While adequate military power is necessary for every nation to secure its land and maritime boundaries against any external aggression and assisting the government in the events of natural disasters and/or internal threats, the focus of governance should be a comprehensive growth including important sectors like social security, education, health & sanitation, infrastructure, agriculture and industrial developments. Needless to mention that the commensurate scientific and technological development of the manpower and equipment is also essential for the overall growth and prosperity of the nation.
After independence from the colonial raj, while India pursued a course of democratic federalism with socialist and secular credentials having by and large stable civilian governments all along, Islamic Pakistan had long spells of dictatorial regimes, directly or indirectly, under military rulers and accordingly their national priorities also got completely influenced by a military mind-set. For illustration, territorial and border disputes between neighbouring countries are common and India too has its share with China, Pakistan and Bangladesh but for India such disputes have never been an overriding priority. It has always patiently looked for a peaceful settlement through negotiations while maintaining peaceful friendly relations with the neighbouring country. On the other hand, in Pakistan border disputes with India have taken overriding significance on all issues, prioritising Kashmir over everything else. The obvious outcome has been overly focus on their military spending and build-up with futile war hysteria on India, nuclear rivalry and cross-border terrorism.
Economic Legacy of British Raj
Modern India, Pakistan and Bangladesh (East Pakistan till 1971) were carved out of the erstwhile British India and subjugate Princely States. Most of the Indian historians hold the British Raj responsible for India’s economic backwardness and poverty. Before the colonial occupation, the Indian economy was largely based on agriculture, handicrafts and cottage industries, and the country was a major exporter of the textiles, spices, jewellery, pearls, sugar and iron weapons with nominal imports, if at all. There was a general prosperity and the country was nick-named Sone ki Chidiya (The Golden Bird) for long. After the British came, the persistent colonial rule gradually weakened agriculture base and deindustrialized India, rendering millions of farmers and artisans out of work.
To serve own vested interests, Britain’s trade policies were made favourable to the import of manufactured goods including cheap textiles and the export of raw materials that systematically drained the wealth of India while increasingly enriching Britain. For illustration, that was the time when Europe was still going through the industrial revolution and Lancashire’s new textile mills with their cheaper products ruined India’s handloom textile industry leaving millions of Indian weavers out of work, plunging India’s textile exports from a leadership position to a miniscule trade. A country which was a leading exporter of finished and much sought after textile goods became an exporter of raw cotton under British rule. The revenue system too was changed to the disadvantage of farmers, revenue surpluses were diverted to England and trade surpluses were used to offset their own trade deficits and to pay exports to India.
In fact, other than perhaps developing a robust railway network which some historians and experts believe that the development was largely driven by their own commercial interests, British hardly did any substantive investment during their reign for the benefits of Indian masses or development of industry and agriculture in India. This was in sharp contrast to the America (USA) which they chose for settlement and made massive investment for all round development while they treated India only as a colony to serve their economic interests and political ambitions of global dominance. Besides, apart from facilitating a few upper class elite Indians with modern English based education; they didn’t do enough to develop education system for common people.
Consequently, it is not surprising that by the time India became free from the British Raj, it was tattered with adverse trade and miserable economy rendering the majority of Indians as poor and illiterate lot. On partition, apart from the land and population, the military strength, Indian civil service, other assets and already thin cash reserves were also proportionally divided between India and Pakistan. India and new born Pakistan had a plethora of challenges for the nation building on modern lines by taking appropriate measures for the development and growth in the new political and socio-economic order.
Legacy Change in Socio-Economic Order
To recapitulate, India was a leading manufacturing country, developed banking system, extensive foreign trade, abundant merchant capital with a network of brokers, agents and middlemen to facilitate world trade with a high percentage (22% plus) of world GDP share till about the middle of the 18th century. Growing industrialization of the Western Europe and colonisation of India for almost two centuries under British gradually destroyed the external trade and commerce as also indigenous base of agriculture, crafts and industries. The country which once upon a time boasted of exports of vast variety of finished goods with high trade surpluses gradually turned into a trade deficient importer of finished goods while exporting cheap raw materials under the colonial rule. So as their own masters now, the independent India and new born Pakistan had their own threats, challenges and opportunities to grow in the world economic order.
This was the time when the world economy was broadly divided into two blocks. On one hand was USA and Western European democracies pursuing capitalist economy favouring private sector and liberal policies to govern trade and commerce; on the other hand was communist block led by USSR pursuing socialistic system with stricter government control on economy directly and through state enterprises. The then Indian Government led by Pt. Jawaharlal Nehru realized that despite democratic character of governance, the atmosphere in the country was not ideally suited for the capitalist economy for all round development and growth. Hence the Indian government decided to pursue a mixed economy, neither pure capitalism nor pure socialism but a mixture of the two systems. The logic was that in India the private sector would be interested in enterprises which are less capital intrinsic with more profit orientation while country simultaneously needed the development of energy, infrastructure, defence and heavy engineering goods. Accordingly, the private sector was assigned to the industries of consumer goods, agro, small and medium scale industries while the state run enterprises were assigned heavy industries such as defence equipment, space, atomic energy, heavy engineering industries etc. Then the Mixed Economic System was considered to be more suited to remove the anomalies of the capitalist and socialistic economic systems.
While the system worked but pace of economic development remained slow and far from satisfactory for many years. The Indian economy which remained stagnant during the British rule (average 0.8% growth from 1900 -1950) picked up during the Nehru – Gandhi regimes (average 3.5% from 1950 – 1980) but the impact was not felt much due to population growth of over 2 percent in the corresponding period. During the eighties, the country adopted to change with the modest liberalization but the real breakthrough came in early nineties under Narsimha Rao government with dramatic liberalization and de-licencing policies that created conducive atmosphere for the foreign investors and annual growth rising to over 5 percent. The successive governments, irrespective of their political leanings and ideology, continued with the reforms opening more sectors and avenues in the process with the population growth slowing down simultaneously. Consequently, India is among the fastest growing economies in the world now with over 7 percent annual growth.
Pakistan too had similar economic challenges since its creation but its Islamic character and unstable political environment never allowed it to pursue a definite long term economic policy. Besides, the bitterness created by partition and Pakistan’s obsession with Kashmir constantly kept troubling its central leadership – civilian or military, irrespective of the party in power giving disproportionate importance and weightage to Pakistan military. Consequently, with the changing leadership under the civilian and military governments, the economic policies also kept changing.
Till about 1960, Pakistan’s economy was largely based on agriculture, and people were free to make choices regarding their occupation and wealth but still the government interference was fairly high. General Ayub Khan during his tenure laid emphasis on industrialization focusing more on a capitalist oriented economy. Reportedly, industries made progress during his time but the gap between rich and poor increased because the development largely amassed wealth to a few influential and industrialist families. Interruption came during the 1965 war with India which was also a blow to already poor economy. His successor General Yahya Khan neither proved to be a good administrator nor a visionary to lead the country to economic progress; instead he plunged the nation into a serious crisis after the elections for the Pakistan National Assembly in 1971 that led to the separation of its eastern wing emerging as an independent Bangladesh, and a simultaneous ignominious defeat in war in the hands of India.
After war of 1971, Pakistan’s reigns came under Zulfiqar Ali Bhutto who pursued a sort of command based economy. Immediately after taking charge as president, he nationalized banks and large-scale enterprises. He discouraged private investment and tightened government control on economy by nationalizing almost all domestic banking, the energy sector, major part of the transportation and communications sector and also a substantial chunk of the industrial and manufacturing sector. While Pakistan resisted world monetary institutions like World Bank and IMF insistence for a planned economic system, Pakistan’s economy was largely driven by the influence of the United States and European countries during the eighties and nineties due to their huge foreign aid and funding on account of the former’s cooperation as a frontline state in on-going war in Afghanistan to drive away soviets.
In 1999, General Parvez Musharraf assumed power by overthrowing the civilian government and around this time the country opted for the sort of a mixed economy. His government lifted ban from investment of the private capital in the fields of banking, energy, transportation and communication sectors. Besides encouraging the domestic investment and small scale industries, his government also opened doors for the foreign investors in Pakistan. Thus Musharraf government is credited with the current environment of a mixed economy system in Pakistan, subject to the rules and regulations defined by the Government.
Broad Economic Trends
India’s economic upsurge over the past twenty-five years or so has been remarkable in so far as it is now in the bracket of the fastest growing economy in the world, its current pace surpassing even China, the second biggest economy in the world. Off late. India’s economic potential and growth rate has been lauded by the world monetary institutions and developed nations using gerunds like an emerging, arriving, shining or rising economy. With a series of reforms and liberal policies initiated in the 1980s and 1990s, and opening of the newer sectors and avenues for the inland private and foreign investment, India has effectively registered on a path of progress with the rising global private investment, high growth rate (over 7%), expanding prosperous middle class and a burgeoning arrival in the manufacturing and global information technology sectors.
If the recent trends of economy are any indicators, India’s diverse economy is all inclusive from the traditional village farming to the modern agriculture, handicrafts and cottage industries to a variety of heavy engineering industries, prospering private banking and financial institutions to an organized public sector and a central bank (RBI) besides multitude of other services and trade. Though almost half of the work force is still engaged in agriculture, the services and trade are the major source of economic growth accounting for nearly two-third of India’s output while employing about one-third of its labour force. Another asset is India’s large highly educated technical manpower and English-speaking population with a large potential of a major exporter of information technology services, business outsourcing and software services globally.
On the other hand, notwithstanding some economic reforms Pakistan has internationally gained altogether a different reputation as a safe haven for terrorists. During 1980s and 1990s, it was considered a crucial partner of the US and allied nations in their fight against terrorism in the region. The same terror network took altogether a different turn and the country remained besieged with the continuous incidents of international terrorism and strife, so much so that today it is considered as a safe haven of terrorists and the US has ultimately put it in the list of rogue nations sponsoring and nurturing terrorism from its soil. This has adversely affected Pakistan’s economy, growth and investment levels. International investors show little interest in the Pakistan’s economy while domestic investors remain indecisive with low-confidence level in the prevailing conditions.
India is gradually moving towards an open-market economy. De-licencing and economic liberalization, disinvestment and privatization of public enterprises, industrial deregulation, relaxing controls on foreign trade and investment, allowing foreign direct investment even in crucial areas like defence served to accelerate the country’s economic growth to nearly an average of 7% per year from late 1990s to 2010. Rising macroeconomic imbalances like high interest rates, inflation and uncertainty about further reforms had slowed down the economic growth around 2011 but post-election central reforms from 2014 onwards have again put economy back on track improving investors’ perception and confidence, surge in capital flows and stabilization of the rupee.
After years of dilemma and uncertainty, the federal government has now passed the long pending goods and services tax (GST) bill and implemented it with effect from July 2017. This is a major tax reform whereby all central and state indirect taxes on goods and services have been merged into a uniform and simplified tax structure applicable across the entire Indian Territory which is likely to go long way to ease and augment domestic business and commerce. Further, the foreign direct investment caps in certain sectors have been removed and new sectors opened for it. On the flip side is, however, the plight of the public sector banks ridden with mounting bad debt, high interest rate and constrained growth.
On the other end, political uncertainties, lack of the industrial growth, disproportionate military expenditure and low foreign investment continue to slow down Pakistan’s economic growth. The deteriorating security environment, terrorism menace, severe power shortages and unfavourable climate for foreign investment are serious drag on economy. So for Pakistan has been getting substantial grants and foreign aid from the US and Islamic countries supplementing its economy but due to its continued harbouring and tangoing with terrorists organization harmful to the interests of the US, other western countries and India, such funding from the US is likely to dry up soon since the US has now listed Pakistan in July 2017 among the nations serving as safe haven for terrorists.
Pakistan continues to remain largely agriculture based economy, and the textiles and apparel account for a large chunk of Pakistan’s export earnings. Pakistan’s failure to diversify its exports is a major bottleneck in expansion of its external trade and commerce. Other shortcomings are the much of the economy being informal, high rate on unemployment and laggard human resource development. However, the lack of foreign investment and trade deficit in Pakistan is partly compensated by remittances from the overseas workers and aid mostly from the Gulf countries. Pakistan needs substantial investment in the modern education and health care, improving tax base to augment more revenue, improving domestic business environment and reducing dependence on foreign aid and grant.
Economic Indicators – A Bird’s Eye View
As per the latest World Bank figures, India is ranked 7th largest economy in the world with the GDP (nominal) $2.38 trillion, the US and China occupying first and second rank with $18 trillion and $11 trillion, respectively. Pakistan with its $271 billion GDP (nominal) does not find a place in the list of 40 biggest economies in the world and even a small island nation like Hong Kong has a greater economy than Pakistan. As per a recent study by Pricewaterhouse Cooper, China is likely to replace the US taking the first place while India will occupy second place by 2050 with the current growth rate, both being emerging Asian economies and are likely continue to grow at faster pace compared to developed economies.
For the argument sake, many people might argue that India’s economic superiority over Pakistan could be due to more population and consequent more money in circulation. But as can be surmised from the analytical account given in the preceding paragraph, the economic superiority is not merely in numbers and India is far ahead of Pakistan in terms of average data on various economic indicators. For illustration, according to latest trends the GDP growth of India is 7.6% while for Pakistan it is 4.4%. As against the growth rate, the current average birth rate in India is 1.19% while it is 1.45% in Pakistan, as such population of Muslims worldwide is projected to grow faster than other communities because high fertility among them is largely due to religious influence. A mention of birth rate along with GDP is relevant because the fast growing population tends to neutralize the fruits of a faster growth.
Similarly, the nominal per capita income in India is $1820 while in Pakistan it is $1427. The corresponding PPP (Purchase Power Parity) per capita income for India is $6664 and for Pakistan it is $4902 while the GDP (PPP) for India is $8.73 trillion and Pakistan $984 billion. India has a staggering $350 billion as foreign reserves while Pakistan merely manages it to keep around $20 billion. Compared to Pakistan’s paltry export value of $29.8 billion, India’s total exports have reached to a level of $477.1 billion. In business terms, India has a strong global presence in trade while Pakistan’s trade is largely concentrated with the gulf countries. Outside gulf region, Pakistan has a reasonable presence in China, US and Germany but much of the Europe is beyond its radar while India has much of the business with European countries besides the US, China, Japan. Defence expenditure wise, currently India spends approximately $51 billion (2.2% of GDP) while Pakistan $5 billion (2.8% of GDP).
Scope of Trade and Commerce
Given the contiguous long border between India and Pakistan, the immediate advantage in mutual trading would be low freight costs resulting into cheaper prices of commodities and goods. The other favourable factors are their cultural affinity, common language and compatible social and economic system providing ideal conditions for mutual trade and merchandise. For illustration, Pakistan imports iron ore from Australia and Brazil at much higher cost due to transportation and other handling charges while the same is abundant in India and can be procured at lower cost. Similarly, keeping in view that both India and Pakistan are predominantly agrarian economies, the agriculture sector being a large component of the GDP and employment generator, it could be of mutual interest and benefit if the two countries seek cooperation and look at each other for tapping the existing potential in this sector. According to an estimate, a liberalised trade in this sector alone could easily generate about 3 lakh jobs in India and 2 lakh in Pakistan.
Incidentally, both India and Pakistan are members of the South Asia Free Trade Area (SAFTA) but the trade between the two countries is miniscule. Reportedly, the total trade between the two countries is approximately US$2.5 billion a year, of which India’s exports to Pakistan accounts for about $2 billion while trade value of import from Pakistan is about $0.5 billion. Besides, a lot of informal trade also occurs involving third countries route, mostly via Dubai. Indian exports to Pakistan mostly include items of real jewellery, diamonds, precious stones, appliances, paper, chemicals, tyres, packaged food items, pulses, spices, consumer durables, industrial additives and pharmaceuticals while imports from Pakistan mainly include textiles, dry fruits, spices, cement, carpets, fruits and veggies etc. As per an estimate, the trade potential between India and Pakistan is at least 10 times larger than the existing one but a variety of political and infrastructural constraints continue to be impediments in improving the bilateral trade relations, more particularly the ghosts of the past wars over Kashmir and the role of Pakistan in terrorism.
As members of SAFTA, both India and Pakistan maintain sensitive lists of trade items. While the items which are completely banned from trade appear in the negative list, items appearing in the sensitive are those which can be traded without any tariff concessions. Obviously, these lists are reflective of sentiments of the countries to protect their domestic industry from imports. Currently and ironically, items representing almost 60% of India’s export potential appear in the sensitive or negative list of Pakistan. Conversely, about 30% of India’s import potential from Pakistan too is on India’s sensitive list.
There is a lot of scope to address the physical and regulatory impediments between the trade of two countries. The addressal of physical impediments would mean creation/expansion of physical infrastructure (roads) at the land borders, augmenting capacity and facilities at ports, developing rail links between ports and markets, and so on so forth. Removal of the regulatory impediments include revisiting the sensitive and negative lists, and the amendment of transport protocols to allow uninterrupted transportation without the requirement of trans-shipment of cargo i.e. the transfer of goods from one country’s truck to the other country’s truck at the land borders because of the current position that the trucks of either countries cannot operate in each other’s territory. Non-tariff barriers such as the complexity of regulatory procedures, port restrictions, recognition of standards and valuation of goods also need addressal to create better trade environment between the two countries.
Most Favoured Nation Status
India granted most favoured nation (MFN) status to Pakistan in 1996 in trade relations but this was not equally reciprocated by the latter. After almost 16 years in February 2012, the Pakistan government gave indication that they are actively considering granting MFN status to India. Such a decision could have been a paradigm shift and turning point in trade relations of two countries but then perhaps due to their internal differences and reservations, the issue was postponed by the then government led by Pakistan People’s Party (PPP) till 2013 elections leaving it to the new government to take a call. The newly elected Nawaz Shariff led Pakistan Muslim League (PML-N) after showing its initial bonhomie and interest on the subject further postponed a decision in March 2014 apparently due to Pakistan army’s misgivings about moving too quickly on trade relations pending settlement of the Kashmir issue. Incidentally, Pakistan has now redesignated MFN as the Non-Discriminatory Market Access (NDMA). Apparently, the agriculture lobby in Pakistan too is against granting MFN status to India.
During late 2015, after quick interaction at the Secretary and NSA levels followed by informal visit of the Indian Prime Minister to meet his counterpart in Pakistan, there was a warming of relations giving optimism for a comprehensive talk between two countries including trade relations. But the environment was soon vitiated by the terrorist attack on India’s Pathankot Air Force base in January 2016 and its trail suggesting a handlers based in Pakistan. Developments thereafter have only worsened the situation with repeated LOC violations and more terrorist attacks from Pakistan side and India’s counter reply including surgical strikes and blunt refusal for any talk till hostilities from the other side are stopped.
There is a widespread perception that the Pakistan army is against the trade with India, hence normalcy of trade relations would largely depend on how their army perceives and balances their security considerations vis-à-vis economic needs. If it ever happens, it will be a watershed mark in Indo-Pak relations as a vast economic cooperation could considerably alleviate mutual suspicion on security threats and perceptions. A case in point is India-China relations, they too share a long border and many territorial disputes but the vast on-going trade and commerce between the two countries have deterred any territorial dispute escalating beyond a threshold line. However, apart from the MFN or NDMA status, the two neighbours would also need to jointly evolve an agreement on non-tariff barriers (NTBs) and a dispute resolution framework. Needless to say, better trade relations cannot prosper without creating adequate infrastructure (roads) across the border and rail network between ports and markets for two-way trade.
Economic Cooperation – Contrast and Paradoxes
After independence, the Indian leadership quickly realized the dynamics of the capitalist and socialistic models of economy and decided to go far a mixed economy model considering the strength and vulnerabilities of the Indian democracy in a nascent stage. The same was fine-tuned by successive stable and democratically elected governments. On the contrary, since beginning the economy in Pakistan was driven by the individual preferences and fancies of leaders of rather unstable successive governments.
Inspired by the Five-Year Plans of Soviet Union, both India and Pakistan opted for the programme. While India by and large took it seriously and pursued a planned development under a strong institutionalized mechanism of the Yojana Ayog (Planning Commission) headed by the prime minister till recently when a decision was taken to replace it with Niti Ayog expanding its scope and coverage. On the contrary, only a few of the five years plans in Pakistan attained the full period while the majority of them were failed or abandoned midway due to changing priorities under different military and civil dispensations till finally around the close of century the five-year plans were replaced with the medium term development framework (MTDF).
In the decade of 1960s, India launched “Green Revolution” for the Agriculture, whereby modern agricultural techniques and practices were adopted such high yielding seed varieties, petrochemical fertilizers, enhanced irrigation facilities and mechanized labour enabling sharp rise in productivity and farm output. Ironically, midway in the same decade, Pakistan launched “Operation Grand Slam”, a covert military operation with a view to forcefully snatch Kashmir from India that led to full-fledged Indo-Pak War of 1965. More than India, it had adverse impact on Pakistan’s economy taking them back by several years.
In 1970, India launched Operation Flood nick-named “White Revolution” with a view to achieve self-reliance in milk and other dairy products, the world’s biggest dairy development program that transformed India from a milk-deficient nation into the world’s largest milk producer over a period of time. As against in the same year Pakistan denied power to the legally elected Awami League Party in the National Assembly simply because the party was based in East-Pakistan. This led to a mass upsurge and protests in its eastern wing, genocide by the Pakistan army under Yahya Khan, exodus of over a crore refugees to India, consequent Indo-Pak war of 1971 with Pakistan’s ignominious defeat and emergence of Bangladesh.
In 1980s, the US and allies included Pakistan as partner to fight Soviets forces in Afghanistan, and in the process “Mujahedeens”, a militant group, were created. While the war was still on, the same Mujahedeen were unleashed in Kashmir towards the late 1980s and 1990s causing unrest in the valley through sabotage, murder and loot driving away minority Hindus and Sikhs. Ever since the Pakistan army and ISI has patronized and sponsored several other Kashmir and POK based terrorist outfits as also mercenaries from other Islamic countries to keep the Indian state in constant turmoil citing it an in-born freedom struggle.
The above are only a few illustrative contrast and paradoxes that highlight the priorities of India and Pakistan in their quest for socio-economic development and consolidation after the independence. In short, Pakistan’s obsession with Kashmir has overtaken all other agenda of development during these seven decades of independence. In a nutshell, Kashmir is the cornerstone of Pakistan’s national policy, their ultimate ambition and obsession. A country which has so many challenges in nation building and could so easily work with India for mutual advantage and gains, a pity that it continues to be obsessed with only one topic instead. This is also evident from the fact that Pakistan uses United Nations and various other international forums, not to showcase their economic state to attract international business, but just to raise Kashmir issue and more particularly the demand of plebiscite.
Notwithstanding these developments, India gave MFN status to Pakistan in 1996 which has not been reciprocated so for by Pakistan. A mutual MFN status could have worked to eliminate trade barriers, creation of new jobs besides helping the economy in both countries. Such initiatives in economy and other sectors enabling larger movement and interaction among the political leaders and citizens could also help in easing tension putting contentious issues at the back-burner.
Now it is universally accepted fact that India is the fastest growing economy in the world and emerging in the global scenario as an economic giant. Currently, it is 7th largest economy and with the current growth rate, it is likely to take second place after China in terms of economy size in a few decades from now. The GST, a major tax reform, introduced by the present government along with other on-going reforms is likely to further ease and expand business opportunities and increase by another 1-2% in the growth rate. As against this, Pakistan economy is already in bad shape without indications of recovery in near future on account of low tax collection, high defence spending, internal instability, extremists and terror organizations, poor infrastructure, low education and IT base, and now drying of traditional fund sources from the US and allies. Another and perhaps the biggest problem is the constant military-civil tussle in Pakistan. It is often held that irrespective of the party in power in the civilian government in Pakistan, it is the army which actually calls the shot in deciding priorities and in the process, probably it has the backing of the mass population and judiciary too.
The sharp contrast in development and economic growth of the two countries is remarkably visible in the following sectorial developments:
(1) Defence: India with about 1.3 million active troops is world’s third largest military and fourth most powerful military power yet its defence establishment works under the complete control and policies of democratically elected civilian government. On the contrary, Pakistan is an Islamic republic and the elected government works on the behest and under control of the Pakistan army on all important issues.
(2) Health & Medicine: At any given time, India has the largest infant population in the world yet without a single reported case of polio for many years while two countries Pakistan and Afghanistan continue to remain polio-endemic. Out of 70 polio cases reported worldwide in 2015, 51 belonged to Pakistan and 19 to Afghanistan. Of late India is emerging as the most popular destination for availing medical treatment worldwide (nick-name: medical tourism) that includes many critical patients from Pakistan too.
(3) Space Technology: After NASA, Russian and European space agencies, the Indian Space Research Organization (ISRO) has emerged as 4th best in space technology and missions. After Chandrayaan to moon, ISRO successfully sent Mangalyaan on Mars mission putting its satellite in Mar’s orbit in the first attempt. Besides, it has carried out several successful multiple satellites launch for other countries. Pakistan stand nowhere in space technology, it is alleged that even the missile system and technology for defence was clandestinely acquired from China/North Korea.
Is There a Silver Lining?
One can do nothing but hope that someday Pakistan will get over its Kashmir obsession and realign its priorities. Of the combined Jammu & Kashmir state, almost 55% land area is already under illegal occupation and control of Pakistan and China. These seventy years have already considerably changed the geographical contour and demography of the state. The fact that a substantial part of the state is under illegal occupation of the hostile neighbours certainly pinches the psyche and self-esteem but India has gradually learned to live with the pain in favour of the larger priorities of the country’s welfare, development and growth. Pakistan too need to learn that 70 years of hostilities with India has yielded nothing except inflicting costly wars, disproportionate spending on the military build-up and arms race in the sub-continent at the cost of the socio-economic development.
On the other hand, a healthy trade linkage and cooperation in cultural and sports activities could play wonders in improving relations in the best interest of both countries. The problem is the army and media in Pakistan remain constantly engaged in an aggressive and vilified campaign against India branding it as a big threat to Pakistan’s security and stability. Even children in schools are reportedly taught that India is enemy number one of Pakistan. On the contrary, there is no such hard feeling or hostility in Indian psyche because they understand that a secure and stable Pakistan would offer best chance and possibility for the peace and prosperity in the region.
To achieve this, a free movement and interaction among the common citizen, business community and investors is necessary. In the present circumstances, citizens have apprehensions and businessmen from both countries are reluctant to invest as they fear the consequences in the event of the breakout of hostilities. A bilateral investment treaty might help or the investors could enter into joint ventures without physically locating in each other’s territory. Another key determinant of realization of trade potential is the liberalization of business visas. But the moot point is whether the Pakistan army and political establishment will ever allow fructifying this approach.
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