A better appreciation of the situation will come from the fact that at constant prices Pakistan's per capita GDP at $555 is behind India's $584 by 5%. The gap widens further in purchasing power parity terms. Pakistan's purchasing power parity GDP per capita is around $2,803 as compared with $3,569 for India. This indicator places India as much as 27% ahead.

Why is this so? The answer, as suggested earlier, is inflation and to a lesser extent an over-valued rupee. Pakistan's inflation rate was 7.4% in 2004, 9.1% in 2005 and 8.4% in 2006. India's, by contrast, was 3.8% in 2004, 4.2% in 2005 and 4.8% in 2006. Consequently, the GDP deflator index was also higher at 154 for Pakistan as against 130 for India. Another telling indicator is the purchasing power of the US dollar in each country. Here too, Pakistan is at a discount. The implied purchasing parity conversion rate is PKR 18.03 for Pakistan as compared to INR 9.53 for India. The "greenback" purchases 30% more in goods and services in India than it does in Pakistan, and the gap is widening.

Clearly, once its economy picked up much larger quantum of money started flowing into it from within and abroad. Inflation followed as growth and inflation usually go hand in hand. Pakistan is, thus, faced with the dilemma of controlling inflation without inhibiting growth. India and Bangladesh have handled this issue in a far better manner and Pakistan may well take a lesson or two from them in this area. Be that as it may, its government says its budgetary and socio-economic policies are geared toward fighting inflation. How successful these are only time can tell.

Having got this issue out of the way, let us concede that despite the October 2005 earthquake, and the significant increase in prices of crude oil, Pakistan has moved ahead. If the size of its budget is a measure of growth and potential, it is doing well. Unfortunately, the fruits of progress are not equitably distributed. The government says that percentage of population living below the poverty line has fallen substantially. Perhaps, this may be so. However, the extent of poverty and the disparity in incomes may have grown especially in certain pockets of Pakistan's economic powerhouse, Karachi. The rich clearly look richer here while the poor seem to be where they were, if not worse off. Rising income disparities may well become Pakistan's next major concern after inflation.

Another area of growing concern is the inability of Pakistan's exports to pick up. Its exports for the fiscal year ending June 30, 2006 amounted to $16.5 billion. This represents an increase of $2.1 billion or 14.4% over last year's level of $14.4 billion. The absolute increase is slightly more than that achieved last year of $2 billion. Thus viewed, the performance is somewhat disappointing.

Apparently the cost of doing business, as of production, has increased significantly in the recent past in Pakistan and this has impacted severely on the export competitiveness of commodities and textiles. Also the poor performance of agriculture and large scale manufacturing has reduced the exportable surplus. This is proving to be a major obstacle in the effort to rapidly increase exports. The government is cognizant of this fact and has fixed less encouraging export targets for the current fiscal year. The export target is to be $18.6 billion. This will represent an increase of 13% on the export level attained in the preceding fiscal year and is a reflection of the ground realities.

With a growth rate averaging more than 7% over the last three years and a current GDP per capita of $854, the economy of Pakistan is at the stage of take-off. However, at the micro-level, there remain many black spots and weak areas such as the poor state of infrastructure, education and health and the continuing emphasis on guns over butter. Belatedly and reluctantly, efforts are now in place to redress the imbalance.

The government is making special efforts to develop infrastructure and higher education so that the country can meet the challenges of the modern age. Health is not, it seems, as yet an immediate priority, as is not primary and secondary education. While the change in respect of infrastructure and higher education is to be welcomed, it has quite a long way to go before Pakistan catches up with India and even Bangladesh in many areas, as the gini, human development, and quality of health systems indexes will confirm.

Last available data indicates that the gini index was 41 for Pakistan, 33 for India and 32 for Bangladesh. A higher gini index, it must be remembered, denotes greater inequality in family income. In human development also, Pakistan lags behind with an HDI of 0.497 as against 0.509 for Bangladesh and 0.596 for India. The most damning indicators are the ones that measures quality of health systems and education. With regard to health systems, Pakistan ranks at 122 compared with 112 for India and 88 for Bangladesh. About the spread and quality of education, any comment is better left unsaid.

It is in Pakistan's fate and, perhaps, even in its genes, to compare itself with India at most times. Pakistanis feel a sense of elation when ahead and become truly despondent when behind. Given the size of the Indian nation, the largeness of its population and its economy and the growth path it has taken in the recent years, despondency will only increase, if it continues in this vein, and, more importantly, growth rate and development will suffer further.

The author, a Pakistani, is a freelance writer.