India and Pakistan, two neighboring countries in South Asia, have been long associated with a history of conflict and rivalry. One area of comparison between these countries that often comes up is their economic performance, particularly in terms of Gross Domestic Product (GDP) on a purchasing power parity (PPP) basis.
GDP PPP is a measure of a country's economic output adjusted for the purchasing power of its currency. It provides a more accurate picture of a country's economic strength as it takes into account the cost of living and inflation rates, which can vary widely between countries.
According to the World Bank, India is currently the third-largest economy in the world on a GDP PPP basis, with a value of $11.3 trillion in 2020. Pakistan, on the other hand, is ranked 25th with a GDP PPP of $1.1 trillion in the same year. This shows that India's economy is significantly larger than Pakistan's in terms of PPP.
Moreover, India has been consistently growing at a higher rate than Pakistan over the past decade. Between 2011 and 2020, India's GDP PPP grew at an average annual rate of 6.8%, while Pakistan's GDP PPP grew at an average annual rate of 3.1%. This indicates that India's economy has been expanding at a much faster pace than Pakistan's, despite the occasional economic setbacks.
One reason for India's higher economic growth rate is its diverse and rapidly growing services sector. The services sector, which includes industries such as IT, finance, and hospitality, accounts for more than 50% of India's GDP PPP. In comparison, Pakistan's services sector accounts for only about 38% of its GDP PPP.
Another factor contributing to India's economic growth is its large domestic market. With a population of over 1.3 billion people, India has a vast consumer base that provides a significant demand for goods and services. In contrast, Pakistan's population is around 220 million, which limits its market size.
However, it is worth noting that despite its lower GDP PPP, Pakistan has made significant strides in reducing poverty and improving its human development indicators over the years. The poverty rate in Pakistan has declined from 24.3% in 2015 to 19.3% in 2020, and its literacy rate has increased from 58% in 2000 to 66% in 2020.
In conclusion, while India and Pakistan are often compared in terms of their economic performance, India's larger and faster-growing economy on a GDP PPP basis is clearly evident. However, both countries face challenges in achieving sustainable and inclusive economic growth, and it remains to be seen how their respective economies will perform in the future
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