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4 ways South Asia can lead pandemic recovery and become the driver of global growth

The impact of Covid pandemic has been profoundly disproportionate across different segments of populations and disrupted the development roadmap for South Asian economies.

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For most of 2020, the world grappled with the devastating impact of the Covid-19 pandemic on human life, society and economy. The crisis has upended decades of global development progress, with the combined health and economic shocks taking a toll on the lives and livelihoods of millions of people, disrupting business activities and exposing existing fault lines in social, economic and health systems.

The pandemic forced us to face problems we have ignored for too long, and the existing inequities, fragilities and unsustainable practices intensified its impact. Furthermore, the impact of the pandemic has been profoundly disproportionate across different segments of populations. The poor and vulnerable have been the worst hit, and the pandemic is threatening to push millions more into poverty, the first such rise since 1998. According to the World Bank, as many as 115 million additional people risk being pushed into extreme poverty, and the largest share of the “new poor” is estimated to be in South Asia.

The Covid pandemic has highlighted inadequacies in the health care systems of even the most developed nations; in South Asia, it served as a reminder that too many people face financial hardships to get the critical care they need. At the same time, school closures threaten to hold back this generation of students, because much of the region lacks reliable and universal access to the internet, and many rural and poor communities have limited or no access to devices. In India, for example, according to a UNICEF report, only 24 per cent of households – 4 per cent in rural parts – have access to the internet.

The pandemic slowdown has also deeply impacted the economy of the region. It has disrupted the inflow of remittances, which form an integral part of the development roadmap for South Asian economies. It has harmed businesses – especially micro, small and medium enterprises and startups – and devastated the tourism industry, which is critical to the economies of Maldives, Sri Lanka, Nepal, and Bhutan. The region’s sizable migrant and informal sector workers have suffered the dual blows of lost jobs and absence of a social security net.

At this critical juncture, South Asian economies must not only reflect on how best to return to growth, but also on how to address the existing challenges and enhance their resilience, inclusiveness, self-reliance and sustainability.

Also read: The curious case of South Asian countries and coronavirus

Increase digital transformation

The Covid pandemic has significantly boosted the adoption of digital technologies, offering the region a unique opportunity to pivot towards creating digital economies. The most fundamental ingredients for digital transformation are building a robust digital infrastructure, enhancing digital literacy and promoting an entrepreneurial ecosystem.

Already India’s Aadhaar, the world’s largest biometric national identification system, has allowed millions to participate in the country’s economic life over the last decade, while the government of Bangladesh has been marching ahead with its Digital Vision 2021. Further digital-led growth in the region will not only bring significant economic returns but also help bridge existing divides in access to education and healthcare, financial inclusion and public service delivery.

Also read: India’s economy set to lag rest of South Asia in race to recovery as Covid surges, report says

Create integrated supply chains

While traditional revenue sources such as tourism and remittances may be hard to recover in full, the gloomy prospects of some economic sectors are matched by promising avenues in others. The pandemic has exposed the fragility of long distance, international, single-source supply chains. As a result, global supply chains are undergoing significant reorganisation, and businesses are increasingly looking to diversify their supply chain risks.

South Asia can emerge as a preferred supply chain hub by investing in manufacturing capacity including land, labour and logistics, improving ease of doing business and enhancing the quality of infrastructure. Stronger supply chains will help the region enhance its self-reliance, and Indian Prime Minister Narendra Modi’s vision of an “Atmanirbhar Bharat” (self-reliant India) underscores this opportunity.

Also read: In South Asia, a vaccine diplomacy has begun. Will India’s efficacy outdo China’s?

Ensure a green recovery

While navigating through the immediate public health and economic challenges, it is important to not allow other important issues to slip from the development agenda, not the least of which is environmental sustainability and climate action.

For example, Bangladesh has been playing a lead role in the global climate dialogue. Its Climate Change Strategy and Action Plan, launched in 2009, has become a blueprint for other climate-vulnerable nations. India is leading global climate action through initiatives such as the International Solar Alliance, Kigali Amendment to the Montreal Protocol, International Coalition for Disaster Resilient Infrastructure, and Leadership Group for Industry Transition. India is also one of the few countries on track to meet and likely exceed its Paris target, achieving 21 per cent of its pledge to reduce emissions intensity of GDP by 33-35 per cent by 2030.

Investing in green recovery and committing to greater climate ambition can unlock employment and economic opportunities, coupled with advancing local health and global climate benefits. By prioritising green stimulus, clean energy investment, catalytic green finance instruments and sustainability-oriented policies in its pandemic response, South Asia can play an important role in making the future more sustainable, both for the region and for the world.

Also read: Why many Asian countries are being cautious on Covid vaccines

Advance regional cooperation

This crisis can also usher in a new era of collaboration in South Asia. Enhanced regional cooperation can bolster the region’s capabilities to fight the pandemic and its economic losses in the near term and simultaneously bring long-term benefits through increased intra-regional trade, acceleration in shared growth, poverty reduction and cooperation in priority areas such as energy, food security, logistics and infrastructure. Countries must strengthen regional institutions and frameworks for regional cooperation, improve regional infrastructure and connectivity, and develop cross-border solutions to shared problems.

To support these efforts, the World Economic Forum’s Regional Action Group for South Asia is working to bring together regional government, business, civil society and academic leaders to address regionally relevant issues such as supply chain disruptions, deceleration in remittances, harnessing emerging technology, supporting the recovery of travel and tourism through safe border opening, strengthening social protection systems, and building healthier and more resilient cities.

In finding a resilient recovery process, South Asian economies can help lead the exit from the pandemic and be a vital driver of global economic recovery and post-pandemic growth.

Viraj Mehta is Head of the Regional Agenda – India and South Asia, and Member of the Executive Committee, World Economic Forum.

Suchi Kedia is Community Specialist – India and South Asia, World Economic Forum. Views are personal.

This article is part of the World Economic Forum’s The Davos Agenda, 25-29 January 2021.

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