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Pak bleeds, India not in the best of health either
Pak�s stock markets have fallen 9% over last week but
India�s
growth targets have dipped as well
SUNIL JAIN, Indian Express Dec 28, 2001
NEW DELHI, DECEMBER 27: LOOK at the macro-fundamentals �
the ones Finance Minister Yashwant Sinha says are
okay for India �
and the answer�s obvious, namely that Pakistan�s
Afghan adventure
has cost it dearly, and any war with India can only
hurt it a lot more.
But look at India�s fundamentals, and while they�re
very strong
compared to Pakistan, just today the NCAER has
lowered its growth
forecast for India by around 15 percent � in August
it was looking at
a 5.6 percent growth, and now this is down to 4.8 for
the current
year.
Pakistan�s stock markets have fallen a whopping seven
percent over
the month � 9 percent over just the last week thanks
to war fears
� and it�s currency has been on a free fall right
since the year�s
beginning, stabilising only last month after the US
gave it an outright
$600 mn for ditching the Taliban and helped
renegotiate its other
loans.
Worse, thanks to the near-collapse of its economy,
growth forcasts
for the year have been lowered dramatically, from 4
percent earlier
to around 3 percent according to the Asian
Development Bank. The
reason for this is equally clear. Thanks to the huge
war fears,
Pakistan�s exports which account for 30 percent of
its GDP have
been badly hit � major international carriers have
reduced
operations to/from Karachi, and India blocking
commercial cargo from
Pakistan will force re-routing which will add to
costs. Nadeem
Maqbool, chairman of the Pakistan textile mills
association told
Reuters that the textile and garments industry in
Pakistan had orders
till December, but nothing after that as buyers from
Europe and the
US had not come in after September 11.
Import duty collections till last month were also
lower this year �
they were 135.6 billion Pakistani rupees as compared
to 141.6 billion
earlier. And according to a Reuters news report,
estimates suggest
that overall tax collections for the year 2001-02
will be well below
targets. A senior finance ministry official told the
agency that
against the target of Rs 457 billion (Pakistani), the
target for the
year had been revised to 430.
The numbers for India, unfortunately, don�t look that
great either �
they�re much better than those for Pakistan, but that
hardly means
anything. The Business Confidence Index of the
National Council for
Applied Economic Research (NCAER) shows a further
fall of 11
percent over the last quarter � the index has been
falling steadily
since January 2000. Total tax collections so far this
year have been
6 percent lower than those last year, and it�s
unclear how the
government will reach the target of raising
collections by around 15
percent for the full year.
NCAER, in fact, expects the fiscal deficit to touch a
whopping 6.5
percent of GDP for the year against the target of 4.7
percent. And
with exports falling in comparison to last year, no
growth is expected
here this year either.
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