Column Beggar thy neighbour

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: The recent economic blockade of the Kashmir valley and the subsequent demand from some people in the valley for the government to allow trade across the LoC has brought economics to the fore of what is considered a largely political problem. The trouble in Kashmir can be used as an effective springboard to spur greater economic integration between India and Pakistan and in South Asia more generally.

Consider this: India’s total exports in 2007-08 were worth $159 billion. Of this, a large share of $61 billion goes to OECD countries. Interestingly enough, a slightly larger share goes to other developing countries: $67 billion. Rather dismally, India’s exports to Saarc countries were a mere $8.9 billion. If one disaggregates the export figures within Saarc, the numbers reveal something more interesting: India exports more (in value terms) to Bangladesh ($2.5 billion) and to Sri Lanka ($2.7billion) than to the much larger and faster growing Pakistan ($1.8 billion).

The numbers are similar on the imports side. India’s total imports were worth $239 billion in 2007-08. Of this, some $75.8 billion comes from OECD countries and $80.6 billion comes from developing countries. Imports from Saarc countries were a mere $2.1 billion. Again, disaggregated figures for Saarc show that India imports more from stagnant Nepal ($628 million) and from tiny Sri Lanka ($631 million) than from Pakistan ($287 million).

Politics, then, clearly—and to the detriment of the peoples of South Asia and India and Pakistan, in particular—dominates economics. India’s trade with another troublesome neighbour, China, however, shows much better health. India’s exports to China were worth $10.7 billion in 2007-08 and imports were worth some $27 billion. Despite numerous disputes, politics has taken a seat behind economics in Sino-Indian relations.