South Asia Subcontinent, which was reputed to be the ‘golden sparrow’ in the medieval ages, seems to be poised for rise, once again. However, the economic growth of Pakistan’s eastern neighbours — India and Bangladesh — is more impressive at present compared with the former.

The Indian economy is expected to rise by 9.2 percent in 2010-11 following impressive growth in the manufacturing and services sectors, according to the Centre for Monitoring Indian Economy (CMIE).

The foreign investment in the Indian stock market has crossed Rs1 trillion ($22 billion), hitting Rs1,005,742 million on October 13, 2010, for the first time in history. According to the Daily Tribune (Chandigarh, October 13), analysts predict that the overseas inflows will continue to increase in the coming months.

Going by the pace of foreign fund inflows, analysts are positive about the continuation of the trend in the near term, given that the country is one of the hottest destinations for investment by overseas fund houses. Last year, Foreign Institutional Investors (FIIs) purchased shares of Indian companies worth Rs834,230 million. During the same year, the stock market benchmark — SENSEX recorded a gain of over 80 percent.

The surge in the Indian market is primarily due to inflows by FIIs that have been pumping funds into emerging markets on account of their strong growth prospects and fundamentally sound companies.

Driven by FII inflows, Indian bourses picked up significant momentum during the second quarter of the current fiscal year. This helped the stock market to break out of the tight range that it was confined in the previous three quarters.

Analysts believe Delhi’s plans to disinvest in public sector companies, including Coal India Ltd; will give more investment opportunities to FIIs.

As regards Bangladesh, the International Monetary Fund (IMF), in its latest economic outlook, has projected the country’s economic growth at 6.3 percent for the current year, higher by 0.5 percentage point than last year.

Compared with India and Bangladesh, Pakistan’s economic outlook is depressing. "Hardly had our economy started showing signs of recovery when it was hit hard by the recent calamity," President Asif Ali Zardari said, on November 6, 2010, during a dinner meeting with some ambassadors of countries in the Friends of Democratic Pakistan (FoDP) forum.

Economy is the most vital element of national power because it is the one element which keeps the other moving. In addition to the recent unprecedented devastating floods, the war on terror, global financial crises and internal security conditions are some of the factors which adversely affected Pakistan’s economy.

After an impressive and above 5 percent growth for a couple of years, Pakistan’s GDP growth is projected at 2.8 percent during the current financial year. The foreign direct investment (FDI) in the country has tumbled down by 50 percent and economic activities have slowed down massively in the wake of non-provision of power and gas.

Meanwhile, with a burden of Rs9 trillion public debts, the country’s debt to GDP ratio has swelled alarmingly to 69 percent. (According to officials, the existing public debt hovers around Rs8.6 trillion.) The economic experts say that the debt burden is too much and the poor country has no debt carrying capacity.

Officials working for the IFIs and diplomats representing FoDP (Friends of Democratic Pakistan) member states believe that no one in the government looks serious to bring the economy on radar screen, upsetting FoDP and IFIs, including IMF, WB and ADB, as to why the state hierarchy are not serious to increase the national resources.

In a report entitled "Doing Business 2011," the World Bank has lowered Pakistan’s ranking as a place to do business by eight places, from 75th in 2010 to 83rd in 2011. The report might cast adverse impact on the potential investors and keep them away from the country, thus negatively impacting the efforts and hopes of economic turnaround that the nation and the country need so desperately.

In eight of nine categories, Pakistan’s ranking has slumped from 69th place during the previous year to 85th place; while globally the country has fared the worst in terms of its ability to enforce contracts. However, the report commends Pakistan’s judiciary because of the improvement in the time taken to settle cases.

According to Sultan Ahmed Chawla, President of the Federation of Pakistan Chamber of Commerce and Industry (FPCCI), Pakistan’s economy was in a critical situation only due to mismanagement and one-sided decisions. Addressing a meeting at FPCCI’s Lahore office on November 5, 2010, he exhorted the government to take the private sector on board in the process of policy-making.

Mired in poor governance and rampant corruption, Pakistan has paid almost Rs2.6 billion ($ 30 million) as commitment charges to ADB for not using efficiently, timely and in transparent manner the credit lines amounting to $4billion.

One of the perceived pre-requisites of good governance is transparency in administration and, in fact, in public life as a whole. If the government business is conducted openly, the authorities can afford transparency in most of public activities. It is now universally agreed that the more the transparency the less the corruption.

On the other hand, corruption inhibits good governance. It undermines economic development, stunts growth, fuels poverty and creates political instability. No nation can develop to its full capacity or realize its full potential in any field if its social system is plagued by corruption and inefficiency. Corruption not only causes a severe drain on the national economy, it also acts as a major disincentive to foreign investment.

The World Bank report brings to the fore the implications of poor governance, which has stifled growth, raised unemployment and depressed the economy in innumerable ways. The bleak picture painted by the World Bank must be taken seriously because without investment there can hardly be any prospects for turn around that Pakistan so urgently needs.

The writer is a freelance columnist based in Islamabad

alauddinmasood@gmail.com

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Verily, His command, when He intends a thing, is only that He says "Be!" - and it is! (Al-Quran)