South Asia Regional Brief
September 26, 2013
- 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 is lower now in South Asia than any time since 1981. Still, the South Asia region is home to many of the developing world’s poor.
- Growth in South Asia weakened to an estimated 5.4% in 2012 from 7.4% in 2011, mainly due to a sharp slowdown in India, where GDP growth was forecast to be 5.4% in the fiscal year ending in March 2013.
- The World Bank Group (WBG) is a significant development partner in South Asia, with a portfolio of 219 IDA/IBRD projects. In fiscal year 13, WBG provided $378 million in IBRD assistance and $4.1 billion in IDA assistance.
South Asia has experienced a long period of robust economic growth, averaging 6% a year over the past 20 years. This strong growth has translated into declining 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 is lower now in South Asia than any time since 1981. Still, the South Asia region is home to many of the developing world’s poor. According to the World Bank’s most recent poverty estimates, about 571 million people in the region survive on less than $1.25 a day, and they make up more than 44% of the developing world’s poor.
As referenced in the January 2013 Global Economic Prospects, growth in South Asia weakened to an estimated 5.4% in 2012 from 7.4% in 2011, mainly as a result of a slowdown in India, where GDP growth was forecast to be 5.4% in the fiscal year ending in March 2013. Weak global demand exacerbated region-specific factors, including subdued investment growth, electricity shortages, policy uncertainties, and a weak monsoon. Regional GDP is projected to grow by 5.7% in the 2013 calendar year, 6.4% in 2014, and 6.7% in 2015, driven by improvement in export demand, policy reforms in India, stronger investment activity, and normal agricultural production.
South Asia will play an important role in the global development story as it takes its place in the Asian Century. It has the world’s largest working-age population, a quarter of the world’s middle-class consumers, the largest number of poor and undernourished in the world, and several fragile states of global geopolitical importance. With inclusive growth, South Asia has the potential to change global poverty.
World Bank Assistance
The World Bank Group (WBG) is a significant development partner in South Asia, with a portfolio of 219 IDA/IBRD projects. In fiscal year 13, WBG provided $378 million in IBRD assistance and $4.1 billion in IDA assistance. The leading sectors were health, nutrition, and population ($855 million); transport ($694.7 million) and social protection ($612.5 million)
The Bank’s strategy for South Asia was updated in February 2013. Work in the region supports the Bank’s overarching goals to reduce poverty and boost shared prosperity. The strategy is based on five pillars:
- Increasing employment and accelerating growth;
- Enhancing human development and social welfare;
- Strengthening governance and accountability;
- Reducing weather, disaster and food vulnerability; and
- Enhancing regional integration and cooperation.
It also provides a road map to accelerate growth and foster human development.
Increasing Employment and Accelerating Growth
The key asset of South Asia is its people. South Asia has a young population and the lowest female participation rate in the labor force. The “demographic dividend” will result in more workers entering the labor force in the future and the region will need to add between 1 and 1.2 million additional jobs every month for the next 20 years. Creating jobs for them will contribute to growth, equity and peace in the region. To strengthen policies that are conducive to inclusive growth, the Bank is working on a new report in which inequality in income and consumption will be studied alongside inequality of access to and opportunities for jobs and job success.
The Bank’s new Country Partnership Strategy for India (2013-17) aims to help India achieve its long-term vision of faster, more inclusive growth. As the first country strategy to set specific goals for reducing poverty and increasing prosperity for the poorest people, it significantly shifts support toward low-income and special-category states, where many of India’s poor and disadvantaged live.
Enhancing Human Development and Social Welfare
Building human capital by ensuring that the people of South Asia have access to education, health care, and social safety nets is key to this pillar of the strategy. A large share of the portfolio is results focused, linking financial support directly to the achievement of core milestones that improves service delivery. Education projects focus on raising school enrollment rates and ensuring the quality and equity of the training and education system. Health projects seek to increase the use of skilled birth attendants and ensure that pregnant, adolescent girls, and under age 5 receive basic nutrition services. Given the alarming levels of infant and child malnutrition, the Bank emphasizes policy dialogue, diagnostic studies, and start-up financing support in this area..
Increasing access to safe water, sanitation, and safety nets are also key priorities.
Strengthening Governance and Accountability
The Bank is working in South Asia to ensure greater accountability and transparency of governments, by building capacity of legislative bodies and supreme audit institutions in their budget oversight roles. It is also helping to implement e-procurement systems, better delivery of public services, and craft right-to-information regulations.
Reducing Weather, Disaster and Food Vulnerability
South Asia suffered more than any other region during previous food and fuel crises. To help South Asia’s weather future food crises, the Bank is working with governments to provide more irrigation and drainage services and reforest land that had been logged. It also is working to increase the region’s resilience to extreme weather events, natural disasters, and climate change.
Enhancing Regional Cooperation
Regional cooperation and integration are key strategic priorities for South Asia, as limited intraregional trade, poor air, road and rail connectivity, and scant trade in energy impede growth in the region. The strategy for regional cooperation rests on five main pillars:
- Build on the emerging view in the region that regional cooperation is key to being part of the Asian Century;
- Support regional networks to promote cooperation by sharing information and build institutional capacity through analysis and dialogue, and capacity building;
- Focus on trade in goods, services, and electricity, people-to-people contact, and cooperation in water resources management among Bangladesh, Bhutan, India, Pakistan, and Nepal;
- Strengthen regional cooperation in wildlife protection, water resource management, food security, and disaster risk management; and
- Leverage partnerships including DFID, AusAid, South Asia Water Initiative, South Asia Food and Nutrition Security Initiative, and Central Asia Water & Energy Development Program.
Supporting Transition in Afghanistan
Analytical work in Afghanistan is helping the authorities and the international community to plan for 2014, when the drawdown of most international military forces and the likely reduction on overall assistance will have a profound impact on the economic and political landscape. With population growth at 2.8%, Afghanistan needs strong economic growth to reduce poverty and improve development outcomes. A growth rate of 6% a year would be required to double Afghanistan’s per capita GDP in about 22 years (about a generation). Through the Afghanistan Reconstruction Trust Fund (ARTF) and the International Development Association (IDA), the Bank is committed to supporting Afghanistan’s efforts to engender strong, inclusive economic growth, reduce poverty, create jobs, and fight corruption.
Achieving Results in South Asia
World Bank support has helped South Asia achieve the following results, among others:
- Afghanistan: Child mortality dropped from 257 to 97 per 1,000 live births between 2002 and 2010
- Bangladesh: Secondary school graduation rate increased from 30% to 39% from 2008 to 2011
- India: HIV prevalence rate reduced and at least 3 million new infections averted through reaching at-risk populations
- Nepal: 1 million people supported through Food Crisis Response program
- Pakistan: 3.6 million families received income support of $12 per month
- Sri Lanka: 200,000 households in 1,000 post-conflict villages benefited from infrastructure/productive investment