Their Grassroots Development Fellowship is open for applications — online application link

The deadline is March 15, 2009 (sorry for the late notice but I’ve been traveling).

Here’s their blurb:

Indicorps offers prestigious grassroots public service fellowship to implement sustainable development projects with community-based organizations across India. As a total-immersion leadership program, Indicorps will encourage you to explore your role as a catalyst of change. Fellowship projects promote both personal growth and collective action towards a secular India that is inclusive, peaceful, and participatory. The program requires a minimum commitment of one year.

The Fellowship starts on August 15, 2009. Housing and food are provided and a small stipend will cover basic living expenses.

Tying defence expenditure to GDP is no substitute for policy making.

India’s defence expenditure this year is pegged at less than 2 per cent of the GDP which is lower than India’s defence spending in 1962 — 2.1 per cent of the GDP. After the Chinese debacle, it jumped to 4.5 per cent in 1964. By 1994, it was slightly less than 5 per cent of GDP and it has been on a downward path since. In the mid 1980s, there was a demand to peg defence expenditure to a minimum of 5 per cent of the GDP.  For the last few years, the Parliamentary defence committee, Eleventh Finance Commission, retired military brass and strategic analysts have been active in the media asking for that figure to be pegged at 3 per cent of the GDP.

GDP is an important measure for determining how much India could afford to spend on defence, but it provides no insight into how much India should spend. Proponents of fixing a certain percentage of GDP as the minimum defence expenditure are status quoists, who use this argument as mere rhetoric, rather than as an articulation of defence policy. After the Mumbai terror attacks, it is politically taboo to disabuse this notion of a GDP-indexed minimum defence expenditure. Any analyst, politician or policymaker who dares to publicly question this argument risks being labelled unpatriotic, soft on terrorism and anti-national.

India could spend a great deal more or great deal less on its military capability than it does today, but that does not mean it should choose either course due to a mathematical formula. When there are fewer threats, the defence spending would be less. When there are more threats, a nation spends more. As threats evolve, funding should evolve along with them. Defence expenditure should be determined according to threat-based analysis and there are many substantive reasons why a proposal to bind defence expenditure with a fixed percentage of GDP is totally misplaced.

1] Using GDP to compare current defence expenditure to figures in the 1980s is misleading because India’s GDP has increased substantially over the last two decades. India’s GDP now is five times the size of what it was in 1980 (in dollar terms). Arguing that defence expenditure today is at a historic low as a percentage of GDP, and should thus be increased, is like a landlord arguing that because the tenant received a well-deserved pay hike, their rent should also be increased.

2] In the current economic climate, GDP does not necessarily provide the reliability in defence budgeting that many cheerleaders hope for; especially if India was to enter a recession, like the US or Europe. If India’s GDP decreases tomorrow, would the Indian armed forces support a concomitant reduction in their budget. Perhaps not, especially if India was at war or facing a threat on its borders.

3] Tying defence expenditure to GDP would erode budgetary flexibility and might threaten the civilian control of the military. By rigidly fixing defence expenditure to GDP, the prerogative of the civilian masters in determining whether defence expenditure should be higher or lower is curtailed. Civilian control of the military, an inviolable principle of Indian democracy, is likely to be undermined.

4] Another justification put forth by the proponents of linking defence spending to GDP is the erosion of the Indian armed forces under Nehru in the years after independence. While inadequate defence expenditure did play its part, it had also to do with post-independence downsizing of the armed forces, Krishna Menon’s failure to successfully manage military morale and Nehru’s misplaced belief in Panchsheel, UN and peaceful diplomacy.

5] The defence ministry and the defence services have been unable to fully utilise the amount earmarked for them every year. Over the last four years, nearly 16,000 crore rupees have been returned unused by them. Tying defence spending to GDP throws more money at the problem but does not force the bureaucrats and the generals to find ways to streamline the acquisition procedures.

6] Pakistan spends 6 per cent of its GDP on defence while the corresponding figure for China is 4.5 per cent. Comparing the percentage of GDP spent on national defence by different countries represents a flawed analysis. The argument is that if India’s adversaries devote a higher percentage of their GDP to defence, it represents a threat to Indian security. It proves that India has to increase its defence spending to maintain a relative advantage over them. Leaving aside the fact that India is set to spend many times more on its defence than Pakistan (or many times less than China) in actual dollar terms, comparing India’s GDP to Pakistan’s or China’s GDP does not give an accurate sense of relative military capabilities.

7] The usual Guns versus Butter argument. Money spent on defence is money not spent on education, reducing fiscal deficit, infrastructure, public health and other important non-military priorities.

Defence planning is a matter of matching limited resources to achieve carefully scrutinised and prioritised objectives. Smart planning relies on requirements, tradeoffs and a thorough evaluation of threats, not GDP, to determine defence spending. Replacing sophisticated and rigorous analysis with rigid formulas severs India’s defence planning from the evolving threat environment and widens the chasm between policy, planning and execution. Retaining flexibility in defence expenditure should not be viewed as a weakness, but rather as being capable of adapting to the  rapidly changing security environment in this age of unprecedented, diverse and dangerous threats.

If the armed forces and defence ministry can make the case that the threats India faces justify larger defence budgets, then larger amounts should be allocated towards national security. Unfortunately, fixing defence spending at 3 per cent of the GDP is a lazy substitute for national vision, political will and coherent policy making at the national level. Such a step would, instead, shield the troika of inept politicians, inefficient bureaucrats and staid military brass from careful scrutiny and throttle a much needed debate on national security.

The decade and a half following India’s economic reforms of 1990-91 has been an exciting and transformational one for India and its people, and has also had a significant impact on the entire world. Much good has happened, with increasing growth and prosperity benefiting millions. The world has observed the rise of a large and vibrant middle-class, an aggressive and innovative private sector, and the growth of a soft culture. It is true that severe challenges still remain, caused mainly by massive disparities in income and access to resources, which mean that over 300 million people remain desperately poor, and large parts of the country not benefiting from growth.

A lot of India’s growth and stability today has been credited to its overall political structure and institutions. This is what has kept the nation united through the numerous challenges it has faced, and continues to face. The federal nature of the government, coupled with the presence of an independent judiciary and a powerful media have all combined to create the unique phenomenon that is Indian democracy. There are notable flaws, such as weak law enforcement, and an excessive bureaucracy, but, for better or for worse, Indian democracy has worked.

However, over the past few years, a major development has occurred in India, almost silently, which illustrates the uglier side of this system. While the growth rates clocked by the economy over the years have been impressive, most of the major policy changes benefited big established business houses. This has resulted in the India of today being a highly oligarchic economy, with a relatively small population enjoying disproportionate power, wealth and influence (four of the world’s ten wealthiest individuals are from India). Actual market friendly policies, which would help the middle-class and poor by boosting entrepreneurship would often be to the detriment of this group, and are often inhibited. In the 1950′s, Eisenhower warned the Americans of a “military-industrial” complex which could skew American priorities. His fears might have been unfounded, or at the very least, quite exaggerated. However, India today does the face the danger of a political ? big business complex distorting its priorities.

This phenomenon was partly displayed during the debate over the Indo-US nuclear deal. A seemingly innocuous bilateral treaty, it created frenzied debate, polarized the polity and the nation, and forced the government through a no-confidence motion. To a complete outsider, it all seemed a lot of action for something which appeared quite routine. To Indians though, it all seemed wearingly familiar.

The nuclear deal holds many ramifications for India, and the general consensus amongst the scientific, business and intellectual community is that it would be beneficial, if negotiated properly. Power generation is one area where the deal is said to have probable benefits. India remains critically deficient in power generation, with large parts of the country, including metros, suffering from severe power shortages. This has had a major impact on the growth of small business units, especially in manufacturing.

Since nuclear energy can be used to generate power, it appears that the deal could help meet the shortage, and thus, presents a huge opportunity for big business houses. Each major political alliance in India has its support base comprised of various business houses, and each alliance feels the pressure to make sure the deal goes through when it is in power, to ensure the maximum benefit for its support base. Simultaneously, policy changes such as decentralizing power production, removing subsidies or limiting power theft are often prevented, as those would enable the entry of other players into the sectors. It is like a double whammy effect.

Two other areas where the impact of the political-business nexus can be seen are agriculture and retail. Organized retail presents a massive opportunity for India to broad base its growth, and help kick start the agriculture sector, with estimates ranging from $ 500 billion to over $ 1 trillion. A large amount of agricultural produce in India is wasted each year due to the lack of cold storage, to the tune of $ 7 billion. Investments, both foreign and domestic, should be welcomed in this sector, as well as initiatives to promote local small businesses. Yet, the whole sector has been dominated by big players, who would rather establish consolidated supply chain which would squeeze prices all along the retail chain.

On a broader governance level, the negative impact of the political business nexus can be observed. Running for public office in India is an incredibly expensive proposition and campaign financing remains murky, with virtually no accountability. This works perfectly to the advantage of the business lobbies, in exercising control over political parties. The labor market also remains highly informal and unorganized, as this keeps labor prices cheap. Another good example is the real estate sector, where acquisition of land for commercial or private purposes remains incredibly difficult, for businesses which want to establish themselves. It needs to be pointed out that these phenomena were not the creation of the big players today, but it works to their benefit today to ensure that the status quo remains.

It is entirely likely that the influence of this group would diminish with the passage of time, and that fears about it would prove unfounded (as some of Eisenhower’s were, in the case of the US). Yet, in the Indian context, there needs to be a greater awareness of the dangers posed by such developments, and how they could impact the overall growth story.

Clark writes:

The Darwinian struggle that shaped human nature did not end with the Neolithic Revolution but continued right up until the Industrial Revolution.

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… economic success translated powerfully into reproductive success. The richest men had twice as many surviving children at death as the poorest. The poorest individuals in Malthusian England had so few surviving children that their families were dying out. Preindustrial England was thus a world of constant downward mobility. Given the static nature of the Malthusian economy, the superabundant children of the rich had to, on average, move down the social hierarchy in order to find work. Craftsmen’s sons became laborers, merchants’ sons petty traders, large landowners’ sons smallholders.

This framework possibly explains the classification of the English as “gentlemanly”. An extremely high proportion of the population in England has its backgrounds in “gentlemanly” famlies. Over the generations, their professions may have changed but they still retained their basic cultural traits – which were once gentlemanly.

On the same lines, one wonders why this kind of development didn’t happen in India, and the answer lies in the caste system. Given the rigid caste system here, it wasn’t possible for people to “downshift”. Given its tight linkage with profession, what the caste system did was to freeze the proportion of various castes in the total workforce.

Hence, even if the upper caste/class people managed to produce more surviving offspring, these offspring weren’t able to migrate to other “lesser” professions.  In other words, the survival of the fittest happened within castes. It was not until much after the industrial revolution and urbanization and the development of modern medicine, that people of different castes started professionallly competing with each other.

The events had their share of coverage in the mainstream media– Indian, African and western. However, the landmark event deserves much wider appreciation and analysis than provided by the perfunctory news reports covering the events.

On one hand, western analysts tend to see all major Indian initiatives on Africa, including this summit, through the prism of competition between the burgeoning economies of India and China. On the other hand, many African commentators have warned their own leaders about India’s intentions in what they have disparagingly labelled as a “second scramble for Africa”.

The key drivers for this summit and other Indian initiatives on Africa go beyond the traditional factors raised by most analysts. It is not limited to containing or matching Chinese economic interests in Africa or answering India’s impending quest for energy security. Unlike China, India has had a historical relationship with the African continent for centuries, based on trade with the eastern and southern coasts of Africa. The presence of a large Indian diaspora in Africa for over two centuries also provides India with a unique advantage over its Asian neighbour. India’s quest for energy in Africa, unlike China, is not a core component of the Indian government’s energy security policy; rather, it is part of its bid to diversify energy sources.

So what was the rationale for the India-Africa summit, if not mimicking the China-Africa summit last year? It is an obvious indicator of the renewed drive in the India – Africa story. Current global equations and recent Indian policies indicate that India’s engagement with Africa has shifted from the old issues of colonialism, non-alignment and South–South cooperation to issues of trade and economy.

Ever since India’s economic revival in the mid-nineties, India’s foreign policy has been increasingly driven towards finding export markets, attracting foreign capital and know-how. This policy shift is echoed across Africa as most of the economies there are going through economic reforms and liberalisation. The Indian diplomats have been working overtime to garner support for its quest for a seat in the UNSC in the continent. The Indian stand on the western agricultural subsidies at the WTO negotiations has been in consonance with the views of most African nations.

The recent improvement in India’s economic relations with Africa, however, cannot be attributed solely to the new focused approach of the Indian government. Another factor is the ‘outward-looking’ attitude of India’s private sector. Tempted by the easy availability of capital and driven by the search for new markets, Indian companies have been eagerly targeting those regions in Africa, in which they had shown little interest until recently. The economic boom in India and the success of both home-grown and NRI/PIO (Non-Resident Indian/Person of Indian Origin) companies in Europe and parts of South America have given Indian businesses the confidence to venture into Africa.

Indian companies’ increased activities in Africa have spurred the government to link its diplomacy in the continent more explicitly to its economic requirements. The Indian engagement reflects private-enterprise led bottom-up approach of its economy. In tandem with this policy change, India’s commercial ties with Africa have grown as the India-Africa trade volume has increased by 285 percent to 25 billion U.S. dollars in the last four years.

African countries hold India in high esteem – in particular, on account of its democratic institutions and the manner of its economic growth. India, as a democratic developing country, serves as a role model for these countries and is a source of support in various sectors, especially agriculture, services and small- and medium-scale manufacturing. Above all, it is the new image of India -– that of a leader in the information technology industry, biotechnology and telecommunications -– that has attracted Africa to India.

For their part, African political leaders would like their constituencies to believe that India and Africa are making a joint effort to improve the well-being of their peoples and societies. It is here that India’s real influence in Africa will emanate– from its success in achieving sustained economic growth and lifting many out of poverty in a democratic, post-colonial setting. It is for the Indian political and bureaucratic masters to remember that the right message to an external constituency in such an environment will be only delivered by a continued focus on domestic reforms. The Indian leadership will be judged by its African partners on how India progressively tackles various impediments to its economic growth in fields of infrastructure, education, labour and other roadblocks. It is imperative that India is perceived to be addressing its own developmental challenges successfully; only then will others, including Africa, consider it as an attractive and rightful partner for the future.

Raj Chetty, an associate professor of economics at the University of California, Berkeley, is the winner of the The American magazine’s 2008 Young Economist Award, a research grant of $100,000 provided by the Searle Freedom Trust.
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To be eligible for the award, economists have to be featured in the magazine’s bimonthly column entitled “The Young Economist,” which profiles talented economists under the age of forty doing groundbreaking original research.
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Chetty, who is twenty-eight, did his undergraduate and PhD work at Harvard, became an assistant professor of economics at Berkeley at age twenty-three and an associate professor at age twenty-seven. [link]

As far as we can tell, Raj’s academic work and the Indian economy haven’t intersected. At least, not yet. The only desi link (apart from his family) we found was this interview in Rediff, which might seem a tad tenuous to some. But, what the heck! This guy is an academic superstar in the making…

A courtesy salaam to Ajay Shah.

Q) Is this the first such internship programme in the Finance Ministry?

Noted defence analyst Ajai Shukla, in his column for the Business Standard (reproduced on his blog Broadsword ), has highlighted the changing paradigm of the Indo-Russian relationship. He also suggests that India has been unable to come to terms with the altered relationship as the Russians have taken a more hard-nosed approach to their defence exports. The signs are ominous. It seems that India is operating in a timewarp and has been caught in the rhetoric of a historically “special” Indo-Russia relationship.

This perceptional error emanates from a failure to understand the basis of the “special” Indo-Russian relationship. The continued references by Indian officials (and parroted by the Russian officials) to the unique quality of Indo-Russian bipolar relations imply a common perspective in Indian and Russian strategic, diplomatic and economic interests. However, the Indo-Russian relationship has never been “special” when placed in a vacuum, devoid of outside influences. India and Russia have had, and will continue to have, certain common interests that are necessary for the development of a lasting bond; this commonality has not been in itself sufficient to solidify their relationship. Historically the glue in the Indo-Soviet/Russian “special” relationship was United States and western ambivalence towards India and Indian military needs. As the United States’ ambivalence has dissipated and India’s military-industrial complex has moved towards a higher level of self-reliance, the Indo-Russian bond has naturally cloven. The history of Indo-Soviet military cooperation can be thus summarised as a relationship determined by Indian military needs, Soviet/ Russian opportunism, and fueled by Western ambivalence.

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As defined by Ken Booth, strategic culture is the product of a nation’s “history, geography and political culture,” and it helps to “shape behavior on such issues as the use of force in international politics, sensitivity to external dangers, civil-military relations and strategic doctrine.” History, geography, and political culture all played crucial roles in the development of India’s conventional forces and nuclear capabilities during the Cold War. India’s sudden emancipation in 1947 after centuries of subservience created “a fierce determination to preserve Indian independence no matter what the cost – an attitude often bordering on paranoia.” Any attempt by outside powers, whether Soviet or Western, to exert influence upon India was often met with open defiance. While the Soviet Union, especially under Khrushchev, would be more understanding of India’s “paranoia” and would treat India with respect, the United States often presented India with demands, even when providing food aid. Furthermore, the United States would exacerbate India’s geographic isolation by providing arms and technical data to both Pakistan and China, thus adding fuel to Indian militarism.

During the Cold War years, there existed a historical pattern in the Indo-Soviet relationship that supported India’s quest for regional security and independent global stature, and an oscillating Soviet vision of India based upon India’s changing geo-strategic and diplomatic significance. As a result, far from being an enduring and close “special relationship,” the historical foundations of the Indo-Soviet relationship reveal an opportunistic relationship in which India’s needs are a match for Soviet capabilities, and Soviet needs are a match for India’s strengths. Moreover, the strength of the Indo-Soviet relationship depended upon the short-term impact of Indo-US interactions. Additionally, major South Asian policy decisions made by the United States during the Cold War clearly depict that the cementing of the “special” Indo-Soviet relationship was a product of American inattention as much as Soviet perseverance.

When India commenced the rapid modernization of its armed forces following the 1962 Sino-Indian conflict, its initial objective was to continue and expand upon its historical Western supply-line. After failing to secure arms transfer agreements with the West, India turned to the Soviet Union out of “dire necessity.” For India, the agreement was a commercial one based on economics. Soviet military contracts usually had favorable financial terms and included provisions for production licensing. But in the long-run, these deals became a burden as India failed to secure a reliable supply of spare parts and also experienced a drop in operational readiness due to a void in indigenous maintenance capabilities. When India made a concerted effort in the 1980s to diversify its procurement portfolio, it found itself returning to the Soviet Union to satisfy its short-term military needs. With a long-term goal of self-reliance in military procurement, India had to use Soviet arms as a stepping stone between the bygone era of the British Raj and future Indian procurement autonomy.

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The Soviet pullout from Afghanistan in 1989 and the end of the Cold War brought about a drastic change in India’s geo-strategic and diplomatic importance. It was during this transition period of the early 1990s that India emerged from centuries of subservience to (or, during the Cold War, dependence on) external powers to begin defining a global role for itself that was solely egocentric and not centered on India’s reliance on other states. On the strategic level, to rephrase Ashley Tellis’ Cold War depiction of India, the post-Cold War era became a time of transition as India evolved from being a consumer of security to being a producer of its own security. At the same time, India experienced internal economic turmoil which contributed to a sharp decrease in Indian military expenditures and arms imports. Furthermore, a rigid US approach to India, centered on nonproliferation concerns, that permeated all aspects of Indo-US relations and prevented a broadening of these relations.

As the transition from Soviet to Russian rule took place, the anti-India school of thought dominated Russian foreign policy-making. This domination resulted in a major shift in Soviet/Russian policy towards South Asia. In November 1991, when the Soviet Union was breathing its last, in a dramatic change of policy, Moscow suddenly supported the Pakistan-sponsored UN Resolution calling for the establishment of a nuclear-free zone in South Asia to the great consternation of New Delhi. The signal sent by the collapsing Soviet regime, with many of its leaders taking positions in the new Russian government, was that it sided with the West and Pakistan against India’s ambitions for regional leadership and security. In January 1992, one month after a delegation of Afghan Mujahideen traveled to Russia, Moscow severed all “military supplies, ordnance and fuel for military transport” that were sustaining the Najib government’s war effort against the Mujihadeen. India felt a certain sense of betrayal because of the reversal in Soviet policy since the Indian government had worked with the Soviet Union in supporting the Najib government and denying Pakistan the ‘strategic depth’ in Afghanistan.

It was in this atmosphere of uncertain Russian foreign policy objectives that the post-Cold War relations between Russia and India were further strained by two events. The first was the cancellation of the Glavkosmos deal for cryogenic engines by Boris Yeltsin under US pressure. The conclusion the Indians drew was that Russia’s overriding need for American economic aid has made it susceptible to American pressure. In Indian eyes, Russia was unreliable, and it had lost its international stature. During the same time frame as the cryogenic engine fiasco, the “rupee versus ruble” debate flared up in Indo-Russian relations.

The primary short-term military concern for India in the early 1990s was its limited supply of spare parts and supplies for its Soviet-produced armaments. After three decades of reliance on Soviet-produced hardware, India was in a position in 1991 in which seventy percent of Army armaments, eighty percent of Air Force armaments, and eight-five percent of Navy armaments were of Soviet origin. Lacking the indigenous capability to produce spare parts and supplies for these systems, India’s military faced an immediate crisis. In response to its economic crisis in 1990-91, India imposed a reduction in defense expenditures and a sharp reduction in arms import. After having been the top importer of conventional weapons in the world during the period from 1988 to 1992, India was ranked as the twenty-third largest importer of conventional arms by 1996. The inability of Russia to continue the Soviet flow of military hardware, coupled with the sharp reduction in Indian military expenditures, weakened the primary bond that had united India and the Soviet Union during the Cold War.

During the Cold War, decisions to sell Soviet weaponry abroad had been made by the Politburo. But in the post-Cold War era, the choice of where and when to sell Russian arms rested with the power-brokers of the Russian military-industrial complex. As Vitaly Kataev, the General Director of Russia’s Center of Military Industrial Complex, remarked, “Economics dictate the routes of trade.”

During the late 1990s, the Russian interest groups dictated military cooperation with India as India procured more hardware from the Russian defense industry than Russia’s own military forces. It was estimated that about eight hundred Russian defense production facilities were kept in operation by Indian defense contracts. During the early part of this century, Russian exports to China and India amounted to about three-fourths of the total revenue brought in by Russia’s defense industry. The foundations of the Indo-Soviet/Russian military relationship had thus experienced a tectonic shift since the end of Cold War – from Indian needs and Soviet opportunism to Russian economic needs and Indian military needs and opportunism.

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The rising oil prices, the Russian resurgence under Putin with a more pragmatic foreign policy, coupled with the current US embroilment in Iraq and Afghanistan, have changed the rules of the game. There is also disillusionment in the Russian establishment with the ‘softness’ of the Indian state and its proclivity to align with US interests. The “special” relationship between India and Putin’s Russia exists only as a meaningless palaver nowadays.

Until the communist collapse, the Indo-Soviet relationship prospered because of the need for a balance against the West, and shared security and geopolitical concerns. The new Indo-Russian relationship is based primarily on business interests, and coloured only marginally by geopolitics and security. Outside the paradigm of arms sales, there are not many emerging trends that will promote strong Indo-Russia cooperation nowadays. The history of Indo-Russian cooperation provides a foundation for understanding the current rift in Indo-Russian relations. Indian strategic culture dictates that the likely courses of action for India in the current geopolitical context do not merge with Russian interests anymore. As Indian military needs, Soviet/ Russian opportunism, and US ambivalence do not exist to drive the Indo-Russian relationship, this relationship isn’t “special” anymore. In fact, it never was.

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Reference –
Jerome M. Conley, Indo-Russian Military and Nuclear Cooperation: Lessons and Options for U.S. Policy in South Asia, Lexington Books, 2001.

I am observing that Capital and Business that was flowing into the country is now stopped – they are now questioning whether to invest here or not Pakistan will remain stable. Our economy, the livelihood of our nation which improved over the last 7 years – in economy, in livelihood, in infrastructure, roads, ports, airports, railways, telecommunication, mobile telephone, landlines, rural telephone, information technology, building and construction, the entrepreneurs across the land, the rapid development across Pakistan, the thousands of industries launched, water irrigation, dams, canals, canals with brick linings, water courses, and then the social sector, education, health on the primary and secondary level, and education at every level – on all these Pakistan was moving forward, all this. I am very saddened, God Forbid, that 7 years of hard work may be washed away. [CM]

Shanta Devarajan, the Chief Economist of the South Asia Region at the World Bank, puts some figures to probate the General’s rhetoric.

Since 1999, the Pakistan government has undertaken a series of macroeconomic and structural reforms and Pakistan’s GDP growth rate has accelerated. It has been averaging well over 7 percent a year over the last three years. Poverty has been declining steadily at about one percentage point a year during this period. Despite rising world oil prices, inflation has largely been kept under control. Nevertheless, there are two sources of concern on the macroeconomic front. The current account has gone from a surplus of one percent of GDP four years ago to a deficit of 4.9 percent of GDP today. And export growth has declined sharply from 14 percent a year two years ago to 3 percent this year.

Moreover, Pakistan suffers from a huge “human development deficit.” In 1997, child mortality rates in Pakistan and Bangladesh were the same, at about 114 child deaths per 1000 births. Today, Bangladesh’s rate is 77 and Pakistan’s 101. In addition to low enrolment rates, especially for girls, there is evidence that the quality of education is extremely poor. In a sample of (better off) Punjabi villages, the share of 10-year-olds who could do single-digit addition and subtraction was 29 percent. These problems of basic service delivery cannot be solved without the active participation of communities and parents. In fact, the number of private schools has risen dramatically–from 32,000 in 2001 and 47,000 in 2005. [EPISA]

The politics of the proclamation has already felled many trees and left many overworked monkeys on the keyboards. The ruse of an economic angle while proclaiming the emergency is indicative of a rather fresh and innovative approach by the General. Trust a Commando for putting forth such avant-garde rationale!

This year’s Asia round for the GSVC will be held at the Indian School of Business (ISB) in Hyderabad, with the deadline for submission of plans being Nov 15, 2007. The Asia round finals will be held at the ISB this between the 8th and 10th of March 2008, and the global finals will be held at Berkeley on the 18th and 19th of April. So, if you’re sitting on a business idea, model, concept or even an existing business which has a double or triple bottomline, and would like exposure and perhaps even seed/growth capital, head over to the ISB’s GSVC Asia Round website, where you can find all the instructions necessary for submission of business plans and participation, including vital information and FAQ’s for entrants.

I served as a judge for the 2007 finals, so i can give prospective participants some idea on what to expect. First of all, don’t be flaky and keep in mind that there is no business that can meet a second or third bottom line without meeting the financial bottom line. The judges at the Asia Round tend to be very hard nosed and you can therefore expect the same questions that you’d expect if you were to pitch the plan to a venture capitalist. The higher the social impact without sacrificing your commercial viability, the higher your chances of getting through to the finals. Last year’s top prize at the Asia finals went to a bio-technology company from China that had patented a technology to drastically improve crop productivity while the second place went to a Thai team that had developed a new dental technology (the Thai team went to place second at the global finals). One team was also chosen on the basis of their Social Return on Investment (SROI) Analysis.

I know there are several IEB readers out there who are budding entrepreneurs while being socially conscious, so here’s your opportunity to make a difference, and potentially get your business up and running. Questions, if any, should directed to the organizers. Needless to say, if you know of someone who might be interested, feel free to forward the information.