calling for an equitable financial and trade architecture.

“Developing countries need to promote a common development agenda to return to the path of sustained and sustainable growth,” he said.

“Pakistan believes that notwithstanding their current challenges, the greatest potential for economic growth is in the developing world but first it must set out the parameters for equitable global growth and development and realise the promise of a more equal and inclusive world,” he said.
Riaz Haq said…
India reported 8.4% growth in July-to-September up from -7.4% last year. #India’s #MiddleClass Anxious & Frugal. #COVID19 has robbed the country of more than a year of badly needed economic growth. That’s lost ground that cannot be regained quickly. #BJP https://www.nytimes.com/2021/11/30/business/india-economy-gdp.html?smid=tw-share

India’s vaccination campaign has helped put the economy back on track. Ms. Kishore forecast growth of 7.8 percent next year, about 2.5 percentage points higher than what it was in 2019. Still, that would leave 2022 output 9 percent lower than she had forecast before the pandemic struck.
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NEW DELHI — India’s economy is limping back to life, and its wealthy consumers are finally returning to its malls and stores.

But at Electronics Desire, where the aisles are empty and the sales are slow, the lingering fears of India’s middle class — and the millions who aspire to join them someday — are on full display.

An appliances shop in Ramphal Chowk, a middle-class neighborhood in the New Delhi suburb of Dwarka, Electronics Desire is struggling through its weakest sales in months. Even last year, when a coronavirus lockdown at one point brought the economy to a virtual standstill, sales were better, said Tejendar Singh, the manager.

“Around this time last year we sold 15 to 20 dishwashers,” said Mr. Singh, explaining how customers bought the appliances to keep their maids, and potential Covid-19 infections, out of their homes. “This time, we couldn’t even sell two units.”


On Tuesday, India on paper reported a big jump in growth, of 8.4 percent, in the July-to-September period compared with a contraction of 7.4 percent for the same period a year earlier. But that heady number conceals lingering damage from Covid-19 to an economy that needs to generate a steady number of jobs to keep its young, vast population content. The country’s two waves since early last year have killed hundreds of thousands of people, pushed millions into poverty and robbed the country of more than a year of badly needed growth.

Compared with two years ago, before the coronavirus struck, economic output was 4 percentage points higher, according to the Ministry of Statistics and Program Implementation. Even that figure reflects pent-up demand rather than a healthy rise in gross domestic product, said Priyanka Kishore, the head of India and Southeast Asia for Oxford Economics, a research firm.

“If we talk about the structural hits and the G.D.P. level compared to pre-Covid baselines, it’s still 10 percent or so lower,” she said.

The weak and uneven recovery is putting pressure on Prime Minister Narendra Modi to do something about growth. It is also putting renewed focus on longer-term problems that were weighing down India’s economy even before the pandemic: slowing demand, a manufacturing sector struggling to take off and shrinking labor participation.
Riaz Haq said…
India’s population will start to shrink sooner than expected
For the first time, Indian fertility has fallen below replacement level


https://www.economist.com/asia/2021/12/02/indias-population-will-start-to-shrink-sooner-than-expected

When something happens earlier than expected, Indians say it has been “preponed”. On November 24th India’s health ministry revealed that a resolution to one of its oldest and greatest preoccupations will indeed be preponed. Some years ahead of un predictions, and its own government targets, India’s total fertility rate—the average number of children that an Indian woman can expect to bear in her lifetime—has fallen below 2.1, which is to say below the “replacement” level at which births balance deaths. In fact it dropped to just 2.0 overall, and to 1.6 in India’s cities, says the National Family Health Survey (nfhs-5), a country-wide health check. That is a 10% drop from the previous survey, just five years ago.

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Slowing growth will reduce long-term pressure on some resources that are relatively scarce in India, such as land and water. The news may have other benefits, too. Politicians have often used fear of population growth to rally votes, typically by accusing “a particular community”—a circumlocution referring to India’s 15% Muslim minority—of having too many babies. Narendra Modi, the prime minister, has warned of a looming population explosion. Members of his Bharatiya Janata Party (bjp) have even called for limits to family size. In July legislators in bjp-controlled Uttar Pradesh proposed a law that would deny government services to families with more than two children.

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The Indian government’s new numbers may curtail these execrable suggestions. Fertility among Indian Muslims is generally higher than among Hindus. This is in part because so many are poor. But the difference has steadily narrowed; between 2005 and 2015 the fertility rate among Indian Muslims dropped from 3.4 to 2.6. Data on religion have yet to be parsed from the latest survey, but the fertility rates it shows for India’s only two Muslim-majority territories, the Lakshadweep Islands and Jammu & Kashmir, are far below replacement level and among the lowest in India, at 1.4.

While a declining fertility rate is broadly a sign that India is richer and better educated than before, it will also bring worries. Economists have long heralded the “demographic dividend”, when productivity rises because a bigger slice of the population pyramid is of working age. This window will now be narrower, and India will have to contend sooner with a fast-growing proportion of elderly people to care for.

Stark discrepancies in fertility rates between states also carry dangers. In future more Indians from the crowded north will seek jobs in the richer and less fecund south. Politicians will also face the hot issue of how to allot parliamentary constituencies. Back in 1971 Mrs Gandhi froze the distribution of seats among states. The result is that whereas an mp from Kerala now represents some 1.8m constituents, one from Uttar Pradesh represents nearly 3m. When the freeze on redistricting lifts some time in the next decade, these disparities will spawn a big fight.

Riaz Haq said…
Infertility Is on the Rise in Kashmir


https://womensmediacenter.com/fbomb/infertility-is-on-the-rise-in-kashmir


It’s a phenomenon many women in Kashmir have experienced in recent years, as rates of infertility among women there have “risen from 12% to 18% over the past two decades,” Dr. Syed Naseer, an infertility specialist in Kashmir, told the FBomb. According to the 2019-2020 National Family Health Survey, the Total Fertility Rate (TFR) in Jammu and Kashmir is 1.4 children per woman, which has declined from two children per woman in 2015-16. Indian census data from 2018 also revealed that the fertility rates in Jammu and Kashmir had decreased to 1.6 from 2.3 in 2007.

Experts point to the decades-long conflict in the region as one of the major reasons for increasing infertility. But while the reason may not be definitive, the impact on women is clear.

“In patriarchal societies, it is mostly a female who is solely held responsible for not begetting a child,” Shefan Jehan Gazi, a practicing lawyer in the Jammu and Kashmir high court, told the FBomb. “If a doctor prescribes medical tests to the males to ascertain the grounds of infertility, most of them hesitate, as they don’t like to take responsibility for the cause. It is very convenient for them to shift the burden on females.”

Not only can the inability to bear children have a profound impact on Indian women’s identities — childless women’s very femininity is questioned — but it can also threaten their relationships, particularly their marriages.

According to Gazi, in about 30% to 40% of divorce cases in Kashmir, infertility is cited as one of the reasons for divorce. A number of national and global studies back up her observation; a 2014 Danish study, for example, found that childless couples are up to three times more likely to divorce than those who have children.

This is what happened to Bilkees Khan, a beauty parlor owner in south Kashmir’s main town Anantnag. Because she is a breast cancer survivor, Khan’s doctor advised her against becoming pregnant. Khan married a man from Doda only after letting him know this information. “I made it clear to him that I might never be able to become a mother, and he was fine with it,” Khan told the FBomb.

A month into Khan’s marriage, however, her in-laws demanded that she have a baby, and Khan bowed to the pressure; she conceived in the first year of her marriage. Ultimately, however, the fetus couldn’t grow due to her health issues, and Khan had an abortion. Additionally, she experienced early menopausal symptoms due to her chemotherapy treatment, making it difficult for Khan to conceive again.

Khan wanted to adopt a child, but her husband did not. Then, the tension escalated.

“He had started ignoring me and never took my financial responsibilities or paid my medical bills,” Khan said.

During a follow-up visit for cancer treatment to Mumbai’s Tata Memorial Hospital, her husband’s cousin broke the shocking news that he had married another woman while still married to Khan.

The social consequences of infertility have left these women not only stigmatized but also depressed; many have turned to mental health experts for treatment. After four unsuccessful in vitro Fertilization (IVF) procedures and intense pressure from her in-laws to have a child, 36-year-old Fozia Jan’s husband began to mistreat her. Her sister-in-law even used to hide her children from Jan because she thought “that I am cursed and I could bring misfortune to her kids. She often asked me to check with an exorcist.”

Jan had suicidal ideations and was forced to move back in with her parents.

“She hardly talks to anyone,” Jan’s mother told the FBomb. “We tried to counsel her, but the constant thought of being childless makes her depressed.”

“I was by myself throughout this quest to have a kid and save my marriage from falling apart. I felt completely unsupported,” Jan said.

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