Introduction:

South Asia has shown a long period of strong economic growth, averaging 6% per
annum over the last two decades. This strong growth has translated into reduced
poverty and impressive improvements in human development. The percentage of
people living on less than $ 1.25 a day fell in South Asia from 61% to 36% between
1981 and 2008. The proportion of poor people less now in South Asia more than at
any time since 1981. However, the southern region Asia is home to many of the
poor in the developing world. According to the most recent estimates of the World
Bank poverty, about 571 million people in the region live on less than $ 1.25 a day,
and they make up more than 44% of the developing world's poor.
As referred to in the January 2013 Global Economic Prospects, and growth in South
Asia weakness to an estimated 5.4% in 2012 from 7.4% in 2011, mainly as a result
of a slowdown in India, where it was expected GDP growth to be 5.4% in fiscal year,
the fiscal year ending March 2013. weak global demand factors exacerbated the
specific area, including growth subdued investment and a lack of electricity, and
policy uncertainty, weak monsoon. It is expected regional GDP to grow by 5.7% in
2013 calendar, 6.4% in 2014, and 6.7% in 2015, driven by the improvement in
demand for exports, and political reforms in India, investment activity stronger,
normal and agricultural production.
And South Asia plays an important role in the story of global development because
it takes place in the Asian century. It has the largest number of the population of
working age in the world, and a quarter of middle-class consumers in the world, the
largest number of poor and fragile states undernourished people in the world, and
many of the global geopolitical importance. With overall growth, South Asia has the
potential to change the poverty in the world.

Asias Challenges
The forces driving Asias rapid growthnew technology, globalization, and marketoriented reformare also fuelling rising variation. Some income difference is
expected in times of fast economic development, but that shouldnt make for
satisfaction, especially in the face of rising inequality in peoples opportunities to
develop their human capital and Income-earning capacity.
Asias performance is down on where it was before the crisis, and governments
must remain watchful to the risk of further global shocks in the near term.
Asias rapid growth in recent decades has lifted hundreds of millions out of extreme
poverty, but the region remains home to two-thirds of the worlds poor, with more
than 800 million Asians still living on less than $1.25 a day and 1.7 billion surviving
on less than $2 a day.
One of the most visible side-effects of Asias rapid growth has been environmental

damage. The reliance on fossil fuels has tainted air quality and eco-systems,
reduced the supply of clean water, and created significant health hazards. Asia has
become the worlds largest source of greenhouse gas emissions, which are linked to
global warming and climate change.
The gap between Asias rich and poor has widened distressingly in the past two
decades. In many countries, the richest 1% of households account for close to 10%
of total consumption, and the top 5% account for more than 20%.
For developing Asia as a whole, 1.7 billion people (45% of the population) lack
access to sanitation and 680 million are without access to electricity.
A recent Asian Development Bank (ADB) study cites three forces behind this rising
inequality: new technology, globalization, and market-oriented reformironically.
Three groups, in particular, have benefited most. The first are the owners of capital,
who, as a result of the bias of technological progress, have seen their share of
national income rise while that of labor has fallen.
The second group is made up of those living in cities and near coasts and who have
gained greatly from better infrastructure and market access. For example, ruralurban and inter-provincial gaps combined account for 54% of total income
inequality in China and about 32% in India. And finally, better educated graduates
make up a third group which has managed to increase its income, thereby widening
the gap relative to those with just a basic education.
High and rising inequality can challenge long-term growth by wasting human
capital, increasing social tension, weakening governance and increasing pressure
for inefficient populist policies.
Reducing inequality and making growth more inclusive in Asia, therefore, requires
the following mutually-re-enforcing policy actions.
First, fiscal policy must play an important role. Spending on social sectorshealth,
education and social protection.
Second, the gap between rural and urban areas and across provinces must be
bridged.
Third, productive and decent jobs are a must for inclusive growth. This requires a
business environment conducive to private investment and a well balanced
composition of growth.

Poverty reduction

One of the most obstinate problems facing the region is poverty. Although South
Asia has 22% of the worlds population it contains more than 44% of the worlds
poor. More than four hundred and fifty million South Asians live below the poverty
line, it includes those who earn $1 or less a day. This is despite a robust annual GDP
growth of 6-9% average for the region in the last five years.

Economic growth
Some of the highlights about economic growth in the region are discussed next.
India has been posting high growth rates of 9-10% per annum constantly since the
past five years. This has been achieved by policy reform and technological
development. In Pakistan the GDP grew by 6.6% in 2006 but was lower in 2007 and
this trend was likely to continue through 2008. In Sri Lanka the increase of 20% in
oil prices in 2006 and the restart of fighting with the Tamils have reduced the
growth rate to 6%. Nepals growth rate suffered because of internal turmoil and
could barely manage 1.9% growth.

Health and education

Looking at the health issues we find that each year about 20 million persons suffer
from Malaria. About 900,000 new cases of Tuberculosis are reported each year.
HIV/AIDs scourge is affecting more than 6 million persons.

Millennium Development Goals

A brief explanation is needed to describe the principle cause of poverty of the
developing world including South Asia. It may be recollected that due to oil price
hike in the 1970s and 1980s, the economies of the developing world were unable
to service the loans borrowed from the developed worlds banking system.

Washington Consensus and its implications

All countries of South Asia were affected by the adverse consequences from these
new global economic and financial organizing principles. These goals were met,
when Pakistan fitted into the Western global strategy, whether in the Cold War years
as an ally of the U.S against the USSR, or in the Jihad against the Soviets in
Afghanistan. However, when budgetary support was withdrawn by the U.S, many
social de-stabilizers came into effect. Public sector investment in subsidies and pro
poor activities in education, and child and mother health care programs were
withdrawn. At the same time a financial crisis loomed coupled with high inflation
due to lack of funds. The poor were the hardest hit. Simultaneously, these areas
were also heavily weaponized during the Jihad. According to a source this region
received more than $ 66 billion of weapons, including what was supplied by the

USSR to Afghanistan! But what was happening to Pakistan was also happening to
many other Muslim countries or those having large Muslim populations. Thus the
poor were forced to seek assistance from religious charities or Islamist social
organizations; these countries also became comparatively more radicalized and
included Egypt, Since constant growth in all the South Asia countries may not be
possible, the existing strategies will have only marginal impact on poverty.
Secondly, the poverty figures conceal its spatial spread. Those areas which are les
incorporated into international trade are poorer than the rest of the country. In Sri
Lanka growth has been concentrated in its Western Province. In India while
developed states like Maharashtra, Gujarat, and Tamil Nadu have attracted most of
the new investment. Backward areas like Bihar, Orissa and Assam did not fare well
under deregulation. Secondly, employment generation has been less than desired.
In Pakistan a similar pattern of unequal growth is discernable. There is high growth
and employment in Punjab centered on Lahore, Faisalabad, Sialkot and Gujranwala.
In Sindh high growth areas are Karachi, Hyderabad and Gawadar. Although,
Gawadar is in Baluchistan, but its proximity to Karachi makes her a part of Sindh. In
Bangladesh benefits have remained confined to Dacca and its environs. It was also
a fact that the excluded took up violence to negotiate better conditions. Therefore,
to take care of these problems, to protect globalization, 189 nations at the U.N
signed in 2000 the Millennium Development Declaration under which they
committed to achieve the Millennium Development Goals aimed at removal of
poverty, hunger and other social and environmental deficits from the developing
world. Poor governance of programs is leading to ineffectiveness in the delivery of
outputs. Other problems identified are:
Poor coverage
Poor targeting
Political interference in identifying the beneficiaries
Leakages due to corruption
Poor administrative capacities
Lack of monitoring and proper evaluation
Poor governance which leads to making of policy which hurts the poor more by
Taxing his meager income
There has only been marginal increase in agricultural productivity. Thus rural
poverty remains high in India, Pakistan, Nepal and Sri Lanka.

Energy cooperation
Energy cooperation in South Asia remains a high priority. India, Pakistan and
Bangladesh are three large South Asia nations and they constitute more than 90%
of its population. Their growth depends upon assured energy supplies. India and

Pakistan are Diversifying to find new gas, oil and nuclear alternatives for their
energy requirements. India has an ongoing energy dialogue with the U.S. India also
has an energy cooperation agreement with Russia and has invested in the
exploration of oil and gas. She is also negotiating for oil, gas and hydroelectric
power with Central Asian states and Iran. However the energy factor assumes a
political issue shape on two grounds.

India - U.S nuclear cooperation

The Joint Statement by U.S and India issued on July 18, 2005 indicated the
subsistence of a future road map for strategic partnership between the two nations
based on cooperation in the use of nuclear energy as well as in the military domain.
The U.S is thus looking at India as a strategic ally. Pakistan feels that once the
nuclear agreement is implemented between the two countries, it will affect the
South Asian balance of power. Pakistan fears that new technology will permit India
to make qualitative and quantitative improvement to its nuclear arsenal. Since
Pakistan holds an Indo-specific threat perception, the implementation of the
agreement is likely to create a new arms race.

Infrastructure development
The development of high standard infrastructure like roads, railway, and
communications is absolutely essential for rapid economic growth and speedy
poverty reduction. In 1980, India had higher infrastructure stocks than China. But
China rapidly overtook India by larger investments made possible by a high saving
and investment rate of almost 40%. India and other South Asian countries have a
lower saving and investment rate. Indias rate is about 25%. Pakistans is a low
16%, while the other countries have savings rate which is in between. In a survey of
Indian firms, 33% cited poor infrastructure as a major obstacle to growth. In
Bangladesh, 78% businesses complained of poor infrastructure. It has power outage
for 250 days a year. Nepal has outages every day. Pakistan also suffers severely
from power and other infrastructure deficits.

War on Terror
The War against Terror has its epicenter in Afghanistan and Pakistan. These South
Asian nations will become more brittle and human development and growth is likely
to suffer. The war is likely to lead to more radicalization and destabilization. There
are going to be more social problems for the inhabitants of these two nations. War
will also lead to break down of institutions. This is already visible in Pakistan;
Afghanistan is in the process of nation building from scratch and it will take many
years for the region to stabilize. Governance and capacity building is therefore an
area for continuous assistance when the U.S began to fight the Taliban and al-Qaeda
in Afghanistan, Pakistan and elsewhere, the nature of the war changed. It now
became a universal war. Though the U.S. homeland is now comparatively better

protected but matters have deteriorated for Pakistan and Afghanistan where the
war has now shifted. In Sri Lanka the ongoing fighting between the government and
the Tamil LTTE is harming that countrys potential for growth. According to a report
the cost of this war is the loss of 2-3% points of growth a year. In Nepal the
withdrawal of the monarchy from active politics has been a major reason for
creating conditions for a settlement with the Maoists. Only time will tell whether the
understanding reached in Nepal is long lasting. In Bhutan the army is taking counter
insurgency action against Assamese separatists from India. Whatever, the long term
effect of these operations might be it will effect Bhutans growth in the short run.

SAARC and trade

South Asian Association for Regional Cooperation was created in 1985 for increasing
regional trade in South Asia. Unfortunately, because of differences between India
and Pakistan on Kashmir, the whole region is suffering from lost potential. It is not
only hindering growth but also future cooperation in other areas like energy.

Globalization
The lifting of financial controls, lower duties on imports and the impact of
communication
technologies has in the words of Thomas Friedman, created a flat world.
Manufactures and
services can be obtained from any part of the world. Trading collaboration does not
require government, except for security and regulation. Anyone can participate in
this world of plug and play, who has the right skills and attitudes the willingness
to constantly re-learn and re-train, an ability to conceptualize and the ability to be a
good social interactor with different cultures and people are the only pre-requisites
required by this new world. What has been the impact of this new pattern of
globalization on poverty and hunger in South Asia? Economic data collected by the
World Bank since 2000 indicates that the countries of South Asia grew rapidly yet
the Gini coefficient showed widening disparities in incomes. Increasing inequalities
have created divided nations. For instance between 1980-2004. Bihar in India
generated 2.2% average growth per annum, as compared with 7.2% in Karnataka.
The same is the case in Pakistan, Sri Lanka and Afghanistan, where the north is
rapidly out stripping other parts. Rising inequalities in a globalized world causes
other types of discrimination like access to markets and services in education,
health, infrastructure and other facilities. Inequalities cause disempowerment which
leads to social and political unrest. If a balance is not restored by positive
intervention by the state the situation will ultimately result into violence and
separatism. All the South Asian insurgencies have their root in the inequality of
distribution of economic wealth. In India, Sri Lanka, Nepal, Bhutan, Pakistan and
Afghanistan simmering unrest against the established order is wide spread. The
time has come to re-assess the role of policies and to take corrective action rather

than leave destiny in the hands of the market. It may be good in allocating
resources but is purblind to issues of equity.

Human rights and gender balance

The War on Terror has not been a good sign for human rights or democracy in
Pakistan. Due to the attack of the medieval Taliban, gender freedom and balance
has been disturbed far more in the tribal areas of Pakistan than anywhere else in
South Asia. Girl schools were forcibly shut and NGOs serving women and the girl
child were asked to leave. In some parts even providing polio drops to infants was
banned by the regressive Taliban! Similarly the imposition of emergency in
Bangladesh vides Rule 5.5 of the Emergency Powers Rule 2007, ousted the
jurisdiction of courts in matters challenging executive authority. The armed forces
have thus been placed above the rule of law and abuses against human rights will
accumulate. The Human Rights situation in Nepal has improved due to an
agreement with Maoists for power sharing. Bhutan is undertaking military
operations against separatists who had settled in camps there. India has progressed
better on this score except for the large number of those on or below the poverty
line. The condition of the lower caste and the burden on the female as a
consequence are heavier. However, political and judicial activism gives hope for
better human rights and gender balance in India. Both Afghanistan and the northern
parts of Sri Lanka remain low in the rating for human rights and gender support.
Both are in the midst of conflicts.

Global warming and disaster preparedness

By all accounts global warming with serious result will be biting into South Asia by
2030. It will create huge political issues for the region. South Asian nations must
cooperate more actively or the impact of warming wills cooperation the promise of
this regions development. Global warming will likely result in the following physical
consequences for South Asian nations: The main rivers will have reduced flows
and will be mostly dry outside the Monsoon season. A similar situation will prevail
relating to other rivers. This will compromise food and energy security. It will also
cause conflict over fresh water sources like common rivers. The fragile Himalayas
will be geologically affected by the disappearance of glaciers and the formation of
large lakes owing to snow meltdown. Many of the lakes are likely to burst causing
destruction to humans and loss of agricultural land particularly in Nepal, Bhutan,
India, Pakistan and Afghanistan.

Plant production and plant and human pathologies will change with new diseases
entering the medical lexicon as a result of the higher temperature. .As water
decreases in the rivers, disputes amongst joint users will arise Reduction of water
will reduce cereal production and cause food shortage. Sea board nations will
suffer from sea encroachment when the water table rises. The

Maldives, Bangladesh, Sri Lanka and Southern India will have large populations
affected by increase of sea level.

Bio-fuel and genetically modified crops

The above matters are likely to cause another set of problems with wide negative
collision on food prices and poverty in South Asia. They will create political problems
in the future. Due to high oil prices, many agriculture product producers have
changed to planting crops for bio-fuel. This is causing two sets of problems. First,
although under WTO agreement the G-8 countries have to stop agricultural
subsidies, yet a way has been discovered by them to continue to provide subsidies
in agriculture when they provide tax breaks to farmers for growing bio-fuel crops!
Second, the price of food crops is already increasing as acreage for crops is
reduced. On the other hand, despite a guarantee not to develop terminator seeds, a
U.S firm has obtained rights for such a seed. This is potentially very dangerous as it
will force farmers to purchase seeds from corporations. It is possible that their own
crops may become unable to provide seeds that grow. This will give the large
corporations like Monsanto and others the ability to fix monopolistic prices and
worsen the terms for South Asian farmers and poor consumers.

Conclusion
South Asian countries have experienced a marked improvement in the Economic
Outlook during the past decades, more or less, although many twists and able to
maintain positive growth. Challenges for the next 10 years, but of different nature.
While the policy reform and good governance in the past will help the internal
transformation of the task facing the leaders of 12 countries is enormous. To maximize
the benefits of globalization and in this way help reduce poverty in the future agenda
should focus on good governance and institutional reform, investment in skilled labour,
turning away from low-technology exports, and adapt the international production value
chain, attracting private capital flows, including overseas citizens dwell in promoting
intraregional trade and mitigate the political risk and geopolitical.