[SmartCat]

Originally Posted by v1p3r

Everything we take for granted and think of as the bare minimum is something the Pakistanis can only eye covetously.

Pakistan made two China-specific mistakes. Being a close friend of China is bad for a developing country's economy.

1) Signing up for Free Trade Agreement with China in 2010. Imports from China shot from $6 billion to $20 billion. This decimated a big number of small/medium/large scale industries in Pakistan. This has worsened the balance of payments crisis because it killed exports and increased imports.



2) Signing up for $60 billion infrastructure project called CPEC (China Pakistan Economic Corridor). Under this project, China built roads, railway lines, ports and powerplants all over Pakistan. Like Sri Lanka case, all these projects have been white elephants. Issues:

- To build infrastructure, everything is imported from China (machinery, cement, steel). Even the labour force! Unlike an infrastructure project in India, money does not flow into local economy.
- China has no equity participation in the projects, it is just 100% debt with interest. Interest payments and principal has to be paid back.
- No foresight and planning. China has built a number of power plants based on natural gas and not coal or hydro. But Pak has limited natural gas reserves and hence natural gas needs to be imported. It was fine when LNG was cheap but Ukraine Russia war has resulted in prices skyrocketing. Now most of the power plants are lying idle.

$60 billion CPEC is equivalent to buying iPhone 15 Pro Max Plus 6G on 10 year EMI when your salary is just Rs. 10k per month.

Other issues with Pak economy:

1) No diversification. IT exports are just around $1 billion. From the past 3 decades, textiles exports has been their main dollar earner. And now that too is more or less stagnant (because Bangladesh has now become a textile export powerhouse).

2) Poor management of economy by Finance Minister & central bank. Right now, they have frozen the currency pair USDPKR at Rs. 200 something. What this has done is drastically reduced all dollar inflows into the country through legal channels. Pakistan expats send billions of dollars home (just like Indian or Bangladeshi expats). But because of fixed low dollar rate, these dollars are either staying back or coming into the country through hawala channels.

[V.Narayan]

Originally Posted by v1p3r

A very interesting take on the India growth story, from across the border. Everything we take for granted and think of as the bare minimum is something the Pakistanis can only eye covetously. https://tribune.com.pk/story/2395510/on-india-1

While it ill behoves us to engage in schadenfreude, we must thank our lucky stars. To our west lies an example of 'what could have been'. Whatever our complaints of governance, for the most part we were led nationally by people who had India's best interests in mind, in their own way. My fervent hope is that we continue a similar trajectory over the next few decades until every Indian is assured of a dignified life.

We can never be safe if our neighbours home is on fire. That is a fact no matter even if we don't like our neighbour with good justification. Pakistan has followed the politics of hate that led them down this path. It is a somber caution for others. Their single point agenda with its core branches of anti-India, liberate J&K, Sharia law, keep Afghanistan on the boil, subordinate the State to the Army led to a situation where none of their institutions of judiciary, law making, business regulators, R&D, think-tanks etc developed. So in some ways Pakistan sadly for the common man there is the feudal raj of 1947 married to social media. With TTP {Pakistani Taliban} now fighting for redrawing the Af-Pak border of the Durand Line our neighbours have their hands full.

Originally Posted by SmartCat

1) Signing up for Free Trade Agreement with China in 2010. Imports from China shot from $6 billion to $20 billion. This decimated a big number of small/medium/large scale industries in Pakistan. This has worsened the balance of payments crisis because it killed exports and increased imports.

We destroyed our MSME industry too with lowered tariffs and the free trade with ASEAN. That is why {sensibly IMHO} we stayed out of RCEP {Regional Comprehensive Economic Partnership} as that was simply a back door route for effectively a free trade with China and would have led to the complete destruction of Indian industry. As it is China is our largest import partner and biggest trade deficit partner.

PS: I was unable to read the article in the Pakistan Tribune quoted by @v1p3r. Anyone else facing the same problem?

[ninjatalli]

What about the Pakistan relationship from a trade perspective? Can't it be a relevant country for Indian exports going forward. Historically Indian exports to Pakistan has been between US$1-2Bn; how come we aren't seeing increase in this number if their domestic production is being impacted (assuming that's the reason for the jump in numbers in above chart). Or is it being more impacted due to the relationship constraints?

[sunilch]

Originally Posted by V.Narayan

PS: I was unable to read the article in the Pakistan Tribune quoted by @v1p3r. Anyone else facing the same problem?

For some reason the article opens up with the image of the writer at top followed by a full blank (white) screen/section. Then a small conclusion para at the bottom asking if Pak can play a 3rd party role in a tri-party arrangement between India and China

But, if you double click on the white section, it will highlight the text of the article and you can read it in full

[v1p3r]

Hopefully this attachment is easier to read.

[v1p3r]

Not a good sign for us. We've been evergreening loans and ignoring bad debt, while everyone's favourite whipping boy, the ordinary taxpayer, picks up the tab.

[whitewing]

Originally Posted by v1p3r

Not a good sign for us. We've been evergreening loans and ignoring bad debt, while everyone's favourite whipping boy, the ordinary taxpayer, picks up the tab.

Totally agree with your view that the tax payer will bear the brunt of the after effects.
Can you please share the source of the info?
Asking because I remember reading a report from a broker that the NPAs have been on a downward trend and now in (6-8% IIRC).

[Turbanator]

Originally Posted by v1p3r

Not a good sign for us. We've been evergreening loans and ignoring bad debt, while everyone's favourite whipping boy, the ordinary taxpayer, picks up the tab.

Must be old news.

This is current and at pretty low.

https://wap.business-standard.com/ar...2901139_1.html

[v1p3r]

This is from an industry group that I'm part of. The data is based on IMF (global) + RBI and parliament disclosures, I was told. However, since the data isn't dated, I can't be sure it's current. I know our scheduled bank gross NPA was somewhere around 11% in 2018, so I assume it's fallen since then, which is good news.

[v1p3r]

https://www.youtube.com/watch?v=ljVtYj-YSnk

Very interesting, if slightly long, interview where a well-regarded economist explains why the UK is actually far poorer than similar countries like France, Australia, and Canada.

[carboy]

Originally Posted by Turbanator

This is current and at pretty low.

https://wap.business-standard.com/ar...2901139_1.html

Originally Posted by v1p3r

I know our scheduled bank gross NPA was somewhere around 11% in 2018, so I assume it's fallen since then, which is good news.

Once loans get written off, they go off the books & hence the NPA goes down. I am not sure what is good news about it. Here is an article about why NPA has gone down - https://www.livemint.com/mint-top-ne...s07012022.html

[SmartCat]

One of the popular narratives is that India's wealth is going to Middle Eastern countries, thanks to billions of dollars of crude oil purchases every year. But numbers tell us a different story. Let's look at Year 2021 numbers because 2022 was an unique year for the oil markets (Russia Ukraine war, Crude oil price shot up, Imports of discounted crude from Russia skyrocketed)

- Total crude oil import bill was $80 billion in 2021.
- In 2021, we imported 50% of our oil needs from the Middle East. So those lazy sheikhs pocketed $40 billion from us
- However, because of strong business & cultural relationship with the Middle Eastern countries, Indian workers are dominant in these countries
- In 2021, inward remittances from all countries was $85 billion
- Middle Eastern countries contributed 30% to this number. So $25 billion came back to India.

There still seems to be a gap between oil imports & inward remittances from Middle Eastern countries. But India is actually a petroleum refining powerhouse. We exported $30 billion worth of petrol/diesel/aviation fuel etc. That is, not entire $80 billion of crude imports was for domestic consumption. Significant percentage of crude volumes was processed for exports.

Conclusion (unless I'm missing something obvious): If petroleum is phased out, it will have a net neutral effect on the Indian economy. That's assuming that inward remittances from Middle East too will dry up, because those economies will slow down and will no longer need an army of workers from India.

[d.w.w.]

Originally Posted by SmartCat

Conclusion (unless I'm missing something obvious): If petroleum is phased out, it will have a net neutral effect on the Indian economy. That's assuming that inward remittances from Middle East too will dry up, because those economies will slow down and will no longer need an army of workers from India.

I'm not the expert, but I really doubt this. For eg: a very high percentage of people from Kerala works in middle east. The remittances they send back fuels the local economy(construction/vehicle purchases/ investments). If you ask any one from Kerala, he/she will have someone in their family who financially benefitted from 'Gulf money'. Once petroleum is phased out, a major part of this migrant workers become jobless and will be forced to come back home. This will cause a huge trigger in unemployment numbers which in turn affects economy. Most of the labor intensive jobs in Kerala is already done by low cost migrant workers, so this makes it even more difficult to create local employment.

[Linuskm]

Originally Posted by d.w.w.

Once petroleum is phased out, a major part of this migrant workers become jobless and will be forced to come back home. This will cause a huge trigger in unemployment numbers which in turn affects economy. Most of the labor intensive jobs in Kerala is already done by low cost migrant workers, so this makes it even more difficult to create local employment.

I disagree, gulf countries are diversifying into other sectors and industry like tourism, comercial space leasing etc. If you take Dubai less than 20% of their GDP is from oil. Even Saudi is opening up the economy and liberalising on the culture front to encourage investments and growth.

[Chetan_Rao]

Originally Posted by Linuskm

I disagree, gulf countries are diversifying into other sectors and industry like tourism, comercial space leasing etc. If you take Dubai less than 20% of their GDP is from oil. Even Saudi is opening up the economy and liberalising on the culture front to encourage investments and growth.

An important aspect to consider is the overlap between the current migrant workforce and the future migrant workforce.

What's happening in terms of enabling the current migrant workforce in transitioning to the new jobs being created?

The migrant workers displaced and migrant workers employed could be entirely different demographics, if the skill gap is not bridged.