South Asia experiencing rapid growth

South Asia has experienced rapid economic growth, declining poverty, and progress in human development for more than a decade. As a result, for the first time in its history, the region with the world’s largest concentration of poor people has a real chance of ending mass poverty in a generation.

Thanks to the economic reforms of the past two decades, annual GDP growth in the region has averaged 6 per cent since 2000.

This growth has translated into a significant drop in poverty rates across the subcontinent. In the next decade, South Asia is expected to contribute more to global poverty reduction than any other region. If it can accelerate growth to 8-10 percent a year and sustain it, it can reduce income poverty to the single digits.

Rapid growth alone will not necessarily end poverty. However economic growth has been accompanied by rising inequality, and the region continues to suffer from some of the worst levels of human deprivation in the world.

Corruption, confrontational politics, an conflict threaten to derail the process of economic development. The region has also been hard hit by the recent increase in world food prices, especially for rice and wheat, the two main staples in South Asia.

To address all of these issues, the World Bank’s strategy for South Asia comprises three pillars - accelerating and sustaining growth, making development inclusive, and strengthening human development - and the cross - cutting theme of improved governance.

The Bank’s programme also reflects an emerging new reality: South Asia can no longer be characterised as a uniformly low-income region. Growth is propelling several Indian states, along with Bhutan, Maldives, and parts of Sri Lanka, into middle-income status.

At the same time, per capita incomes and human development indicators in Bangladesh, Nepal, most of Pakistan, and the lagging regions of India and Sri Lanka are those of low-income countries.

In addition, some 71 million South Asians live in conflict, and violence is escalating in Afghanistan, northern Sri Lanka, and parts of India and Pakistan.

In recognition of the diverse needs of the region, the Bank is differentiating its engagement. In education, for example, the Bank is working with partners to improve quality in aspiring middle-income countries and States, while in low-income countries and States, its focus is on increasing both access to and the quality of primary schools.

World bank assistance

The Bank approved nearly $ 4.3 billion for South Asia in fiscal 2008, $1.5 billion in loans from IBRD and $ 2.8 billion in IDA credits and grants.

More than half of these projects provide safe drinking water or access to safe sanitation.

In fiscal 2008, the fund received additional financing of $ 75 million from the Bank to mobilize 5 million people in 25 of the country’s poorest districts into community organizations and local support organizations.

In Andhra Pradesh, India, Bank-funded projects have helped some 8 million women build incomes, improve living standards, and gain political influence by banding together in some 630,000 self-help groups. The Bank continued its support of this programme in fiscal 2008 by providing $ 65 million to finance critical investments in institution and capacity building that will allow community institutions of poor women to become sustainable and self-reliant.

Responding to climate change

Few regions in the world are at greater risk from climate change than South Asia. The 2007 floods in Bangladesh, India, and Nepal, which claimed several thousand lives, were a reminder that climate change is already beginning to have an impact.

The Bank’s response has been to significantly scale up its activity on a adapting to and mitigating climate change. IT is providing assistance and advocacy for national programs in urban development, rural areas, coastal zone, and ecosystem management.

It is also embarking on a long-term program to strengthen water cooperation among Bangladesh, India and Nepal for flood control and hydropower generation.

Cooperation among Bangladesh, India, and Nepal on flood mitigation could benefit 400 million people.

Bangladesh is one of the most vulnerable countries in the world to extreme weather events.

(See http://www. worldbank.org/sar.)