India and Pakistan - future scenario

Sixty three years ago, the two countries started their journey, torn by bitter memories of partition. The relations between the two nations have been troubled right from the start. Two similar examples from around the world the come to mind - West Germany and East Germany, and the two Koreas.

There are some basic similarities. These countries too had to go through a bitter partition. They followed different political systems and were bitter rivals of each other. One essential difference is that they essentially were one country - i.e. both East and West Germany claimed that they represented the entire Germany. Same is true in case of North and South Korea. In case of India and Pakistan, their rivalry is essentially over Kashmir. Though India was earlier a united country, it is extremely unlikely that partition can be reversed.

The German Story
After the Second World War, both East and West Germany were essentially poor and devastated. But West Germany under the allied influence, introduced free market reforms. It also benefited by large scale aid by the US. By the 1960's and 70's, there was large and visible difference in conditions on the two sides of the border. People in East Germany wanted to move to the West in search of a better life. The Berlin Wall was constructed to stop this. The difference in living standards continued to increase. Perhaps it was the aid from Soviet Union that was keeping things just about together in East Germany. In late 80's, Soviet Union was badly battered in Afghanistan. As a result, it could not continue its aid to the East. The Berlin Wall collapsed.

The Korean conundrum
The story between North and South Korea is somewhat similar. Both countries have remained bitter rivals since the end of the Korean War in 1953. Both countries have contrasting political and economic systems. While North Korea is a totalitarian dictatorship with centralized economy, South Korea is a democratic country with free markets. North Korea implemented land reforms, introduced free health care and education. At one point of time, its HDI indicators were better. However, gradually South Korea's export led economy has moved way ahead. Today its HDI indicators are much better. Its per capita income is $20,000 as compared to a minuscule $1100 in North Korea.

Sung Yoon Lee in his article in ForegnPolicy says,

In contrast, beyond North Korea's southern border lies a free and affluent Korea, one that claims sovereignty over the entire peninsula and to which millions of Northerners would move if given the choice. By its mere existence, Seoul poses an omnipresent existential threat to Pyongyang.

In his article, Lee predicts that North Korea like East Germany cannot survive forever. It will collapse at some point of time. It must be noted that it currently receives aid from China (just like East Germany did from Soviet Union) and South Korea without which vast proportion of its population would die of hunger.

Comparing India and Pakistan
Can such an eventuality occur in the Indian Subcontinent ever. On one side we have India, a democracy (with its own flaws), an rapidly growing economy and rising living standards.But it is also the home the largest number of poor, there is growing rich-poor divide and a growing Naxal violence. On the other side of the spectrum is Pakistan, at best is a military controlled democracy, a country that is battling with an identity crisis, is a nuclear weapon state, is said to be source of terrorism worldwide.

Small signs of such a thing are present. Pakistanis today are worldwide seen with suspicion. They are lined up and frisked separately at airport. Many Pakistanis abroad claim themselves to be of Indian origin in order to escape this. Some Pakistanis artists like Musicians also want to get hold to an Indian Passport. Of course, these people are a small minority.

But is such a thing really possible. My answer to that will be for the moment, NO. The difference in prosperity in the two countries isn't that huge. India's rank according to HDI index is 134 while that of Pakistan is 141. As per Wiki, India's per capita income $1022 while that of Pakistan is $1017. Our Gini ratio is actually  higher at 36.8 as compared to just 30 for Pakistan. Historian William Dalrymple too writes that there is little difference.

On the ground, of course, the reality is different and first-time visitors to Pakistan are almost always surprised by the country's visible prosperity. There is far less poverty on show in Pakistan than in India, fewer beggars, and much less desperation. In many ways the infrastructure of Pakistan is much more advanced: there are better roads and airports, and more reliable electricity. Middle-class Pakistani houses are often bigger and better appointed than their equivalents in India.

However, he goes on to point out some major differences - landholdings. democracy and education. Soon after independence, land reforms were introduced in India. This was promised the Congress. In fact, this is often referred as one of the reasons of creating Pakistan, (protecting the interests of Zamindars). In Pakistan, this feudal system still exists and as a result there is inequality and social tension. Pakistan has seldom enjoyed Democracy. However, often freedom is difficult to directly quantify when it comes to measuring prosperity. Regarding education in Pakistan, he writes

No problem in Pakistan casts such a long shadow over its future as the abject failure of the government to educate more than a fraction of its own people: at the moment, a mere 1.8% of Pakistan's GDP is spent on government schools. The statistics are dire: 15% of these government schools are without a proper building; 52% without a boundary wall; 71% without electricity.

This education gap is the most striking way in which Pakistan is lagging behind India: in India, 65% of the population is literate and the number rises every year: only last year, the Indian education system received a substantial boost of state funds.

But in Pakistan, the literacy figure is under half (it is currently 49%) and falling: instead of investing in education, Musharraf's military government is spending money on a cripplingly expensive fleet of American F-16s for its air force. As a result, out of 162 million Pakistanis, 83 million adults of 15 years and above are illiterate. Among women the problem is worse still: 65% of all female adults are illiterate. As the population rockets, the problem gets worse.

Currently, India's literacy rate is 65% and should increase to 80-85% by 2030. One obvious concern here is what is the quality of this education and are these people employable. And I am sure even in India, there are schools that don't have proper building or electricity(particularly in the Naxal belt).

Nevertheless, India is way ahead of Pakistan in terms of education. But another concern is that a large proportion of the population receives education through the outdated Madrassa system.The so-called secular forces are merely promising reservations for them, even though in 60 years, reservations haven't made enough impact on SC's and ST's. Reservations were supposed to be an instrument that removes the caste identity. Instead it has only strengthened it. A divide based on religion is even more dangerous. Ironically, it has been the so-called communal party that has talked about reforming the madrassas, something that has been looked with suspicion by the community.

Future Scenario:2030
Where will be in 2030 economically, this is an important question. Will there be any difference in level of prosperity with respect to Pakistan change?

Over the last 20 years our economy has grown consistently. In the last five years, we have grown by nearly 8%. There are rumors that we are capable of achieving 9-10% growth rates. Let us assume that we will grow at an average of 7% over the next 10 years and at 5.5% in the subsequent 10 years. The growth rates will come down because of base-effect. Despite these highly conservative estimates, India's GDP would be at least 4.2 trillion dollars. Our rate of population growth has been coming down consistently and present it is roughly 1.55% (Source). Assuming an average growth rate of 1.45% over the next 10 years and an average of 1.35 over the subsequent 10 years, our per capita GDP should be roughly 2700$ in 2030.

What would the number be for Pakistan? Under Musharraf, from 2002 to 2007 Pakistan did post impressive growth of 6-7%. But such stability in the country is rare. In 2009, the growth rate was just 2%. Assuming an average growth rate of 4% over the next 10 years and 6% over the subsequent 10 years(highly optimistic considering the frequent bomb blasts and terror attacks), in 2030 Pakistan's GDP would just be $436 billion. Assuming its population grows at 2% and 1.8% as against present figure of 2.2%, its per capita income would in 2030 would only be around $1800.

These are highly conservative estimates and the real picture might actually to be much much better than this.For example, considering current education levels in Pakistan it is highly unlikely that they can sustain such growth rates of 6% over such long periods. Despite this conservatism, India's GDP would be 10 times that of Pakistan while per capita GDP would  be 1.5 times. More likely figures are that our GDP will be 14-15 times that of Pakistan and per capita GDP will be around 2.5 times that of Pakistan.

Impact of this growth

India's GDP would be at least 10 times that of Pakistan. In another five years time, India's economy would overtake China as the fastest growing economy. This should translate into enormous leverage for us. Around 10-15 years ago, China's human rights record was severely criticized everywhere. But one hardly hears that today. China's influence was very much visible at Copenhagen.

India is bound to enjoy similar influence by 2030 or even before that. By 2030, India would have almost certainly hosted the Olympics. We are not even sure whether Pakistan could host even the Asian Games by then

I do not foresee a Germany like situation which led to the reunification of Germany. But I do expect that if there is appreciable difference in prosperity and if this grow is inclusive, domestic support for terror is should come down appreciably.

Another important thing is that if there is an appreciable and visible difference in prosperity, it shall become increasingly difficult for the Pakistani Military to continue with its astronomically high defense expenditure. Presently India spends around 2.5% of the GDP on defense while Pakistan spends around 3.5-4%. Hence, in 2030 our defense budget should be close to 100 billion dollars ( 2.5% of 4.2 trillions). This would be 25% of the Pakistan GDP in 2030. Naturally Pakistan would try and match India's defense expenditure by increasing its defense to atleast 8-10% of the GDP.

There would be increasing public pressure against this and unrest among the people would rise. This would result to much more Army control over the civilian Govt and military highhandedness. Thus most probably by 2030 Pakistan would under direct Military control.Furthermore, the increasing military asymmetry would force Pakistan to lower its nuclear doctrine. Thus the sub-continent would actually become a much dangerous place in 2030.


Limitations of this analysis
The methodology of this analysis just too simple to cover everything. First, the GDP figures are based on nominal values rather that PPP. Using purchasing parity method, the comparative figures would actually improve significantly for India.

Secondly, India has been lucky to have stable Govts. at the centre since 1999 and increasingly governance is becoming the sole criteria that is used by the people while voting. What if there is a hung Parliament. India has previously witnessed this during the 1989-91 and 1996-98. During this period, the growth was minimal and reforms were stagnant.

Thirdly, merely achieving these growth rates are not sufficient. Whether this will translate in improve in prosperity. Whether this growth will be inclusive. Whether all communities including the Muslims who are currently lagging behind in all social indicator be a part of this growth. Will the Maoists be suppressed. Will the development reach the Naxal belt.

Finally, will there be any war either with Pakistan or with China. War could change the above numbers. Of course any resolution with either of the two will also improve the numbers vastly.


These are extremely difficult questions and only time tell. However, if India plays its cards well, great glory is awaiting us. For Pakistan, it is important to understand that India's rise is inevitable. It will be their choice whether they would like to be a part of this growth or not. It is therefore important for Pakistan to understand that going forward, they will not be able to compete whether militarily or economically.