Flying Donkey

Sunday, April 02, 2006

Long Live Pakistan!

Everyday bad news trickles in from Pakistan. Balochistan is up in arms and the North West Frontier Province is witnessing intense fighting on a daily basis. To the east, Sindh is increasingly disaffected.

This cannot be good news for India. We don't want a strong and belligerent enemy on our western borders, but we don't want a fragmented and crumbling state either.

The repurcussions of a failed state could be horrendous for India. We would be looking at 162 million people, majority of them poor and uneducated, looking for stability and possible assimilation into India or the same people in constant strife and possibly an endless resource for terrorist movements.

Manmohan Singh recently spoke about the future of the subcontinent in which the borders would be irrelevant. This cannot be allowed to happen. A borderless subcontinent would give the greenlight to about half a billion people from neighbouring countries to ride piggyback on the success brought about by the hard work of the Indian people.

India was cleaved into two and there are still people (I used to be one of them) who dream about a united India. But the geopolitical and socio-economic realities do not permit us to be romanticists anymore.

Assimilating a population almost half the size of the current one will throw India into disarray. On one hand is the volatile issue of the fundamentalist and feudal mindset of our neighbors, and on the other hand is the issue of the massive economic shocks that would result from a re-unification or federalization of the subcontinent.

On an aggregate basis, the per capita GDP of Pakistan in PPP terms is about $2,400 compared to $3,600 of India. The GDP of Pakistan is obviously inflated by the fact that it receives substantial foreign aid (including $1 billion/year from US). This aid will no doubt stop once the two economies assimilate. The combination of the two economies results in an immediate dilution of about 5% for India (If you factor-in the aid factor, the dilution is higher). This is important as India is fast approaching the theoretical inflection point of per capita GDP that will allow India to achieve the critical mass for long term growth. Any dilution in per capita GDP will only push back the timeline.

According to various estimates 32%-40% of the Pakistani population lives below the poverty line. That translates into 52-65 million destitutes on top of the approximately 250 million that already exist in India. And this does not even take into consideration Bangladesh, which is considerably worse off.

Pakistan's literacy rate is 49% with about 40% of the population less than 14 years of age. This influx of an illiterate young population will put tremendous pressure on the Indian educational infrastructure which is already at capacity. The law & order implications of this influx are even more significant.

In short, the boundaries that were created in 1947 have to stay. We talk of federalization or re-unification only at our own peril. Germany presents a clear example of what happens when two disparate economies combine. Lets work towards peace and collaboration, but lets stay away from re-drawing the geographic or monetary borders. Lets also pray for a stable Pakistan.

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