Page last updated at 12:19 GMT, Monday, 24 September 2007 13:19 UK

Time to give Saarc a facelift

Kaushik Basu
By Kaushik Basu
Professor of economics, Cornell University

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India is among the world's three fastest growing economies

Most people, after participating in a conference, will tell you what a "great" conference it was.

To let the uninitiated in on a secret, this is not because all conferences are so good, but because conference organisers do not like to invite people who spill the beans and let those who were not invited know how bad the conference was.

So, if you wish to remain on the conference circuit, there is no better guarantor than to have a reputation for raving about conferences.

Despite knowing this, I have to admit that the one conference of the South Asian Association for Regional Co-operation (Saarc) that I have attended was utterly disappointing.

The dressed-to-kill women entrepreneurs from Bangladesh, India and Pakistan were stunning, there can be no denial. But by all criteria, excepting the sartorial, the conference was a failure.

Rather like the region, at least till recently.

The sports and cultural wing of this association was founded almost exactly 25 years ago, though Saarc as an economic unit was formally established in 1985, picking up on an idea that was first proposed by Bangladesh in the early 70s.

Where the Saarc countries have done badly is in removing poverty and assuring a basic standard of living for the masses

It has, for the most part, been a rudderless organisation, initially, of seven nations - Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan and Sri Lanka - and now eight, with Afghanistan joining the group earlier this year (just in case someone thought the association was short on failed states).


This is a cluster of very poor nations and it is not surprising that Saarc has been treated as a non-entity by the global powers.

It is, however, time to give Saarc a facelift. It has the potential to be an important organisation with far-reaching economic and political consequences. The reason is that South Asia as a region has done remarkably well in terms of growth in recent years.

The India story is, of course, well known, and has been written about widely by the regional and international media.

What most people, however, do not know is that India is not as big an outlier in the region as it is globally.

Women in Bangladesh
Saarc countries have done badly in removing poverty

The entire region of South Asia has had a growth rate of 5% per annum over the last 20 years, which is double the world's average.

It is true that the region's average is pulled up by India, which has been among the world's three fastest growing economies (along with China and Vietnam).

But, if we take the most recent five years for which we have detailed data, India, Bangladesh, Pakistan and Sri Lanka with growth rates of, respectively, 6.9%, 5.3%, 4.8%, and 4.2%, have all out-performed the world average of 2.8%.

Strange growth

The country that has consistently lagged behind economically is Nepal. Afghanistan would also fall into this category but only if the word consistent was not used. Thanks to war and insurgency it has seen the wildest fluctuations in income.

The Maldives, which is the richest among the Saarc nations in terms of per capita income, has also seen a lot of fluctuations, caused mainly by natural phenomena, such as the tsunami.

Much has been written about India's strange pattern of growth, whereby it seems to be going from an agrarian economy to a service-based one, skipping over the "manufacturing phase", which virtually all nations that are today considered wealthy went through.

Afghanistan is lagging behind economically

Of India's national income, well over 50% comes from the services sector. This is very unusual for a poor nation, but what is equally surprising and is less known is that all the large South Asian nations share this trait.

The services sector contributes more than 50% of the national income of Pakistan, Bangladesh and Sri Lanka.

What sets these countries apart from India however is that, within the services sector, India has seen the greatest growth in high-end activities such as finance, information technology and telecommunications, whereas for the other nations it has been the more traditional and informal activities that have seen rapid growth.


While the expansion of the aggregate economy has been laudable, where the Saarc countries have done badly is in removing poverty and assuring a basic standard of living for the masses.

India is home to the largest number of poor people in the world. Basic literacy in the region ranges from over 90% in Sri Lanka and the Maldives to 28% in Afghanistan. India's score of 65% is better than those of Pakistan and Bangladesh, but worse than even the poor sub-Saharan African nations.

Poor children in India
India is home to the largest number of poor people in the world
Life expectancy in the region ranges from 71 years for Sri Lankans to 46 years for the Afghans.

India, Pakistan and Bangladesh are all around 64 years, a far cry from the world's longevity leader - Japan, with 82 years.

As Saarc matures, it can have a glorious adulthood.

For that it should capitalise on the region's superior growth performance and work to attract global trade and investment to the entire region, and to open up trade among the South Asian nations.

And, over and above this, it should bring to the region best practices for battling poverty, illiteracy, and ill-health.

This debate is now closed. Following is a selection of comments you sent.

Why concentrate on SAARC... India should try building its trade with the Central Asian countries, EU, US and the Asia-Pacific
nandan, India

Yes, we India are doing very well in economy, why we want to be dependent on SAARC, yes if we can help other nation that is very good, but I think in India if we have hungry children and a lot of poverty, how can we even think about helping other nations?. In SAARC at least if every country thinks about their own people that is enough. I think there is no problem of manpower in South Asia but yes we are way behind when it comes to good infrastructure. I think if we in South Asia really want to lift our economy status good infrastructure is key.
Mahesh Raghuwanshi, INDIA

Instead of talking, here is real suggestion for the face lift. Keep the Passport but Remove visa restrictions for the citizens of SAARC and the internal trade with quadruple overnight.
Sifwat Ali, USA

Apart from OAU/OUA no other regional organization can rival the irrelevance of SAARC. The initiatives on the economic side which drove MERCOSUR, ASEAN, NAFT, EEA, usually have been put on sidelines. Pakistan does not even accord Most Favored Nation status to India. SAARC conferences are big fund guzzlers in a region that excels in poverty. It is completely irrelevant, particularly for India, to break out of the mold of 'Greater India' or Akhanda Bharat mindset and focus more on economic development, it does not need more laggards to pull it down. A good example is European Union, quite a choosy, club, which has elected to exclude Turkey. Sometimes less can even turn out to be more!
Sandeep Chowdhury, Germany

A group between poor failing countries is bound to fail. Just imagine EU before world wars. It will take time and effort before an useful South Asian lobby can come up. Presently it is more important that each country tries its level best to grow up.
Virendra, New Delhi, India

SAARC must still exist and pretend all will come right when democracy exists in all the member countries. If India continues to grow economically and continues to fine tune its democracy, it must have a knock on effect on the neibouring countries. Just see what is happening in Pakistan. Is it not that the people are aspirering to become like India or belong to a state like India where their is economic growth and freedom of speech. SAARC is a product of ideals of well meaning leaders. The problem is these ideals were enunciated ahead of our time. We, as small minded as we are, should have more faith in the future.
balvant bhagat, zimbabwe

Can Saarc be really useful without solving the political tensions between the countries? It is remarkable that except Bhutan and Maldives, India doesn't have cordial relations with any other member.
Samudra Dasgupta, India

While shameful corruption and inefficiency is uniformly found in India, Pakistan and Bangladesh, deep rooted religious divisions and caste politics are sustaining this process. It's no wonder that some countries are breeding grounds for terrorism while others are loaded with extreme poverty. So deep are these religious and cultural differences that nowhere in this world can there be a greater test for democracy and secularism. Saarc needs to address these issues first.
arjun vardhan agastyan , usa

It is possible for whole of the countries of South Asia to grow much faster and alleviate poverty if they trade with each other from and allow transport through their nations. Pakistan will only import Indian goods from Dubai etc. adding to the cost for poor Pakistanis who could easily aquire from across the border at approx 40% less cost. Similarly Pakistan does not allow Indian goods to go across its territory to Afghanistan - making it more expensive for poor Afghans who have to pay approx. 50% more for Indian goods as they have to be imported by sending them from North West India, Punjab to Bombay and then through Iran to Afghanistan. What a way to isolate itself from local friendly nations and make its own public suffer and Afghanis to pay huge extra cost!! Pakistani leaders need to get on with the world and stop creating hurdles which they have been good at for the last 60 years. Wake up and let your people do what everyone else is doing - that is to get on in the world and trade for prosperity.
john, uk

The only thing that the Saarc summit has ever been able to decide is where the next Saarc summit should be held. It is a pathetic organisation - though mind you there are others in competition with it in being useless for example Sadc - the Southern African Development Community.
Alia Mansuri, Pakistan

Saarc is a stale joke. Lay it off!
Manosij Majumdar, Canada

Saarc is an organisation which for the country of Pakistan does nothing. Rather than waste its time on Saarc which consists of several countries that have some of the lowest social and developmental indices in the world not to mention rampant poverty, Pakistan has a better chance to go at it alone and work out its economic policy at a bilateral level. Furthermore, Pakistan should be pursuing an economic arrangement with more dynamic and prosperous markets of China, Central Asia via Afghanistan and towards the vest via Iran, the Middle East, Turkey on to Europe. Thats the way Pakistan should be heading, not towards South Asia, which offers nothing significant for it.
Gohar Ilahi, Pakistan

Saarc failed because the people who make decisions there have failed miserably to create economic incentives for better-performing members. It has not created any realistic benchmark against which each country could be measured, nor has it done much to spread "free trade", per se. I say that Saarc create a "regional fund for development", that would have some kind of a reward system for countries making significant progress in law & order, education, poverty, environment, and other areas. Perhaps some economic incentives would inspire the bureaucrats and politicans take some positive steps.
Cyrus Zulkarnaian Kazi, New York, US

India should concentrate on expanding economic ties with the US, EU, Japan, China and Russia. Other Saarc nations have little to offer India by way of trade and investment opportunities. In fact, given the current state of political upheaval in Pakistan, Bangladesh and Nepal, one can argue that these nations represent a drag on India's economic prospects.
Bonnie Mitra, USA

Economic cooperation organisations like NAFTA and the EU work because the member states like each other well enough to do business. In South Asia, that is not the case. Many member states are openly hostile, with its two largest members having gone to war against each other just in the past decade. Forget about free trade. It would be an achievement even if Pakistan, for example, allowed Indian goods to be legally sold on its soil. Pakistan currently bans everything from Bollywood movies to Tata cars.
Shantanu Thakur, USA

If Saarc is a failure, the blame can be placed entirely at India's door. The sad fact is, most Indians do not particularly want good relations with their neighbours. We hate the Pakistanis, have contempt for the Bangaldeshis and Nepalis and know very little about the others. Some of the comments above reflect this attitude. In a democracy, unless we people desire something, our politicians will not deliver. Indian ought to remember that no other country in South Asia has as much poverty as India does. India will gain if it adopts the Sri Lankan approach to women's education, Bhutan's approach to environmental conservation, Maldives's approach to tourism, Bangladesh's approach to micro-credit and Pakistan's approach to hockey. A vibrant Saarc on the lines of the EU can not only help all the people in that region, but may also help solve the Kashmir dispute and end the civil war in Sri Lanka.
Saurabh Sharma, UK

Most people are unaware of Saarc, unlike Asean or G8. It is probably because of latter's economic and political influence they exercise in the world arena. SAARC can become a voice in the world if they really stand up for their name - regional Co-operation. They must learn to work within the diversity work towards a region that is corruption-free, prosperous, literate and healthy.
Esjay Thottumkal , Italy

It is a sad fact that as a big brother in the region India has failed to live up to expectations. It seems the other nations are always blamed where-as India is not held reponsible, it must learn to be more flexible in its dealings with its neighbours.
Saqib, UK

Do we really need an organisation like the Saarc. It has not only failed miserably... The other countries in Saarc are economic minnows compared to India and that makes it all the more untenable.
B Rajshekhar, UK

Why worry about Saarc when India can do much better on its own.
Pradip Choksi, USA

With extreme poverty in this region of the world and the political differences among the member countries, how would this forum get a facelift? The other problem is the growth itself. When will the poverty stricken people in this region will get the fruits of this growth they all have achieved so far?
Aftab Ali Ghazi, Chitral, Pakistan

I'm disappointed that the only positive reference you make to women in this article is to remark on their appearance. Women constitute a growing proportion of the urban workforce across South Asia and comments like "the dressed-to-kill women entrepreneurs were stunning" completely ignores this hugely-positive and hard-fought social and economic change.
Antara Ganguli, India

Saarc is a big failure, it has not taken any measure in reducing the bad human rights records in the region. Most of the countries are being ruled by dictators including Maldives... The meeting which takes place every year with thousands of dollars being spent on it does not bring any good to the people. a mere waste of the people's money.
Mohamed Shamin, Maldives



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