ISAS Insights

Both India and Pakistan are passing through delicate political times. India is getting ready to hold the next general election no later than the spring of next year when the term of the current government expires. Pakistan, having held elections in May 2013, has a new government in place. In both cases the government will be tested in the field of economics. How the performance of the two governments will be judged is a question that is being debated in the two countries. The Indian Government under Prime Minister Manmohan Singh has chosen to allow its performance to be determined essentially by the prices that people have to pay for the items of everyday consumption. Inflation has been relatively high in recent months. The new Pakistani Government, headed by Prime Minister Nawaz Sharif, seems half-inclined to treat the level of prices as an important test for his ability to restore economic health to the country. In adopting these policy decisions, the two governments are making serious political mistakes. Their electoral appeal will be determined by the rates of growth of their national economies and not by the modest changes in the level of prices.