The size of Pakistan’s GDP was around USD 180 billion in 2010, which was around USD 400 billion in 2023. This is around 120 percent increase over the period. India’s GDP was around USD 1700 billion in 2010 which reached the value equal to USD 3700 billion in 2023.
The increase is almost the same in percentage terms. However, the projected estimate for Pakistan for 2028 is substantially lower than what is for India for the same year, which is expected to touch USD 6000 billion per year mark. This means that India will add an average USD 2000 billion to its GDP every year in the following four years. It implies that around USD 8000 billion worth of economic activity is going to take place just across the Wagah and Khokrapar borders.
It will be a tragedy if Pakistan, the second largest economy in the region, is unable to benefit from the economic acceleration taking place in the region.
The author is neither competent to comment on the World Trade Organisation’s (WTO’s) technical terms nor does he have the capacity to identify the security issues and other considerations, which are relevant to this subject. His assertions are simply based on the assumptions that it will be economically unfeasible for both the economies not to use the regional strengths.
The comments and observations in this article may look novel, impractical and theoretical at the first instance; however, if there is a study of evolution of economic changes over the time it is revealed that most of the important economic events in human history emerged out of normal predictable prism.
The discovery of the sea route to India by Vasco de Gama and America’s by Columbus, and China’s transformation was never the subject of professors and teachers who were projecting economics on the campuses of Oxford and Cambridge. It is the author’s conviction that this region will again be transformed in a coherent manner. Some of the pertinent facts and realities that need a completely new paradigm have been identified in this series of articles on regional economic cooperation.
Corridor for energy import
The biggest change that is required is in the energy economics of the region. India imports about 85 percent of its crude oil requirement. The world’s third largest energy consumer’s crude oil imports from the spot market rose to 49.6 million tonnes (mt) in FY23, the highest on record, in terms of volumes.
Bulk of this crude is imported from the Middle East. Similarly, there is a high demand for natural gas in India. India cannot achieve this growth potential unless there is sustained cheaper availability of crude oil and gas to her.
When we look at the mapping of global oil and gas pipelines, we observe that the only region which is not connected by the pipelines with the countries rich in resources comprises India and Pakistan despite their geographical proximity to the large producers of such energy viz KSA, Kuwait, Iraq and Iran.
There are substantial resources in the Middle East and Central Asia with geographical proximity to India and Pakistan; however, there are no pipelines form these producing countries to the user countries being Pakistan, Indian, Bangladesh and even China. There are two main apparent hurdles: US sanctions on Iran and India-Pakistan trade deadlock.
Who are the beneficiaries of the present system? The only beneficiaries of the system were economies in the West at the time when Indians were not technologically strong enough.
Now the world has changed. Indian economic growth cannot be curtailed or lowered by these disguised measures and the West has learnt this lesson well with China in the past. The only solution is to remove that effective barrier and redesign the world economic map.
The fast-growing relationships between Saudi Arabia and India and between Iran and India reflect the fact that these oil producing countries have fully realized that their ultimate principal consumer is the subcontinent, which has a population of 1.8 billion people being three times the combined total of populations of Europe and the USA. It is to be noted that ultimately it is the sheer number of consumers that determines the requirement for energy.
This leads to a question about the role of Pakistan in laying such pipelines. There are many conspiracy theories for the same; some of which start from 1947 and are presented as plausible reasons for the division of India.
This author does subscribe to some of them; however, there is no point in discussing those matters anymore as the line drawn by Sir Cyril Radcliffe is a stark reality.
The next question is whether Sir Radcliffe divided the ‘political power’ of two regions or the line was drawn to also economically deprive the people of both the areas to share the common economic benefits such a proximity to energy resources. The author, on the basis of his study of political movements of that period of time, is clear that it was a ‘political division’.
It was not in any manner whatsoever aimed at creating hurdles in exploring common economic benefits such as energy pipelines. However, that had been destroyed by whatever happened from 1947 to 2024.
It is increasingly clear that even Hindu fundamentalists who are largely represented by BJP in India and right-wing political parties in Pakistan appear to be convinced that notwithstanding the issue of Kashmir the people of the region have to explore the regional benefits. The time between 1947 and 2024 has been wasted.
(To be continued)
Copyright Business Recorder, 2024
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