Reading through the various valedictory, overly critical and self-congratulatory articles on 60 years of independence for India and Pakistan this week, it becomes apparent that the media largely lack the courage to discuss the main issues confronting the two nations. Instead, the focus has overwhelmingly been on the cosmetic symptoms that are displayed by the disease in question.

In my opinion, this would be the abysmal economic record of the two countries for the past 60 years that has been the dominant factor in the continued socio-political strife, diplomatic snafus and wars. The lack of economic growth in these two countries over the first 50 years of independence weighed on their domestic politics, security and, eventually, every element of the socio-political milieu.

Just after the Korean War, South Korea had a per capita income lower than India’s. Fifty years later (and despite the effects of the 1997 Asian crisis), the country boasts an income more than 10 times India’s. The magic of compound interest applies to economies as well – grow an economy at 5% every year, and it doubles in size in slightly less than 15 years; do it at 8% and it does it in just over nine years. Or put differently, the second economy would have tripled in size in the same time that the first doubled.

Much of the economic mess in the subcontinent can be laid at the door of two forces: feudal chiefs in the case of Pakistan and communist leaders in the case of India. Multilateral agencies such as the World Bank estimate that fewer than 500 families control more than three-quarters of Pakistan’s resources. These powerful families have a blatant disregard for the laws of Pakistan, and express open disgust at democracy, often citing India’s rambunctious politics as a justification. This corralling of power away from the poor and middle classes has left the military as the only national institution in Pakistan, which in turn explains its stranglehold on power.

In the absence of economic growth and political expression, the poor in Pakistan have turned increasingly to Islamic parties, especially from the mid-1980s. [1] While the nominal facade is religious, the ultimate objectives of many such political groupings are very much on the lines of communism, ie, an “equitable” redistribution of wealth. However, it is fair also to point out that Islamic parties across South Asia have been hijacked over the past few years by pseudo-nationalist forces aiming primarily to preserve the status quo favoring the very rich in each country.

India embarked on land reforms in the first few years after independence, thereby blunting the power of its feudal lords, but the victory was short-lived. Ill-thought-out socialist policies reduced economic growth from the second half of the 1950s, which in turn perpetuated the poverty suffered by hundreds of millions.

Combined with rising income disparities, the political framework ended up handing power to communist leaders, a term I use to describe the heads of all Indian political parties. These politicians come in different hues, but much like the French political system today, even the most right-wing of Indian politician looks like a socialist to me. From that perspective, branding the whole lot as communists does not appear an oversimplification of the current environment.

Communism is of course deadly for the economy, and one needs to look no further than the record for India in the 1960s and 1970s to explain the matter. Removing the entrepreneurial urges of a people once renowned for it is no mean achievement, after all. The pernicious impact of communist leaders in India has also been to push government bureaucrats rather than businessmen to the forefront of policy discussions.

Increased corruption was the easy result of such misguided policies, [2] more so in India than in Pakistan, mainly because one had to bribe a lot more people in the former to get anything done. Thus, irrespective of political hue, all political parties in India became increasingly corrupt over the past 20-odd years, in essence serving the same vested interests (businessmen) they were meant to combat. Anti-incumbency has become a permanent feature of the Indian political system as a result, with elections every five years or so inevitably bringing a new political party into power and, with it, a long list of supplicants and their own peevish demands.

Social changes … or not

The deeply ingrained Islamic nature of Pakistani society has allowed relative social stability for much of the past 60 years. Even so, fissures on ethnic lines have deepened mainly because of economic strains. The dominance of the Punjab [3] in Pakistani economics (and military) resulted in deep divisions that eventually caused the creation of Bangladesh in 1971 and now threaten other provinces, especially the desperately poor ones on the border with Afghanistan.

In any economy growing slowly, demand for resources piles up in a geometric fashion as the existing infrastructure begins to creak under the weight of non-maintenance. That is the central feature of both India and Pakistan, but appears more acute in the non-Punjab parts of Pakistan. The intense envy thus evoked spilled over into the Bangladeshi movement in the 1960s, for example. Higher economic-growth rates, along with dedicated government focus on expanding the state’s infrastructure, would have done much to keep Pakistan in one piece.

India had a different experience in this matter. Free mobility of people within the country allowed the expansion of labor-intensive industries in the western part of the country, and gradually across the rest of the north. Much like Pakistan’s focus on the Punjab, successive Indian governments lavished attention on the largest states in the north, in turn fueling resentment elsewhere. Diametrically opposite to the experience in Pakistan, it was in the richest Indian states such as Punjab that separatist movements broke out. While that was quelled by the late 1980s, relatively prosperous Kashmir erupted with terrorists, many of them returning from successful exploits against the Soviet army in Afghanistan.

Away from sectarian lines of thinking, the experience of the social strata has been much less favorable for India. As I wrote in the above-referenced article on jihadis in Pakistan, [1] the Maoist movement has attracted thousands of India’s rural poor into battling the government after the failure of economic growth left them overly dependent on the rural rich for their sustenance. While owning their own plots of land gave Indian farmers some leeway, a combination of high birth rates that split land holdings into uneconomic sizes and indifferent irrigation systems pushed a number into debt, and in some cases even suicide. This is where Maoists draw their recruits from and, as I argued before, the pool is very similar economically and demographically to the one that feeds Islamic terrorist groups operating out of Pakistan.

But not everything is doom and gloom.

IT leads the way

Like eunuchs looking at erotic rock carvings in some Indian temples, trade-union and communist leaders can only gaze with awe at the salary hikes being bestowed on the information-technology (IT) sector, especially in India. The proof of how markets work and eventually reward the workers sits uncomfortably for anyone brought up on a steady diet of Nehruvian socialism, but it is here that Asian politicians can learn their most valuable lessons.

India’s IT sector was created by all the “wrong” people – the sort who would have otherwise joined a dead-end government job or emigrated abroad to enrich North American companies. Attempting to avoid both rampant corruption and the expensive real estate of Mumbai, the sector was located in the southern city of Bangalore initially and has since expanded elsewhere in the region.

With unconstrained growth resulting in explosive demand for people, India’s IT cities soon became a melting pot of the best talent from across the country and produced with it significant social changes. Southern cities are notably more cosmopolitan than their counterparts in the north and, as with cities elsewhere in India, have provided easy refuge for the rural poor.

In a previous article, [4] I characterized the battle for Delhi’s road access as one for economic growth, necessitating the increased industrialization of the country. Similar pressures that are at the root of Pakistan’s troubled regions can only be addressed by increased growth of the kind shown by the freeing up of India’s IT sector.

There are of course negative consequences of India’s IT sector. While its achievements are truly staggering, the sector can also be accused of distancing itself from its environment. Providing themselves with independent power plants, water facilities and self-contained townships, IT businesses avoided dealing with the worst examples of Indian government action and corruption. While that is a fix for the short term, it cannot be applied over the longer term.

The next 60 years

The easiest way to achieve the balance between increased economic growth and improved government services on water, health and education across India and Pakistan is the freeing up of the business sector. Selling down government stakes in state- (and military-) owned enterprises would inevitably increase overall economic growth for starters. Increased government revenues must be spent on improving physical and human infrastructure, including on roads, water and power as well as education, legal and medical services.

Keeping the two nuclear powers on the path to stronger economic growth will pave the way for improved relations, as increased wealth inevitably pushes people to reconcile differences. Many of the worries of the past few years have been fueled by feckless politicians unable to ignite any economic growth, and therefore resorting to empty rhetoric.

All of this, though, depends very much on the ability of governments to push through structural reforms. The outlook for that, however, remains far from encouraging. Inevitably, political and diplomatic evolution will have to wait on economic improvements.

India’s corrupt elite will probably demolish democratic institutions progressively over the next 60 years, while Pakistan’s elite will likely face upheavals similar to what has been observable in Saudi Arabia and other Middle Eastern states. The government of Pakistan doesn’t enjoy the legitimacy required to push through the reforms it is attempting, while the government of India, which doesn’t lack any legitimacy, seems intent on preserving the status quo. This dichotomy appears more like schizophrenia at the top level, hence my characterization of the two countries as the schizophrenic twins.

1. The jihadi ate my homework, Asia Times Online, February 24, 2007.
2. The wages of corruption, ATol, August 19, 2006.
3. The Punjab was split between Pakistan and India in 1947, prompting the worst sectarian riots in history. On the eastern front, East Pakistan was split from Bengal. Ironically enough, it was these two states that had contributed by most measures the most to the freedom struggle against the British.
4. Caste-away, ATol, June 15, 2007.