Dr Priyadarshi Dash in Parallel Session A3 of Ninth South Asia Economic Summit (SAES) organised by Centre for Policy Dialogue (CPD) on 15-16 October 2016 presented on "Financing Development in South Asia: Avenues and Institutional Arrangements". #SAES9 For further details visit: http://saes9.cpd.org.bd/
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Financing Development in South Asia: Avenues and Institutional Arrangements
1. Reimagining South Asia in 2030
Parallel Session A3
Financing Development in South Asia: Avenues and Institutional Arrangements
Presentation by
Dr Priyadarshi Dash
Research Associate
Research and Information System for Developing Countries (RIS), India
16 October 2016
2. Financing Development in South Asia:
Beyond Orthodox Approaches
Priyadarshi Dash
RIS, New Delhi
Email: pdash@ris.org.in
3. Major Issues
• The current magnitude of flows of financial resources in South Asia does not
seem to be adequate given the level of development gaps.
• Public resources are not enough and also not properly mobilized for
development projects.
• Private investment is low even for commercially viable infrastructure
projects.
• Low level of financial integration and bank-based finance systems restricts
the financing options.
• Absence of corporate bond markets.
• Inability of sub-national and municipal level governments to raise their own
resources for building and maintenance of urban infrastructure.
• Fiscal space is eroded as efficiency in social sector expenditure is not
satisfactorily achieved.
4. Extent of Development Gaps
Country Access to
Electricity
(% of
Population)
(2012)
Account at a
Financial
Institution
(% of Age
15+) (2014)
Commercial
Bank
Branches
(per
100,000
adults)
(2014)
Health
Expenditure
(% of GDP)
(2014)
Govt.
Expenditure
on
Education
(% of GDP)
(2013)
Afghanistan 43.0 10.0 2.5 8.2 4.5
Bangladesh 59.6 29.1 8.2 2.8 2.0
Bhutan 75.6 33.7 15.5 3.6 5.6
India 78.7 52.8 13.0 4.7 3.8
Maldives 100.0 13.9 13.7 5.2
Nepal 76.3 33.8 8.5 5.8 4.1
Pakistan 93.6 8.7 9.4 2.6 2.5
Sri Lanka 88.7 82.7 18.7 3.5 1.6
11. Dominant Paradigms
To bring efficiency in resource use, control unintended leakages and
generate additional resources.
To liberalize foreign investment regimes without compromising domestic
priorities and crisis prevention and resilience frameworks.
To undertake financial market development particularly equity and debt
markets in a gradual and experimental fashion.
To develop financial safety nets by emphasizing upon inclusive finance,
micro-finance, streamlining transfers, etc.
To improve tax base, tax compliance and arrest tax evasion with an aim
to meet the ever-increasing demand for financing social sector
expenditure.
12. Policy Options
Loans from World Bank, Asian Development Bank and other multilateral development
banks.
Loans from New Development Bank, Asian Infrastructure Investment Bank and
others.
Issuance of local currency bonds and other debt instruments for infrastructure
projects.
Issuance of municipal bonds for building and maintenance of urban infrastructure
projects.
Harmonization of regulations across South Asian capital markets.
Investing a fraction of surplus foreign exchange reserves for infrastructure
development.
Strengthening fiscal resources at sub-national government levels by ensuring fair
share in central pool of tax and non-tax revenues and providing autonomy to raise
their own resources.