The Difference in Planning Between India and Pakistan?s Economy
India and Pakistan were split up in the partition of British India in 1947. Pakistan was created in order to establish a separate homeland for India's Muslims in response to demands from Islamic nationalists. Since their independence, India has had overall greater economic success. By comparing the economic decisions each country made from the time of their independence until the present, it is possible to pinpoint certain independent variables that have made India more successful than Pakistan. Because India nationalized their economy early when its government rather than the people could afford to invest in industrialization, and because they didn?t rush into a free market economy, they have been successful. Part of this success has also come from India?s early anti-import policies that eliminated competition and encouraged growth.
India at the time of its independence was a country stricken by poverty that lacked education and basic living amenities.
The Nehru government, faced with these problems, was anxious to seek economic development. To a new country forming with an already weak economy, urbanization, modernization, and industrialization was at the forefront of the agenda. They planned an economic policy that relied heavily on government ownership of the industrial, financial, communication, and transportation sectors (Harrison 65, 68).
The government controlled these sectors because they had no other choice. India?s savings rates were so low that only its government could provide the funds necessary to jumpstart these programs. Return on investments would take too long for risky financial ventures to be feasible. Since India was a new country, no foreign investors would take the risk of investing money there. Also, with many government- owned firms supplying each other with cheap inputs for manufacturing, the government could cheaply produce the military supplies needed to be a...