February 2001

India is located in Southern Asia, bordering the Arabian Sea and the Bay of Bengal, surrounded by Burma, China and Pakistan. Pakistan is located to the northwest of India and is bordered by the Arabian Sea, Iran, Afghanistan and China to the north. Although India occupies only 2.4% of the world's land area, it supports over 15% of the world's population. Only China has a larger population. Almost 40% of Indians are younger than 15 years of age. About 70% of the people live in more than 550,000 villages, and the remainder in more than 200 towns and cities. The majority of Pakistan's population lives along the Indus River valley and along an arc formed by the cities of Faisalabad, Lahore, Rawalpindi/Islamabad, and Peshawar.

India's population continues to grow at about 1.8% per year and is estimated at one billion. While its GDP is low in dollar terms, India has the world's 13th-largest GNP. About 62% of the population depends directly on agriculture. Industry and services sectors are growing in importance and account for 26% and 48% of GDP, respectively, while agriculture contributes about 25.6% of GDP. More than 35% of the population live below the poverty line, but a large and growing middle class of 150-200 million has disposable income for consumer goods.

Pakistan's population is currently about 130 million, and growing at about 2.6% per year. Extreme poverty and underdevelopment in Pakistan, as well as fiscal mismanagement, obscure the potential of a country which has the resources and entrepreneurial skill to support rapid economic growth. In fact, the economy averaged an impressive growth rate of 6 percent per year during the 1980s and early 1990s. However, the economy is extremely vulnerable to Pakistan's external and internal shocks, such as in 1992-93, when devastating floods and political uncertainty combined to depress economic growth sharply and the financial crisis in Asia which hit major markets for Pakistani textile exports. Average real GDP growth from 1992 to 1998 dipped to 4.1 percent annually.

The World Factbook, Central Intelligence Agency, United States Department State Background Notes, 03/2000