October 2011:South Asia has experienced a long period of robust economic growth, averaging 6 percent a year over the past 20 years. This strong growth has translated into declining poverty and impressive improvements in human devel-opment. Yet poverty remains widespread in many areas, and South Asia has the world’s largest concentration of poor people—more than 1 billion people live on less than $2 a day.
South Asia’s real GDP growth accelerated to an estimated 8.7 percent in fiscal year 2010-11 from 7.0 percent in fiscal year 2009-10, buoyed by very strong growth in India, which represents 80 percent of regional GDP. These strong growth rates are driven by robust domestic demand, macroeconomic policy stimulus measures, and a revival in investor and consumer sentiment.
World Bank Assistance
The World Bank Group is a key development partner in South Asia with a portfolio of 210 projects and current total commitments of $38.1 billion as of June 30, 2011. The Bank’s strategy for South Asia was updated in fiscal year 11. It comprises three pillars: inclusive growth and creating quality jobs, responding to food and fuel price rises, and promoting regional cooperation. It also provides a road map to accelerate growth and foster human development and informs the development of country specifics. In fiscal year 2011, the World Bank approved 44 projects in the region.
Financial and Food Price Crises
While South Asia navigated the financial crisis better than most regions, the region suffered the worst in terms of trade deterioration during previous food and fuel crises. With global food and fuel prices rising again, South Asia will be affected disproportionally. Regional inflation is already high and countries have limited fiscal space to respond.
The rise in global food prices was highest for cereals, which remain relatively expensive: between 2005 and 2008 the international price of wheat more than doubled, rice and maize prices tripled, and as of June 2009, wheat and maize prices remained substantially higher than the previous four years (by respectively 55 percent and 87percent) while rice prices had about double.
The economic crisis has been particularly severe in Pakistan, where households are highly vulnerable to income shocks and where social assistance programs cover only a very small fraction of the poor. The Bank committed $200 million to strengthen the Benazir Income Support Program, Pakistan’s national safety net program.
Connecting the Poorest
Lack of electricity remains one of the most critical constraints to sustained rapid growth in South Asia. To address the problem, the Bank provided $130 million to Bangladesh during fiscal year 10 to increase access to electricity through the installation of affordable solar home systems in rural areas. The credit supplemented an existing project that has connected 600,000 consumers to the electricity grid, constructed about 8,500 kilometers of new distribution, and provided 320,000 consumers with solar home systems since 2003.
To improve connectivity and boost opportunities for people in Southwest Bangladesh, the World Bank approved a $1.2 billion IDA credit to Bangladesh for the Padma Multipurpose Bridge Project in fiscal year 11. Spanning the Padma River, the world’s third largest; the 6.1km long bridge will connect nearly 30 million people in the Southwest region to the rest of the country, enhancing their access to markets and services while accelerating growth in the country as a whole.
In India almost half of all households—44 percent—lack access to electricity. To increase access and meet rising consumer demand, the Bank loaned $1 billion to Powergrid, the national power transmission utility, in fiscal year 10. The loan will help expand the power transmission network, especially in the western, northern, and southern parts of the country. The Bank also approved a $330 million loan to strengthen the electricity transmission and distribution system in the Indian state of Haryana. In addition, the Bank approved $430 million to finance the Mumbai Urban Transport Project 2A to further improve the suburban railway system in the Mumbai Metropolitan Region, one of the world’s largest urban centers, with a population of 18 million in 2010.
Inclusive Growth and Creating Quality Jobs
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. More than 300 million people are expected enter the prime working age population over the next decade. Creating jobs for them will contribute to growth, equity and peace in the region. The Bank is producing analytical work on how more and better jobs can be created in the region, where there is a concern that job creation has been mostly in the informal sector characterized by low skills and low earnings.
Conflict and Post-Conflict Areas
In fiscal 2010, IDA and the International Monetary Fund agreed to $1.6 billion in debt relief for Afghanistan under the enhanced Heavily Indebted Poor Countries Initiative. The Bank also provided a $30 million grant to support a new initiative by the Afghan government designed to boost employment and incomes in rural areas, where 75 percent of the people live. The Bank continued its support to Afghanistan’s National Solidarity Program (NSP) with a $40 million grant for the program’s third phase. NSP is widely recognized as one of the most successful development programs in Afghanistan, having reached 17 million rural people in all 34 provinces since it was introduced in 2003.
In Pakistan, the conflict in the Khyber-Pakhtunkhwa (KP) and the Federally Administrated Tribal Areas (FATA) led to one of the worst security crises in Pakistan, displacing millions of people and severely disrupting lives, livelihoods, and the provision of public services. In January 2010, the Bank’s Board approved creation of a multidonor trust fund designed to restore infrastructure, services, and livelihoods in the conflict-affected areas of KP, FATA, and parts of Balochistan Province.
With the end of armed confrontations in May 2009, Sri Lanka is facing a historic opportunity for development and reconciliation. In fiscal 2010, the Bank approved a $77 million package designed to support the return of 100,000 internally displaced persons to their places of origin in the Northern Province and to restore their livelihoods, which had been destroyed by three decades of civil war. The Bank supported the rehabilitation of provincial roads in the eastern, northern, and southern Uva province with a $105 million credit. It also provided $75 million for the second phase of Gemi Diriya, a community-driven development program that has touched the lives of nearly 1 million poor Sri Lankans in more than 1,000 villages.
Pakistan Floods
Pakistan experienced extraordinary rainfall in mid-July 2010 which continued until September 2010. The rains/floods have affected over 20 million people, according to Pakistan’s National Disaster Management Authority. The Bank floods response consists of $300 million in critical import financing and $20 million for highways rehabilitation. In the wake of the floods, the Asian Development Bank and the World Bank jointly conducted the Damage and Needs Assessment, and it estimates that approximately $8.7 to $10.9 billion is required for the overall recovery and reconstruction costs associated with the floods.
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Supporting Education and Health Services
The Bank committed a record $1.05 billion in fiscal 2010 to help get more children into schools in India. Most of this financing—$750 million—will go to Sarva Shiksha Abhiyan, India’s ambitious Education for All program. The program is the largest and among the most successful of its kind in the world. It has been particularly successful in providing access to primary education, increasing the number of children enrolled from 135 million in 2003 to 192 million in 2009.
In Bangladesh, the Bank provided an additional $35 million to bring disadvantaged and poor children back to school through the Reaching Out-of-School Children project, which, since 2004, has helped enroll more than 500,000 children in more than 15,000 Ananda Schools (learning centers) in 60 upazilas (subdistricts) with high incidences of poverty and low enrollment.
The Bank continued its support to the education sector in Nepal, approving a $130 million IDA credit to help meet the country’s Education for All goals. The results of Nepal’s school reforms have been encouraging, with net primary enrollment rising from 84 percent in 2003 to 92 percent in 2009. Gender parity improved as well, increasing to 98 percent from 83 percent during the same period. A key aim of the reforms has been to transfer school management to communities. Since 2001, more than 9,000 schools have adopted community management. The Bank also contributed a further $129.2 million to help poor and underserved Nepalis access and use essential health care services. Under the project, the geographic coverage of services will be expanded, and policies aimed at increasing access and use by the poor and underserved populations will be more systematically implemented.
- South Asia: Development Data A wide range of social and economic measures on South Asia, including links to the World Bank's most important online development databases. (Read More »)
- South Asia: Analysis and Research Compilation of all the World Bank's publications on South Asia, with 'search' options and links to analysis and research on other South Asian countries. (Read More »)
- World Bank Program in South Asia Launching pad to all information on World Bank activities in Afghanistan, Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan, and Sri Lanka.(Read More »)
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