I have selected 1990 (for convenience because it actually was a period of two to three years) as the year when India and Pakistan changed their paths. At that time Pakistan was ahead of India in many social and economic yardsticks. They had earned the gratitude of the Americans by fighting their proxy war against the USSR. Anyone who follows history knows that the US has always helped such countries become economic powerhouses (Germany, Japan and South Korea), But they threw all that away. We all know what happened but discussing the two stories together it puts things in perspective and could offer a compass for a path forward.
A decade long proxy war against the USSR benefited the Pakistanis greatly. They developed their nuclear program during those days. The US knew about that nefarious program but did not do anything because they needed the Pakistanis who in turn squeezed the Americans for large amounts of money and weapons. The Pakistanis also developed the Taliban and various other terrorist outfits to control Afghanistan for strategic depths thinking once again that they will be the first ones in the history of mankind to control the monsters they had created. But once the Soviets were defeated, the US left with Pakistan holding the bag. They could still have done the right thing and rehabilitated the Talibs and they could have either controlled the terrorist groups like LeT of marginalized them by starving them of funds and personnel. But what they did would constitute this turning point in their history. All this happened in the 1989-90.
The hatred that the Pakistanis have for Hindus is unfathomable. It is this hatred that led to the policy of using the Taliban to control Afghanistan for a strategic depth in case of a war with India and use terrorist groups like Let to bleed India. They did bleed us and in the process destroyed J&K, forced a Hindu exodus from the valley and caused a lot of deaths- civilian as well as military. Every peace effort between the politicians of India and Pakistan was sabotaged by either ill-conceived military operation like Kargil or a terror attack. It was a lost decade for Indian citizens of J&K. Indian defence forces finally prevailed and ensured the safety of J&K for the most part. But the price paid for the giving birth to Taliban and Osama Bin Laden was very steep for the US and Pakistan.
When the terrorists and the talibs ran out of targets, they turned on their masters. In the last decade, Pakistanis have lost over 50,000 people to a very bloody terror campaign. As usual, they responded by differentiating between good terrorists (ones who kill Hindus and assorted non-Muslims) and bad terrorists. In fact it wasn't until 140 or so children of Sunni military personnel were gunned down, the Pakistanis were still hesitant in clamping down on their strategic assets. Now that they have started a campaign against various terrorist outfits, one hopes that they succeed. Aside from the loss of life, the economic ruin that these attacks have brought are incalculable. Pakistan has gone from what could have been a reasonably prosperous country to a basket case snatching that title from their estranged Bangladeshi brethren.
Around the same time in India, even with fires burning in J&K we had the good luck of seeing a non Gandhi family Congress PM. As per Wikipedia: With India’s foreign exchange reserves at $1.2 billion in January 1991[2][3][4] and depleted by half by June,[4] barely enough to last for roughly 3 weeks of essential imports,[3][5]India was only weeks way from defaulting on its external balance of payment obligations.
PV Narsimha Rao who was the best Congress PM (the most honest one being LB Shastri) abandoned Nehruvian economics and appointed his second choice for Finance Minister i.e. Manmohan Singh. Again, as per Wikipedia,
Major reforms in India's capital markets led to an influx of foreign portfolio investment. The major economic policies adopted by Rao include:
• Abolishing in 1992 the Controller of Capital Issues which decided the prices and number of shares that firms could issue.[31][33]
• Introducing the SEBI Act of 1992 and the Security Laws (Amendment) which gave SEBI the legal authority to register and regulate all security market intermediaries.[31][34]
• Opening up in 1992 of India's equity markets to investment by foreign institutional investors and permitting Indian firms to raise capital on international markets by issuingGlobal Depository Receipts (GDRs).[35]
• Starting in 1994 of the National Stock Exchange as a computer-based trading system which served as an instrument to leverage reforms of India's other stock exchanges. The NSE emerged as India's largest exchange by 1996.[36]
• Reducing tariffs from an average of 85 percent to 25 percent, and rolling back quantitative controls. (The rupee was made convertible on trade account.)[37]
• Encouraging foreign direct investment by increasing the maximum limit on share of foreign capital in joint ventures from 40 to 51% with 100% foreign equity permitted in priority sectors.[38]
• Streamlining procedures for FDI approvals, and in at least 35 industries, automatically approving projects within the limits for foreign participation.[31][39]
The impact of these reforms may be gauged from the fact that total foreign investment (including foreign direct investment, portfolio investment, and investment raised on international capital markets) in India grew from a minuscule US $132 million in 1991–92 to $5.3 billion in 1995–96.[38] Rao began industrial policy reforms with the manufacturing sector. He slashed industrial licensing, leaving only 18 industries subject to licensing. Industrial regulation was rationalised.[31]
The path PM Rao put us on was the turning point for India. In fact it enabled us to utilize our hitherto untapped potential. In fact even during the disastrous ten years of Manmohan Singh who abandoned his own ways in exchange for the PM’s seat could not derail what he had initiated. When the central government tried to move away from our newly found path, the state governments like Gujarat took that and developed it even further. With the current PM, there can be no stopping us (even with the bureaucracy and the socialistic opposition’s mischief).
My analysis may sound simplistic but while watching a video where Moeed Pirzada (who is a very rational man until his hatred for India overtakes his rational part of his brain, is interviewing Simbal Khan comes to the same conclusion as I did or vice versa. Not only him but scores of Pakistani analysts have tried to analyze the mess they are in. Some of them have started to the conclusion that their proxy war with India has nearly destroyed them. Unfortunately for the poor Pakistanis, they keep placing inordinate amount of trust in the only functional organization in their country which is their army which is the solution and cause of their problems. Maybe there is no real hope for that country. That is unfortunate for all concerned including us.
The source of the information for the article are as follows:
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