SOUTH ASIA MEANS BUSINESS
What to know?
The region’s new economic openness, Delhi’s vigorous neighbourhood policies, and Western support for an India-centred regionalism in South Asia could transform the Subcontinent’s economic landscape.
India at the centre of shifting currents in South Asian regionalism. The recent visits to Delhi by various foreign dignitaries like Nepal PM highlights India’s growing might in fast changing global politics.
How South Asian regionalism is trapped in two old propositions?
- South Asia is the least integrated region and insufficiently connected to the world.
- The belief that the road to regional integration in the Subcontinent must necessarily run through the SAARC — the South Asian Association for Regional Cooperation.
Post colonial hurdles:
- The post-colonial and partitioned Subcontinent deliberately chose economic self-sufficiency and devalued regional integration.
- Endless conflict reinforced the lack of political appetite for cross-border commercial engagement.
- The trans-regional connectivity inherited from the British Raj steadily withered as the newly-independent economies focused on import substitution.
- Regionalism in the Subcontinent and a new interest in trade and connectivity.
The 21st century stance:
- The share of intra-regional trade in the Subcontinent’s trade with the world has grown from about 2 per cent in 1990 to about 6 per cent today.
- SAARC is on the verge of dying as an organisation. The last summit was held in 2014.
Factors that are accelerating regional economic integration.
- The renewed pressure to undertake economic reform e.g. the recent economic crisis in Sri Lanka and Pakistan forced political and economic scientist to embark on serious economic change ,Nepal and Sri Lanka are more open to trade and investment and connectivity with India.
- The region is looming larger in India’s economic calculus. As India’s relative economic weight in the world has grown, its commercial ties with neighbours have increased. e.g. Bangladesh as the fourth largest export destination for Indian goods, the regional connectivity with Bangladesh is expanding.
- Renewed great power rivalry between the US and China on the one hand and the deepening conflict between Delhi and Beijing on the other have altered the Subcontinent’s geo-economic template.
e.g. US and its allies are promoting economic integration between India and its smaller neighbours. The US, for example, helped Nepal’s energy and road connectivity with India with the $500 million Millennium Challenge Grant.
India, which was complacent about China’s growing economic presence in the region a few years ago, has offered a measure of competition in the Subcontinent with its own bouquet of regional infrastructure projects. Delhi is now working with its like-minded partners to offer credible economic alternatives to its neighbours that until now had seen Beijing as the only game in town.