It is possible to achieve 10 per cent growth in South Asia region, says World Bank economist
CHENNAI: A `litany of policy changes' were needed to improve productivity and investment in south Asia, said Shantayanan Devarajan, World Bank South Asia Region Chief Economist here on Tuesday.
Dr. Devarajan said that it was possible to achieve 10 per cent growth if some of the common problems were sorted out. In Sri Lanka, for instance, the civil strife had pulled down the GDP by about 2 to 3 percentage points while in Bangladesh, the all pervasive corruption ate into large chunks of funds. Nepal and India too faced civil strife in some parts.
One of the problems that existed in the region related to the lack of cross-border synergies between peoples of countries in the region. The degree of integration between peoples in the region was among the lowest in the world, he said and added that a greater degree of integration might pay off. Some parts of the region - Nepal, Bhutan and Bangladesh - were rich in natural gas and this could easily be sold to energy deficient India if the countries worked together. Trade also should increase manifold, he said citing the example of countries in East Asia.
Speaking at a seminar on `Economic growth in South Asia' organised by the Madras School of Economics, he said that double digit growth rates were possible only if countries concentrated on creating fiscal space for public expenditure, expanded their economic liberalisation and deepened their human capital, doubled the transition rate of students to secondary schools and carried the lagging regions with them.
The relatively low savings rate and investment rate was a reason for growth to lag, he said and added that in democratic societies it was difficult to achieve the 45 per cent savings rate achieved by countries such as China.
Dr. Devarajan stressed the importance of maintaining infrastructure and said that in many countries maintenance of existing facilities left a lot to be desired. He also pointed to regional disparities in development and cautioned that these needed to be addressed early.
Meets Plan panel
Earlier in the day, Dr. Devarajan met the members of the State Plan Panel here, including its vice- chairman, M. Naganathan, and exchanged views.