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How South Asia can lead an inclusive, sustainable COVID-19 recovery

Passengers wait in line to get their temperature checked at a railway station, amid the spread of the coronavirus disease (COVID-19), in Mumbai, India November 26, 2020. REUTERS/Francis Mascarenhas - RC2XAK92D1AC

Passengers wait in line to get their temperature checked at a railway station in Mumbai on 26 November 2020. Image: REUTERS/Francis Mascarenhas

Viraj Mehta
Head, Regional Agenda, India and South Asia; Member of the Executive Committee, World Economic Forum
Suchi Kedia
Community Specialist, Regional Agenda - India and South Asia, World Economic Forum
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This article is part of: The Davos Agenda
  • The largest share of people pushed into poverty by COVID-19 is estimated to be in South Asia.
  • The region faces the challenges of high health costs, low internet connectivity and vulnerable industries.
  • Governments and businesses must come together to increase digitization, create integrated supply chains, ensure a green recovery and advance regional cooperation.

The COVID-19 pandemic has upended decades of global development progress, with the poor and vulnerable the worst hit. According to the World Bank, as many as 115 million additional people risk being pushed into extreme poverty, the first rise in poverty levels since 1998. The largest share of the “new poor” is estimated to be in South Asia.

The 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 face financial hardships to get the critical care they need. At the same time, school closures threaten to hold back this generation of students, as much of the region lacks reliable and universal access to internet connectivity, and many rural and poor communities have limited or no access to devices. In India, for example, according to official estimates, only 24% of households – 4% 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, an industry critical to the economies of Maldives, Sri Lanka, Nepal and Bhutan. The region’s sizeable 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.

Increase digital transformation

The 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.

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 reorganization, 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 the Indian Prime Minister’s vision of an “Atmanirbhar Bharat” (self-reliant India) underscores this opportunity.

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% of its pledge to reduce emissions intensity of GDP by 33-35% 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 prioritizing 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.

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 intraregional 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.

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