Speakers identify main bars to economic growth in S Asia

FE Report Energy crisis and poor infrastructure are the main constraints to the expected level of economic growth in the South Asian countries, speakers at a panel discussion said Wednesday. They also sought regional cooperation and mutual understanding, saying that such relationship can help the nations further accelerate their growth. "Very grave economic situation prevails in Pakistan due to many reasons including energy crisis, poor infrastructure and investment rate," said Rashid Amjad, vice-chancellor of Pakistan Institute of Development Economics (PIDE). He speaking at the panel discussion titled 'Economic Development in South Asia: Sharing Experience' on the first day of the two-day 11th Annual SANEI (South Asia Network of Economic Research Institutes) Conference. The conference was jointly organised by SANEI and Bangladesh Institute of Development Studies (BIDS) at a city hotel. Chairman of SANEI Steering Committee Wahiduddin Mahmud chaired the function. Mr Amjad said Pakistan's economy has been passing a tough time with lower growth rate of 3.5 per cent while non-government expenditure has gone up significantly and the investment rate has come down to about 13 per cent. He said natural disasters like flood also hit the country badly. "On the other hand, government subsidies have gone up gradually as no one wants to invest in sectors like energy due to security reasons," he said. The government must cut subsidy instead of cutting capital spending on key sectors like education and health, he said. "Opening up trade with India can help Pakistan overcome the problems," he said. Asoka Gunawardena, executive governor of Marga Institutes, Sri Lanka, termed reduction of regional disparity and foreign investments the key challenges in the area, saying their government has highly focused on them. The expected level of growth in the region cannot be ensured without infrastructure development, especially road communications, he said, adding that regional cooperation among the countries can ensure it. He also shared the growth experience of Sri Lanka with others during the event. SANEI coordinator and BIDS director general Mustafa K Mujeri said Bangladesh has achieved a significant progress on growth as well as social development over the years thanks to remittance and microcredit that has brought positive changes at the grassroots level. He also emphasised the importance of raising the country's tax-GDP ratio which is the lowest (9.2 per cent) among those of her regional counterparts as the ratio in India is 16.7, in Pakistan 10.0, in Sri Lanka 12.9, in Nepal 12.3 and in Bhutan 14.7. Govinda Rao, director of National Institute of Public Finance and Policy (NIPFP) of India, highlighted mutual relationship between the South Asian countries. "If there remains no trust deficit among the nations, there will be no deficit in the region," he said making a call to increase tax-GDP ratio.