Socio-Economic Challenges For South Asian Leadership

Potential of South Asian economy
Problems/challenges faced by the region
How can we cope?
How is our economy growing esp. that of India?
The investment climate here
Importance of regional integration

The South Asia, despite its enormous economic potential, could not emerge as a major economic force of the world as the political antagonism in the member states has dominated the scene since six decades. As a consequence of unresolved conflicts and mistrust among the governments almost 1.5 billion people of south Asia are left far behind in terms of human development and 40 percent of SAARC population lives below poverty line which is nearly half of the world’s poor population.

Consider some of the dramatic numbers that are similarly horrifying as day to day terrorist attacks. For example, South Asia has one of the highest infant and under-five mortality rates after Sub-Saharan Africa and one out of every three child deaths in the world occurs in South Asia and that two-thirds of the total number of malnourished children in the world live in South Asia and the number is even higher than in Sub-Saharan Africa. We have the highest percentage of underweight, stunted and wasted children under five in the world and nearly half of total numbers of maternal deaths in the world occur in South Asia and the percentage of births attended by skilled health personnel in the region is the lowest in the world.

Other indicators of human development are equally depressing. In the area of education for instance, a recent UNESCO report states that two countries, India and Pakistan, contain one of the highest number of out-of-school children in the world. Though the enrolment rates have improved over the years, dropout rates are still soaring. At the primary level almost 30 per cent of those who do enroll drop out before reaching Grade 5.Around half the total number of illiterate adults in the world lives in South Asia.

State of Economies

To understand where the tribe of South Asia lost its path we need to look closely into the current macro economic indicators of the major economies of the region. India, Pakistan and Bangladesh are the three major SAARC member countries and so are their economies. The Indian economy is the strongest and largest among the SAARC economies. It has enormous growth potential and is comparable to that of China. The economic reform program initiated by Manmohan Singh, then Finance Minister of India, in early 90s has left behind the "Nehruian Socialist growth rate" of 4 per cent of GDP achieved during post 1947 four decades in an economy dominated by the public sector. Economic growth during early 90s averages to 6 per cent of GDP. In the new millennium under the rule of BJP and than Congress India has developed a strong industrial base and comparatively well developed human resource that makes her the world's 7th industrial state with a potential to increase the pace of growth substantially. Cement, cars, car parts, motorcycles, steel, pharmaceuticals and Information and Communication Technology are performing world class. The world looks towards the Indian economy's potential as something positive for global and regional economic development. These all positives of India shining are really encouraging but what are the reasons that compelled well known Indian author Arundati Roy to write in her new book, “Listening to Grasshoppers,” While one arm of Indian society is ‘busy selling off the nation’s assets in chunks, the other to divert attention, is arranging a buying, howling and deranged chorus of cultural nationalism,’ she proclaim. She claims that the recent economic boom has merely created ‘a vast middle class punch drunk on sudden wealth and the sudden respect that comes with it — and a much, much vaster underclass.’ She is extremely concerned that unless the state steps in to correct the situation, the country may have to face a serious socio-political situation.

Pakistan's terrorism ridden economy is struggling to regain the growth rate of General Musharaf years. The country has suffered the most among the SAARC countries in the post 9/ 11 world because religious extremism, a continuous wave of terrorism and tension on its eastern and western borders. Militants and extremists have an instinctive hatred towards reducing tension between India and Pakistan. They will not accept the changes being envisaged to set pace for economic cooperation and reducing tension without serious reservations. The Mumbai terrorist attacks simply reflect their mindset. Political issues are to be resolved in case militancy and extremism are to be curbed to make regional economic cooperation workable.
Pakistani society is still struggling to establish a viable political democratic system. Repeated interventions by the establishment and lack of political institutionalization have obstructed growth of strong and stable democratic institutions and of an economic order that should have discouraged oligarchy, pursued growth of middle class and checked economic corruption which became the hallmark of state craft in recent years.

Bangladesh's economic growth rate is moderate if not strong. It has a good literacy rate, a good exportable human resource base and lower population growth rate. It has developed a sound cottage and garments industry to improve exports. But, its economy needs to expand and achieve higher economic growth rate to eliminate poverty.
The three economies, which really counter SAARC economic cooperation framework, have macro-economic indicators, which are at variance. They have some common problems also such as attracting foreign investment, expanding technological base for innovative exports, alleviating poverty, increasing per capita income and job opportunities, and reducing fiscal deficit. Equally important is the point that political culture of three countries differs substantially from each other. The Indian democracy is institutionalised, stable and delivering results. Despite a small and strong class of industrialists, India has a big middle class particularly of new generation of educated Indians whose life style is changing on the life style pattern of western countries. They are keen to spend and are setting new trends of consumerism.

It is to be appreciated that commonality of political, economic and social culture works as catalysts towards achieving greater economic cooperation and ultimately economic integration. Europe after the devastating experience of two world wars and end of Cold War was quick to get on the road of reconstruction. It was followed by economic cooperation and launching of common currency 'euro' because of homogenous political, economic and social culture. Variance in SAARC major countries' political, economic and social culture should take more time to integrate the region economically than one can visualize at present.