Infrastructure deficits are hampering South Asia’s growth
To catch up to China’s present levels of infrastructure per capita, India will have to invest 12.5% of GDP per year until 2015, approximately four times its current investment. Chapter 1 (pdf)
Over a third of Indian firms surveyed in the 2004 Investment Climate Assessment cite infrastructure as a major or severe obstacle to business expansion; in Bangladesh the figure is 78%. Chapter 1 (pdf)
In Bangladesh, firms experience power outages and surges 250 days a year; in Nepal, almost every day. As a result, about 40% of firms in India, Pakistan, Bangladesh, Sri Lanka and Maldives have their own generators. Chapter 1 (pdf)
Businesses in Pakistan and India estimate they lose 5-8% a year in annual sales due to power problems. Chapter 1 (pdf)
India has practically no interstate expressways linking its major economic centers and only 3,000 km of four-lane highways. In the last 10 years China has built 25,000 km of four- to six-lane, access-controlled expressways. Chapter 1 (pdf)
Because of under-pricing of electricity, the Ceylon Electricity Board loses 50 million rupees--the cost of a rural hospital--every day. Chapter 1 (pdf)
Red tape is hurting investment
In the ranking of all countries in the world by “ease of doing business” in Doing Business 2006, six East Asian countries are in the top 30 but no South Asian country is. Chapter 1 (pdf)
Firing a worker in Sri Lanka costs an average of 75 weeks of salary. Chapter 1 (pdf)
The index for the cost of dismissing workers in India and Nepal is almost four times higher than the East Asian average. Chapter 2 (pdf)
Untapped potential for regional integration
Annual trade between India and Pakistan is currently about $1 billion. Estimates show that it could be as great as $9 billion. Chapter 1 (pdf)
Raising Inequality
Poverty in Sri Lanka’s Western Province, that enjoys higher growth than the rest of the country, is less than half the national rate of 23%. Chapter 2 (pdf)
The geographical concentration of lagging regions risks their becoming perpetual “growth sinks,” this is the case outside Western Sri Lanka, in India’s lagging states, and in Balochistan and NWFP Provinces in Pakistan. Chapter 2 (pdf)
Farmer distress in parts of India is leading to farmer suicides, which in Maharashtra have risen from 15 per 100,000 farmers in 1995 to 57 in 2004. Chapter 2 (pdf)
Conflict
With some 71 million people affected by violence or its threat, South Asia remains the most conflict-ridden region in the world. Chapter 2 (pdf)
The State of Human Development
An increasingly important world player in outsourcing, software, high-tech medical services, pharmaceuticals and manufacturing, India has levels of child under-nutrition nearly double those in Sub-Saharan Africa. Chapter 3 (pdf)
Pakistan has enjoyed 6% annual GDP growth since 2002, but one in 10 children still dies before his 5th birthday and only 57% of children complete primary school. Chapter 3 (pdf)
In India, over 33% of public spending on health is enjoyed by the richest 20% of the population, while less than 10% goes to the poorest quintile. Chapter 3 (pdf)
That 80% of poor people’s spending on health in India is in the private sector testifies to the failure of the public system to deliver health services to those who need it the most. Chapter 3 (pdf)
While the number of out-of-school children in India is declining rapidly, learning levels in public schools is shockingly low. A baseline diagnostic test in Andhra Pradesh found that only 12% of children in class II-V could do a single-digit subtraction; only 54% could answer a question that required counting to three. Chapter 3 (pdf)
THE OPPORTUNITY:
Growth-induced pressure for further reform
Pakistan has successfully privatized the Karachi and Faisalabad Electric Supply Companies. Chapter 1 (pdf)
Building on the success of its telecoms industry, India has sufficiently reformed its ports and roads to attract about $8 billion in public-private partnerships in its urban and transport sectors. Chapter 1 (pdf)
Pakistan has successfully privatized its banking sector. Chapter 1 (pdf)
Bangladesh has reduced agricultural subsidies considerably (and invested much more in rural infrastructure). Chapter 4 (pdf)
India is reforming its value added tax system, which has already raised almost 2% of GDP in additional revenues. Chapter 1 (pdf)
Growth has generated more demand for alternative ways to deliver services, besides the traditional model of heavy-handed, central-government led efforts
Since 2002, Nepal has devolved responsibility for 2,400 schools to communities—through school management committees –essentially restoring the accountability of the provider to the client. Chapter 3 (pdf)
Bangladesh has provided the enabling environment for NGOs to deliver basic services, either directly or in partnership with the government. NGOs account for 10% of all health expenditures, equivalent to a third of public spending on health. Chapter 4 (pdf)
Demand for change, greater accountability
Countries in South Asia are also responding to citizen demands for accountability by putting in place new mechanisms of information disclosure and service delivery. Recently-passed right-to-information legislation in India and in other countries holds the potential for dramatically greater contestability of government decision-making and implementation. Chapter 4 (pdf)
In service delivery, countries are responding to the growing pressures for better education, health, and infrastructure by experimenting with new approaches such as vouchers, conditional cash transfers, contracting out, and benchmarking. Chapter 4 (pdf)
More informed domestic public debate about what works and what doesn’t and combining local knowledge with global experience is emerging as an important force for change in South Asia. Chapter 4 (pdf)
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