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Showing posts from February, 2010

Resolving Pakistan's Circular Debt, Electricity Shortages

As Pakistanis discuss major causes and crippling effects of the worst ever power crisis in the nation's history, "load shedding" and "circular debt" are two key phrases that have entered the vocabulary of average people in Pakistan during the last few years.

Load Shedding:

What do these common phrases mean? Let me start with "load shedding" first. Long and daily power outages are called "load shedding". "Load shedding" is supposedly an attempt to share a limited resource equitably among many consumers. In addition to insufficient installed capacity as the culprit, the dramatic increase in "load shedding" in the last two years is commonly also blamed on growing "circular debt" which results in significant under-utilization of power plants already in place. There is credible data to suggest that the deepening electricity crisis since 2008 has more to do with the independent power producers(IPPs) operating at less…

India to Borrow $100 Billion For $240 Billion 2010 Budget

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India's 2010-2011 budget of 11.08 trillion rupees ($240 billion) represents an increase of 8.6% over 2009-2010. The government plans to borrow $100 billion to finance the deficit during the fiscal year.

Going forward, India plans to cut the deficit to 5.5 percent of gross domestic product in the year starting April 1 from 6.9 percent the previous year. The effort, which relies on tax increases and 400 billion rupees ($9 billion) of state asset sales, is aimed at shrinking a debt burden equivalent to about 82 percent of the GDP.

The defense allocation for 2010-2011 is up another 8.13 percent on top of the massive 34% increase in 2009-2010, according to media reports.

India's defense expenditure has been raised to Rs.147,344 crore (Rs.1.47 trillion/$32 billion) for 2010-11, up 8.13 percent from the revised estimates of the previous fiscal, in the budget presented by Finance Minister Pranab Mukherjee in the Lok Sabha today.

According to the Wall Street Journal, India is one of the …

Pakistan's Finance Minister Resigns Post

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Pakistan's finance minister Mr. Shaukat Tarin has resigned. Tarin is an accomplished banker and a protege of former Prime Minister Shaukat Aziz. He became Pakistan's finance minister in October 2008 when the nation's economy was on the brink of collapse. He led the negotiations with the International Monetary Fund for a 23-month, US $7.6 billion bailout package that boosted Pakistan's foreign-exchange reserves and helped avert a sovereign default.

There have been rumors that the ruling PPP politicians, particularly President Zardari and his inner circle, have ignored Tarin's key recommendations to address the acute power shortages in the country. Zardari's insistence on pushing rental power projects, rather than fix the huge circular debt problem in the energy sector first, specially frustrated the outgoing finance chief, when he reportedly threatened to quit last year.

In spite of the obstacles Tarin faced in his job, he has managed to stabilize the economy. Int…

Next 100 Years For India, Pakistan and the World

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Amidst Pakistan's current troubles, Indian officials and mainstream media continue to display unconcealed delight in painting Pakistan as a "Failed State". And as they offer unsolicited advice to their neighbor, they ignore the ground reality that if Pakistan is a failed state, then India is as failed a state as Pakistan, if not more so.

Why is India a Failed State?

The reality of the failure of Indian state is as obvious as daylight. The Indian state's abject failures in delivering bare minimum services to its people, and its inability to solve India's basic problems are there for everyone to see.

Not unlike North Korea, India is engaged in a massive arms buildup while almost half of its children are near starvation. A nation-state like India that fails to take care of 46% its children's basic nutrition needs has to be a failed state. In fact, George Friedman of Strafor raises serious doubts about India's viability as a modern nation-state, and dismisses t…

Pakistan's Crises Sowing Seeds of Class Struggle

During my visit to Pakistan last year, I saw first hand and wrote a post on this blog about how the upper and middle class urban Pakistanis are coping with growing crises of education, electricity, gas,water, and security. For example, I talked about a friend who is doing well selling small power generators and uninterruptible power supplies (UPS) for homes in Karachi. I also saw significant proliferation of private security companies, private schools, private water delivery businesses, and private clubs. Instead of helping improve the situation for all of their fellow citizens, it was clear that the Pakistani elite are retreating into their own bubbles to isolate themselves from the terrible effects of deteriorating governance in their land. This growing class divide is enhancing opportunities for Taliban and other insurgents to exploits class rifts in Pakistan.

Now I am sharing with you an interesting take on the situation in the following guest post by a Lahore-based freelance wri…

Jinnah Democracy Institute For Good Governance in Pakistan

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Why has democracy not taken root in Pakistan? Why have the nation's democratic institutions failed to sustain themselves? How can Pakistan build and strengthen democratic institutions that provide good governance to solve its problems? Is it entirely the fault of Pakistan's ambitious military generals who have ruled the nation for about half of its 60 year history? Or does it have anything to do with the poor performance of the politicians who have had the opportunity to govern for thirty years, and failed to solve most of its major problems, particularly those related to human development and industrialization?

There are many answers to the questions above. But the explanation that appeals to me most is the one offered by British writer William Dalrymple. He wrote for the Guardian as follows on Pakistan's 60th independence day:

"There is a fundamental flaw in Pakistan's political system. Democracy has never thrived here, at least in part because landowning remain…

Pakistani-American Buys Rams For $500 Million

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What is NFL? It is America's National Football League, the biggest sports franchise business in the world. It's much bigger the Indian Premier League (IPL) cricket franchise which is much better known to South Asians. The IPL has particularly been in the news lately for its controversial exclusion of Pakistani cricket players. Bollywood star Shahrukh Khan, who criticized Pakistanis' exclusion from IPL, has come under attack by right-wing Hindu extremists who are rampaging through the streets in India, burning theaters screening Khan's latest movie.

Today's media reports indicate that a Pakistani-American Shahid Khan of Illinois is in $450-$750 million deal to buy the NFL team St. Louis Rams. The final price will depend on whether Khan gets 60% or 100% of the stake in the NFL franchise. Khan, 55, is the president of Flex-N-Gate Corp., an auto-parts manufacturer in Urbana, Illinois with $2 billion in annual revenue. He has lived in the Champaign-Urbana area for more…

India, Pakistan Capitals Vulnerable in Major Earthquakes

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The recent 7.0 earthquake that caused over 200,000 deaths in Haiti has revived discussion of potential loss of life from seismic activity in many cities in the developing world, including the South Asian capitals of Islamabad, Kathmandu and New Delhi, all located close to the South Asian fault lines.



GeoHazards International, a Palo Alto, Calif. nonprofit research organization aiming to reduce suffering due to natural disasters, predicts that a 6.0 earthquake on the Richter scale would cause tens of thousands of deaths in major cities in the developing world. Here is GeoHazards' list of top 10 major cities and their expected minimum death tolls in the developing world which are most vulnerable to major earthquakes of 6.0 (or higher) intensity:

1. Kathmandu, Nepal 69,000
2. Istanbul, Turkey 55,000
3. Delhi, India 38,000
4. Quito, Ecuador 15,000
5. Manila, Philippines 13,000
6. Islamabad/Rawalpindi, Pakistan 12,500
7. San Salvador, El Salvador 11,500
7. Mexico City, Mexico 11,500
7. Iz…

FAQs on 34% Jump in Indian Military Budget

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Last year, India decided on a massive 34% increase year-over-year in its defense spending. Here are some frequently asked questions and answers about this dramatic move that puts India among the world's biggest spenders on defense.

Q1: How much does India really spend on defense?

A1: On paper, India spends $32.7 billion, about 3% of its GDP on defense, after an increase of 34% for 2010.

In reality, India spends closer to 3.5% of its GDP on defense.

Here's what Col.(Retd) Pavan Nair of the Indian Army has to say about it in a recent guest post on Haq's Musings:

India's own specified limit of 3% has been observed only by excluding several items like the cost of the MoD and the expenditure on military pensions which by itself amounts to 15% of the total defense outlay. Several other items like the Jammu and Kashmir Light Infantry (JAKLI, a regular regiment of the army consisting of thirteen battalions) and the Coast Guard are also excluded. A substantial part of the cost of th…