Why Does India Lag So Far Behind China?

Indian mainstream media headlines suggest that Pakistan's current troubles are becoming a cause for celebration and smugness across the border. Hindu Nationalists, in particular, are singing the praises of Indian Prime Minister Narendra Modi and some Pakistani analysts have joined this chorus. This display of triumphalism and effusive praise of India beg the following questions: Why are Indians so obsessed with Pakistan? Why do Indians choose to compare themselves with much smaller Pakistan rather than to their peer China? Why does India lag so far behind China when the two countries are equal in terms of population and number of consumers, the main draw for investors worldwide? Obviously, comparison with China does not reflect well on Hindu Nationalists because it deflates their bubble. 

Comparing China and India GDPs. Source: Statistics Times


China was poorer than India until 1990 in terms of per capita income. In 2001, both nations were included in Goldman Sachs' BRICs group of 4 nations seen as most favored destinations for foreign direct investment. Since the end of the Cold War in 1990, the western nations, including the United States and western Europe, have supported India as a counterweight to China. But a comparison of the relative size of their economies reveals that China had a nominal GDP of US$17.7 trillion in 2021, while India’s was US$3.2 trillion. India invests only 30% of its GDP, compared with 50% for China; and 14% of India's economy comes from manufacturing, as opposed to 27% of China, according to the World Bank.
 
A recent SCMP opinion piece by Sameed Basha titled "Is India ready to take China’s place in the global economy? That’s just wishful thinking" has summed it up well: 
 
"Comparing China to India is like comparing apples with oranges, with the only similarity being their billion-plus populations.......China is transforming itself into a technologically driven economy in order to exceed the potential of the US. In contrast, India is attempting to position itself as a market-driven economy utilizing its large population as a manufacturing base to compete with China........In its 2022 Investment Climate Statement on India, the US State Department called the country “a challenging place to do business” and highlighted its protectionist measures, increased tariffs and an inability to adjust from “Indian standards” to international standards". 
Over 1.5 million patent applications were filed in China in 2021, the highest number in the world. By comparison, the patent filings in India were 61,573, according to the World Intellectual Property Organization. China spends 2.4% of its GDP on research and development compared to India's 0.66%, according to the World Bank
Top Patent Filing Nations in 2021. Source: WIPO.Int

With growing Washington-Beijing tensions,  the United States is trying to decouple its economy from China's. The Wall Street Journal has reported that the Biden administration is turning to India for help as the US works to shift critical technology supply chains away from China and other countries that it says use that technology to destabilize global security.
India's Weighting in MSCI EM Index Smaller Than Taiwan's. Source: N...

The US Commerce Department is actively promoting India Inc to become an alternative to China in the West's global supply chain.  US Commerce Secretary Gina Raimondo recently told Jim Cramer on CNBC’s “Mad Money” that she will visit India in March with a handful of U.S. CEOs to discuss an alliance between the two nations on manufacturing semiconductor chips. “It’s a large population. (A) lot of workers, skilled workers, English speakers, a democratic country, rule of law,” she said.

India's unsettled land border with China will most likely continue to be a source of growing tension that could easily escalate into a broader, more intense war, as New Delhi is seen by Beijing as aligning itself with Washington

In a recent Op Ed in Global Times, considered a mouthpiece of the Beijing government, Professor Guo Bingyun  has warned New Delhi that India "will be the biggest victim" of the US proxy war against China. Below is a quote from it: 

"Inducing some countries to become US' proxies has been Washington's tactic to maintain its world hegemony since the end of WWII. It does not care about the gains and losses of these proxies. The Russia-Ukraine conflict is a proxy war instigated by the US. The US ignores Ukraine's ultimate fate, but by doing so, the US can realize the expansion of NATO, further control the EU, erode the strategic advantages of Western European countries in climate politics and safeguard the interests of US energy groups. It is killing four birds with one stone......If another armed conflict between China and India over the border issue breaks out, the US and its allies will be the biggest beneficiaries, while India will be the biggest victim. Since the Cold War, proxies have always been the biggest victims in the end". 

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Comment by Riaz Haq on April 21, 2023 at 1:47pm

#Rajasthan, #India: #Cow, hit by Vande Bharat #train, falls on man peeing on tracks, killing him. Parts of the cow fell on Shivdayal Sharma relieving himself on the track 30 meters away, killing him. #toilet https://www.indiatoday.in/india/story/cow-hit-by-vande-bharat-train...

By India Today News Desk: A man relieving himself on the railway tracks in Alwar died after a cow, which came in the way of a Vande Bharat train, fell on him on Wednesday.

The incident occurred in the jurisdiction of Aravali Vihar police station in Alwar, Rajasthan. The deceased has been identified as Shivdayal Sharma -- a man who retired from the post of an electrician in the Indian Railways 23 years ago.

According to Shivdayal's relatives, a cow came in the way of a Vande Bharat train which left from Kali Mori gate around 8:30 am. The impact of the collision was such that a portion of the cow's body fell 30 metres away over Shivdayal, who was relieving himself on the tracks. Shivdayal died on the spot.

Shivdayal's body was sent for post-mortem to the district hospital on Wednesday morning. The semi-high speed Vande Bharat trains have had run-ins with cattle along many routes, the maximum number of them being reported from the Mumbai-Gujarat stretch.

Within days of its launch, the Mumbai-Gandhinagar Vande Bharat Superfast Express train suffered minor damage after colliding with cattle on October 6. The next day, the same train sustained a minor damage to its nose panel after it hit a cow near Anand station in Gujarat.

On October 8, the train had suffered a bearing defect in the traction motor of the C8 coach between the Dankaur and Wair stations. On October 29, the Mumbai-Gandhinagar Vande Bharat had a runover with a cattle near Atul in Gujarat's Valsad.

Union Railways Minister Ashwini Vaishnav said collision with cattle on the tracks is unavoidable and this has been kept in mind while designing the semi-high-speed Vande Bharat trains, which run at a speed of approximately 130-160 kmph.

Meanwhile, the Western Railways has decided to put metal fencing along the over 620km-long Mumbai-Ahmedabad trunk route to stop animals from straying onto the tracks and prevent accidents.

Comment by Riaz Haq on April 22, 2023 at 9:57am

Will This Be the ‘Indian Century’? Four Key Questions
By Alex Travelli and Weiyi Cai


https://www.nytimes.com/interactive/2023/04/19/world/asia/india-chi...

India is a country primed to work. More than two-thirds of all Indians are between the ages of 15 and 59. The country’s ratio of children and retirees to working-age adults is remarkably low.

But this opportunity comes with huge challenges. That “demographic dividend” could instead become something like a disaster. In some recent years, India has squeaked past China to claim the title of fastest-growing major economy. But it has never expanded fast enough to produce sufficient formal employment for everyone. The country needs about nine million new jobs every year just to keep pace; the annual shortfall helps relegate many to India’s old standby, agricultural work.

Most people in India lack the means to be “unemployed” – in the work force but without a job. Underemployment is the more discreet danger. Wages have been stagnant for eight years, according to an analysis by Jean Drèze, an economist at Delhi University. Economic growth without an equivalent increase in jobs makes India’s massively unequal society even more so, raising the potential for unrest.

India has one of the world’s lowest rates of formal employment for women: about one in five. China’s is almost double that rate, higher than the United States’ and the world average. An economy cannot meet its potential when it draws on the contributions of so few women.

Also worrisome, the rate has actually declined in India even as most of the country’s economic conditions have improved. The explanation favored by economists is that the jobs most women take are so poorly paid that as soon as a family can do without the extra income, wives stop working outside the home.

That does not mean women in India do not work hard. They are a visible presence in the 41 percent of society that is still in agriculture, and they carry nearly all of the household burdens. But so long as these women remain outside the formal work force, they cannot enter its most productive categories, in industry and services. Improved access to family planning, better education, efforts to change societal attitudes and measures to ensure women’s safety could help more women take on formal work.


--------


India’s economic story, however it turns out, will not be a repetition of China’s. There are many ways in which India can rise, especially with industrial manufacturing no longer occupying the central role in the world economy that it once did.

Services now make up a huge and exciting part of the Indian economy, augmented by a low-cost digital infrastructure that India developed on its own. Other glimmers are also emerging: Chip makers are looking to India as a high-end substitute for China; online services are allowing millions of young Indians to work abroad without leaving home; and even life in India’s villages is becoming more urbanized by the year.

The only certainty about the new biggest country in the world is that it will be unlike any that came before it.

Comment by Riaz Haq on April 22, 2023 at 9:57am

No census in #India. No one knows for sure how many Indians are there today, how many have #jobs, do they have access to #food, #healthcare and #sanitation and what is their level of #education? Is #Modi government lying about its achievements? https://www.bloomberg.com/opinion/articles/2023-04-20/india-has-the...


This week, the United Nations informed the world that India was now its most populous nation. According to the UN, there are now 1.428 billion people in India, as opposed to a mere 1.426 billion in China. When asked about this, China’s foreign ministry spokesperson sounded dismissive: “I want to tell you that population dividend does not depend on quantity but also quality.”

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In 2020, however, pandemic-hit India postponed the census and claimed at first it would shift online — as was tried in the US, for example. Yet things have returned to normal, in India as elsewhere, and there’s no sign of preparations for a census, online or off.

India’s current government has a somewhat difficult relationship with data. Various surveys and calculations, from the national income accounts to household consumption patterns and jobs data, have been cancelled or reviewed over the past seven years.

This census was set to be even more politically explosive. In famously diverse India, the census provides the last word on the relative sizes of various groups. And those numbers don’t just determine their voting power in democratic India, but also the distribution of welfare and public services. Without an accurate census, Indian policymakers are fumbling in the dark.



Unfortunately, the demographic composition of Indians — what caste they were born into, where they live, and what religion they profess — is now exceptionally controversial.

Consider caste, for example. Not since 1931 has India determined the exact caste composition of its population. And yet our huge affirmative action system — with job and educational quotas earmarked for various caste groups — is based on that data. Any big shifts in the numbers would certainly impact caste-based political mobilization, and the government is unwilling to do the counting.

Then there’s religion. If minorities’ numbers have increased “too much,” there would be an outcry from the right-wing; if they haven’t, it becomes harder for politicians to tell Hindus that they are in demographic danger.

---


Even more potentially problematic are the numbers for language groups and state origins. India is a country of two halves: one with a rapidly growing population, and the other aging just as rapidly. By 2041, according to government estimates, the northern state of Bihar will have added 50 million people to its strength of 104 million in the 2011 Census. The southern state of Tamil Nadu, meanwhile, will have begun to shrink. Worse, the shrinking states are mostly ruled by strong regional parties, don’t speak the same language as the north, and are much richer.

New population numbers may mean that these states’ share of seats in the national parliament will decline, leaving them with little voice in New Delhi’s decisions. Inter-regional transfers in India, already high, will increase. One state finance minister has complained that sending local taxes north is “like throwing money down the well.”

Finally, there’s employment. India has no reliable data about how many jobs are being created for its hundreds of millions of young people. Two government surveys that estimated unemployment were shut down in 2017 and 2018. But the 2011 Census did tell us that 28% of households had somebody “seeking or available for work,” and that there were 47 million unemployed people between the ages of 15 and 24, a youth unemployment rate of 20%. If that rate has increased, it would be very bad news for a government that pitches itself to aspirational, young India.

Comment by Riaz Haq on April 23, 2023 at 10:30am

Ashok Swain
@ashoswai
German cartoon on India overtaking China on population numbers - Has Jaishankar summoned the German ambassador?

https://twitter.com/ashoswai/status/1650168927580815362?s=20

-----------

German Magazine`s `Racist` Cartoon `Mocking` India Irks Netizens


https://zeenews.india.com/india/german-magazines-racist-cartoon-moc...

With India set to overtake China in terms of population, a 'racist' cartoon reportedly published by German magazine 'Der Spiegel' to depict the demographic change has irked Indians. The cartoon shows an overloaded train with people sitting atop it holding a tricolour while a Chinese bullet train is seen behind on another track probably showing China with technological advancement and India with old-age infra.

However, the cartoon has not gone well with Indians and several prominent leaders criticised the 'racist' depiction. Senior Adviser, Ministry of Information & Broadcasting, Kanchan Gupta said, "Hi Germany, this is outrageously racist. @derspiegel caricaturing India in this manner has no resemblance to reality. Purpose is to show #India down and suck up to #China. This is as bad if not worse than the racist cartoon in @nytimes lampooning India’s successful Mars mission."

Comment by Riaz Haq on April 24, 2023 at 8:41am

Tim Cook is bullish on India being the new China for Apple. These 3 charts show there's a long way to go.


https://www.businessinsider.com/3-charts-show-apples-risks-and-oppo...

India has been a somewhat elusive market for Apple. Cook has been "optimistic" about the country for some time but government regulation and COVID-19 have slowed the company's plans for a physical presence.

India has strict rules around foreign entities doing business. Its government has become more liberal in letting in foreign retailers but there was, nonetheless, "a mandate that 30% of the sourcing should be done locally," Prachir Singh, senior analyst at Counterpoint Research, told Insider.

When the government relaxed this clause slightly in 2018, this finally allowed Apple to start planning for a physical store — but development paused due to the COVID-19 outbreak, he added.

This first store comes 14 years after Apple first opened in China, and Cook has sometimes compared the two markets.

"I see a lot of similarities to where China was several years ago. And so I'm very, very bullish and very, very optimistic about India," Cook told investors on an earnings call in 2017.

Is he right? We pulled together three charts breaking down Apple's risk and opportunity in India.

Android phones remain the devices of choice for the Indian population, thanks to a wide range of choice and how cheap they can be. Apple devices remain the preserve of a minority — likely the country's ultra wealthy.

The gap between the two systems is dramatic compared to wealthier markets such as the US and the UK.

In 2022, Apple beat out Android to claim more than half of the smartphone market for the first time in the US, according to previous data from Counterpoint.

In the same year, Apple only took 6% of the market share in India compared to Android's 94%.

The chart above shows Apple's growth in China over the years. It looks small compared to Android and other operating systems, but that growth is impressive considering how many homegrown Chinese phone-makers it's up against. Huawei and Xiaomi in particular boast loyal consumers in their home market.

Apple has increased iOS device sales over the years to claim 17% market share from rivals, per Counterpoint Research's data.

Comment by Riaz Haq on April 24, 2023 at 8:41am

Tim Cook is bullish on India being the new China for Apple. These 3 charts show there's a long way to go.


https://www.businessinsider.com/3-charts-show-apples-risks-and-oppo...


That apparently small market share accounts for a disproportionate size of Apple's overall business. Greater China brought in 19% of Apple's revenue for its fiscal full-year 2022, per the firm's financials, making it the firm's third-biggest region behind the US and Europe.

For Cook, India could offer similar tantalizing growth.

Tarun Pathak, research director at Counterpoint Research, told Insider the Indian market presented an opportunity for Apple to target tens of millions of smartphone sales every year, increasing the 6 million units it currently sells.

"Comparatively, Apple sells more than 50 million units annually in markets such as China and USA. So, India has the potential to reach that scale from a domestic demand perspective in the coming years," he said.

There is a major area where China differs from India: how much its citizens have to spend.

Not only does China boast more billionaires than India, but the country also has a much bigger growing middle class.

Our chart shows wealth distribution by region — anyone in the top 1% is a US dollar millionaire. India has a much larger proportion of its population in the lower percentiles of wealth. China has a higher concentration of wealthier citizens.

As noted by analysts at Credit Suisse who compiled this data for 2022, India does have "significant" numbers of citizens in the upper echelons of wealth.

But, overall, Indian citizens have less disposable income than their counterparts in China, the US, or Europe, per World Bank data.

They have less cash to spend on pricey gadgets — and they have historically been even more expensive in India.

Apple's products have been available online in India for years, but are more expensive due to import fees and taxes. In 2022, the iPhone SE 2022 sold for a minimum of Rs 43,900, around $534, in India compared to around $380, around Rs 32,000, in the US, per CNBC.

All of that suggests growth will be slow. Pricing may fall as Apple ramps up Indian manufacturing, and Indians are becoming increasingly willing to pay more for their phones.


"There was an increase of 18% in average selling price for the first 2 months of 2023 compared to the previous year," Counterpoint's Pathak said. "In 2022, the share of premium segment smartphones (>INR 30,000 or around $360) has crossed the 10% mark for the first time, reaching 11%."

Pathak added that financing schemes could also encourage Indians to buy iPhones.

Comment by Riaz Haq on April 24, 2023 at 2:02pm

#India’s population boom could help growth—but it must solve its #unemployment problem. #Indians' discretionary spending is much lower than #China's or even #Indonesia's. India’s wage earners often have more mouths to feed given low female labor-force participation & large families

https://www.wsj.com/articles/indias-population-boom-is-an-opportuni...


India’s population should reach about 1.429 billion by mid-2023, slightly higher than China’s 1.426 billion people, according to a new estimate from the United Nations. According to Pew Research, people under the age of 25 account for more than 40% of India’s population—at a time when the U.S. and China are rapidly aging.

However, the rosy comparisons stop there. While India was the fastest-growing of the five largest world economies in 2022, real spending power still lies largely in the hands of a lucky few. India’s gross domestic product per capita was just $2,257 in 2021 against China’s $12,556 according to the World Bank. The scope for discretionary spending is much more limited than in China or even Indonesia, according to HSBC. India’s wage earners often have more mouths to feed, the bank says, given low female labor-force participation and large family sizes.


Even so, consumption rather than investment disproportionately drives growth. And high unemployment remains an enormous challenge, largely because India’s private sector remains cautious about investing in the formal economy.

The unemployment rate was 7.8% in March 2023, according to the Centre for Monitoring Indian Economy, an independent think tank in Mumbai. That rate has remained at around 8% for most of the past four years. And that is particularly concerning, given India’s very low labor-force participation rate—at only about 40% according to official data.

Education is also a challenge. Leaving aside those from the country’s top engineering and management schools, Indian college graduates often struggle to find jobs. Last year, business advisory Wheebox found that only 47% of male graduates it tested passed its National Employability Test. Fifty-three percent of female graduates passed.

More manufacturing jobs and increasing female labor-force participation would help. Mahesh Vyas, the chief executive of the Centre for Monitoring Indian Economy, says India needs to create an environment that encourages large-scale private-sector investment—something that has been absent for several years now, he says.

In contrast, China has been extraordinarily successful at funneling its enormous population into the global manufacturing labor force. Manufacturing was 27% of China’s economy in 2021 versus just 14% of India’s, according to the World Bank. And while New Delhi’s recent policies to boost Indian manufacturing have met with some marked successes, much more is still needed—especially heavier infrastructure investment and labor market reforms.

Time is of the essence. While India looks young now, the nation’s population could peak as early as 2047, according to the U.N.

With the West increasingly leery of China and that nation’s own demographic dividend ebbing, India stands at a crossroads. It will either leverage its enormous human resources to become a superpower—attracting enormous investment inflows in the process—or miss the moment and scuttle its potential

Comment by Riaz Haq on April 25, 2023 at 8:41pm

India Has Bigger Population, China Has Better Technocrats

https://www.bloomberg.com/opinion/articles/2023-04-24/india-has-big...

by Pankaj Mishra

The country may have more people than China. But it won’t become a major economic, scientific and technological power without more technocrats.

In a historical shift, India is surpassing China to become the world’s most populous country. But the question of whether India can realize its demographic dividend and outperform ageing China economically does not go far enough. More attention is due to a fundamental and oddly neglected issue: whether India’s government has the technocratic capacity to transform the country into a major economic, scientific and tech power like China.


For more than half a century since Mao Zedong’s calamitous Cultural Revolution, well-educated leaders have mapped China’s trajectory to modernization. Mao devised quack solutions for China’s challenge of rapid industrialization, such as making steel in family backyards. But his colleagues began to check his ideological excesses even while he was alive. Since Deng Xiaoping’s momentous tenure, China has seemed able to tap its available intellectual potential no matter who is in power. Cheng Li, director of the John L. Thornton China Center at the Brookings Institution, argues in a forthcoming book that Chinese President Xi Jinping, considered more autocratic than his predecessors, has empowered a new generation of experts in IT, aerospace, 5G, robotics, AI and more. Many of these technocrats have experience competing globally at China’s state-owned enterprises.


Observers of India will struggle to find a comparable consolidation of talent at the highest levels of the country’s political and economic leadership. India’s civil service, unlike China’s, is a legacy of British rule. Originally meant to enforce law and order and collect revenue, it implements welfare schemes and development plans now. Though increasingly diverse, this bureaucracy does not seem as well-equipped as China’s to tackle complex challenges.


This is hardly because India lacks talent. A handful of educational institutions in India have produced arguably the most impressive global intelligentsia of any non-Western country. Indians today occupy senior positions across Western academic, financial and corporate institutions. Indeed, the Chinese diaspora in the West, though longer established, can’t match the impact and visibility of the Indian diaspora. Yet, it would be misleading to draw a picture of India’s intellectual capacity and potential by looking at Sundar Pichai of Google and Microsoft’s Satya Nadella. Indeed, they are a reminder of how much Indian talent exists outside of India (or is eager to leave).

The occasional homecoming is rarely successful. Take, for instance, Raghuram Rajan, former chief economist at the International Monetary Fund. Invited in 2013 by former Prime Minister Manmohan Singh to head the Reserve Bank of India, Rajan returned to the US in 2016. His criticism of crony capitalism and ideological extremism in India did not endear him to the regime led by Prime Minister Narendra Modi. Since Rajan’s departure, new appointees appear to have compromised the independence of India’s central bank, with other major institutions, from financial regulatory bodies to universities and security and intelligence agencies, are not faring much better.

Comment by Riaz Haq on April 25, 2023 at 8:42pm

India Has Bigger Population, China Has Better Technocrats

https://www.bloomberg.com/opinion/articles/2023-04-24/india-has-big...

by Pankaj Mishra

Facts and data in India often appear increasingly fudged; political expediency seem to have blocked even a routine national census that would shed light on India’s population. Today, it’s questionable whether a system of government that hinges on power of the kind Modi wields can help accelerate India’s modernization beyond a point, no matter how many infrastructure projects he inaugurates. Nor can this essential task be left to the ‘invisible hand’ of the market. China has powerfully demonstrated that nations that start belatedly on the task of economic modernization need long-term policy and coordinated action by a dedicated national elite consisting of bureaucrats and technocrats as well as political leaders.

Modi’s own educational credentials aren’t the issue. Nor is his Bharatiya Janata Party’s Hindu nationalism an obstacle by itself. Pragmatic-minded nationalists can learn on the job. But the regime displays elements of Mao-style, arbitrary decision-making, illustrated pointedly by India’s devastating policy of demonetization. The ruling party also seems to have prioritized its own cultural revolution against India’s previous, highly educated ruling class above all else. After nine years in power, references are still made to the BJP being victimized by entrenched secular elites. What are seen as bastions of social and educational privilege often come under fire.

Rather than catching up with China, India seems to be replicating China’s past, when ideological fervour and indoctrination of the masses disastrously took priority over social stability, political cohesion and economic growth. The world’s new largest country may need fresh leaders before it can realize its immense intellectual as well as demographic dividend.©bloomberg

Comment by Riaz Haq on April 26, 2023 at 7:04am

Many Indians, including a minister, have been criticising a cartoon in German magazine Der Spiegel that they say was racist and in bad taste.


https://www.bbc.com/news/world-asia-india-65395860


The cartoon shows a dilapidated Indian train - overflowing with passengers both inside and atop coaches - overtaking a swanky Chinese train on a parallel track.

It is being seen as mocking India as the country overtakes China to become the world's most populous nation.

Der Spiegel is a weekly news magazine.

Many Indians have tweeted, saying that that the magazine was stuck with an outdated idea of India and hadn't recognised the progress made by the country in recent decades.

Federal minister Rajeev Chandrasekhar tweeted: "Notwithstanding your attempt at mocking India, it's not smart to bet against India under PM @narendramodi ji. In a few years, India's economy will be bigger than Germany's."

Kanchan Gupta, senior adviser in the ministry of information and broadcasting, tweeted that the cartoon was "outrageously racist". Another Twitter user said the cartoon showed the magazine's "elite mindset".

The magazine has not reacted to the criticism.

While overcrowded trains can still be seen in many parts of India, significant investments have been made to improve the country's railway network and its trains.

Cartoons published by Western media have caused outrage in the country earlier as well. The New York Times newspaper had apologised in 2014 for a cartoon on India's Mars Mission following readers' complaints that it mocked India.

The cartoon showed a farmer with a cow knocking at the door of a room marked Elite Space Club where two men sit reading a newspaper. It was published after India successfully put the Mangalyaan robotic probe into orbit around Mars.

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