The Covid-19 Pandemic and Economic Fallout in South Asia. Coherent national strategies, backed by regional cooperation efforts, offer a way forward for economic recovery in South Asia, which is rapidly becoming the next COVID-19 global hotspot. Challenges and policies relating to macroeconomics, health, economic sectors, stimulus measures, and reforms, which are all crucial for the region’s recovery are discussed.

1. COMMENTARY
Economic & Political Weekly EPW november 21, 2020 vol lV no 46 13
The Pandemic and Economic
Fallout in South Asia
Challenges and the Way Forward
Selim Raihan, Ganeshan Wignaraja, Vaqar Ahmed, Puspa Sharma, Nazir Kabiri,
Prabir De
Coherent national strategies,
backed by regional cooperation
efforts, offer a way forward for
economic recovery in South Asia,
which is rapidly becoming the
next COVID-19 global hotspot.
Challenges and policies relating
to macroeconomics, health,
economic sectors, stimulus
measures, and reforms, which
are all crucial for the region’s
recovery are discussed.
This article is an outcome of joint research
undertaken by South Asian think tanks. An
earlier version of the article was discussed at
the webinar “COVID-19: South Asia’s Response,”
2 May 2020. The authors are grateful to Sabya
Dutta, Director, Asian Confluence for organising
the webinar, and to the participants for their
useful comments. The views are authors’ own.
Selim Raihan (selim.raihan@gmail.com) is
Executive Director of the South Asian Network
on Economic Modelling, and teaches
Economics at the University of Dhaka, Dhaka.
Ganeshan Wignaraja (gwignaraja@gmail.com) is
Executive Director of the Lakshman Kadirgamar
Institute of International Relations and
Strategic Studies, Colombo, and visiting scholar
at the International Monetary Fund, Washington,
DC. Vaqar Ahmed (vahmed@gmail.com) is Joint
Executive Director at the Sustainable
Development Policy Institute, Islamabad.
Puspa Sharma (puspa.sharma@sawtee.org) is
Executive Director at the South Asia Watch on
Trade, Economics and Environment, Kathmandu.
Nazir Kabiri (nazir.kabiri@biruni.af) is
Executive Director at the Biruni Institute,
Kabul. Prabir De (prabirde@hotmail.com) is
the head of and teaches at the ASEAN-India
Centre, Research and Information System for
Developing Countries, New Delhi.
S
outh Asia, the world’s most popu-
lous region, is rapidly becoming the
next global hotspot for the COVID-19
pandemic. Governments across the region
are faced with the grim calculus of trading
off health for the economy which is in
lockdown or partial lockdown. Coherent
national strategies, backed by regional
cooperation efforts, offer a way forward
for economic recovery in South Asia.
South Asia faces two major challenges
at this juncture. First, is to tackle the
public health emergency related to the
spread of coronavirus (COVID-19). Saving
lives and not overburdening under-
developed health systems are important
concerns of governments. Second, is to
save the regional economy from an eco-
nomic downturn and deep recession due
to the effects of the Covid-19 pandemic
and the global and regional lockdown.
The present health cum economic crisis
throws up some important issues for
public policy in South Asia. If the spread
of the virus and the consequent loss of
life is minimised, either through newly
invented vaccines or medicines, economies
may rebound sharply. Countries are, there-
fore, heavily engaged in inventing the
vaccines or exploring access to them once
they are invented, as well as injecting
countercyclical fiscal and monetary stim-
ulus measures. Both pathways are critical
to support possible recovery in South
Asia in late 2020 and 2021.
The experience of some better-devel-
oped East Asian countries in managing
COVID-19 offers some insights for South
Asia (such as enforcement of individual
quarantine, early border controls, mobi-
lisation of industry and focused economic
measures), but these need to be tailored to
the circumstances of South Asian countries
(Duchatel et al 2020). The subtle nuances
relating to public policy choices to tackle
the pandemic in South Asia have moti-
vated us as an informal group of South
Asian scholars to debate these issues and
to write this article. It discusses challenges
and policies relating to macroeconomics,
health, economic sectors, stimulus meas-
ures, and reforms, which are all crucial
for the region’s recovery.
Challenges
Health hazard: COVID-19 has sparked
both a public health emergency and an
economic shock in South Asia. As of
2 August 2020, South Asia accounted for
13.17% of global cases, while the United
States accounted for 26.38%, and the
European Union for 7.92% (John Hopkins
University & Medicine nd). On 15 April
2020, South Asia accounted for only
0.99% of the global cases. This suggests
that Covid-19 cases in South Asia have
increased rapidly over a period of three
and a half months. Also, because of its
underdeveloped health system, the public
health crisis will likely be prolonged in
South Asia. Furthermore, testing across
South Asian countries remains inadequate
in relation to needs (Table 1, p 14). Barring
Bhutan, the rest of South Asia lags behind
the East and South East Asian average
significantly in terms of tests, hospital
beds and public health expenditure. These
differences in health outcome indicators
may reflect different development policy
priorities accorded to economic growth
versus human development (including
public health provision) in South Asia
and East Asia. There is clearly a need for
urgent public policy interventions to
narrow the gaps in the health sector
within South Asia.
Macroeconomy: South Asia has moved
from the fastest-growing region in the
world in 2019 to a slow-growth scenario in
2020. Many economies may face negative
per capita income growth in 2020 due to
the coronavirus pandemic (IMF 2020a).
Furthermore, in its recent forecast, the
World Trade Organization (WTO) indicated
a fall in world trade between 13% and
32% in 2020, perhaps, the highest fall

2. COMMENTARY
november 21, 2020 vol lV no 46 EPW Economic & Political Weekly14
since the Great Depression of the 1930s
(WTO 2020). In its June 2020 Global Eco-
nomic Prospects, the World Bank indi-
cated a very slow recovery of South Asia
in 2021 with negative growth in several
countries (Figure 1) (World Bank 2020a).
Economic sectors: All South Asian
countries are suffering from the collapsing
of trade, investment and tourism. Stock
markets have tumbled and business con-
fidence is vanishing. Daily life has been
disrupted and millions face poverty.
In Afghanistan, the outbreak of the
pandemic has and will further suppress an
already sluggish economy. The economy
may contract by 3%–8% in 2020. Infla-
tionary pressures are mounting as a result
of disruption in trade and supply chains.
A sharp decline in revenues has exposed
the country to a fiscal crisis. Un(der)em-
ployment (39.5% in 2017) and poverty
(54.5% in 2017) are projected to increase
to respectively 53.5% and 80% by the
end of 2020 (Biruni Institute 2020).
In Bangladesh, all the drivers of Bang-
ladesh’s economy have been severely
affected during this economic crisis. These
include the export sector—especially the
garment industry, remittances, domestic
industries and services, agriculture, poul-
try, fisheries, and especially small and
medium enterprises. In the fiscal year
ending June 2020, total exports declined
by around 18%. The poverty rate is feared
to increase to around 40% from around
20% in 2019. Considering the dynamics
of the crisis so far, it is obvious that this
crisis is going to leave a big mark on the
economic growth and social achievements
of Bangladesh (Raihan et al 2020).
In Bhutan, from tourism to trade, the
COVID-19 crisis is affecting the livelihoods
of many. Bhutan’s tourism sector remains
among the hardest hit. Initial reports indi-
cate that the temporary restriction on
tourism has affected the livelihoods of
some 50,000 Bhutanese, working in the
sector, including hoteliers, travel agents
and tour guides (UNDP 2020).
In India, with the imposition of restric-
tions on transportation worldwide, exports
and imports saw a drastic fall in the
country especially in the case of essen-
tial commodities, such as petroleum, food
crops, and coal, among others. The growth
rate of the automotive business in India
was expected to be the most adversely
affected, followed by the power supply and
information technology sectors. Further-
more, many start-ups, micro, small and
medium enterprises (MSMEs) in India are
expected to face issues of supply disruption
and a decrease in demand (Keelery 2020).
Coronavirus has hit Maldives’ lucra-
tive tourism industry. Tourism, directly
and indirectly, accounts for nearly two-
thirds of the country’s gross domestic
product (GDP). The industry also employs
the single-largest proportion of the
Maldivian workforce (Sharma 2020).
Nepal is feared to experience a 14%
reduction in remittances in 2020, which
will lead to a significant reduction in
foreign exchange earnings for a country
heavily dependent on remittances (World
Bank 2020b). A large number of migrants
are likely to return home, which, with the
inability to absorb them in the job market,
will create serious socio-economic prob-
lems. Also, travel and tourism, contribut-
ing around 4% to Nepal’s GDP and 3% to
total employment, is one of the most
affected sectors (ADB 2020). The hotel and
restaurant sector in Nepal seemed to
contract by 16.3% in the fiscal year that
ended on 15 July 2020.
In Pakistan, major crops, the livestock,
fruits and vegetable sector supplies are
affected. In the large-scale manufacturing,
sectors producing both tradable and non-
tradable goods have been equally hit
(Javed and Ayaz 2020). The halt in con-
struction activities (now gradually being
opened) resulted in the closure of basic
and allied industries related to construc-
tion. This, of course, had implications for
daily wage workers and those providing
services in the informal sector. Ongoing
concerns relate to drastic slowdown in
small and medium-sized enterprises
(SMEs) sustainability and operations in
the face of expected future rounds of
Covid-19. While exporters from textile
and garments sector are looking to pivot
and diversify towards production of per-
sonal protective materials, unfortunately
lesser options for pivoting are available
to other export-oriented industries such
as leather, surgical, sports, agro and
food processing. The consumption levels
and ultimately aggregate demand in the
economy could remain depressed for a
longer time if remittance and migration
outlook globally remains uncertain.
As a classic small open economy, Sri
Lanka has seen a broad hit across the
economy affecting swathes of manufac-
turing and services. The most affected
sectors are tourism, apparel exports, retail
(non-essential goods), the financial sector,
transportation, construction, and infor-
mation technology (IT)/business process
outsourcing (KPMG 2020). Interestingly,
agriculture and agri-food processing for
Table1:COVID-19TestsandHealthSectorin
SouthAsianandComparableCountries
Total Hospital Public Out-of-Pocket
Tests Beds Health Expenditure
per1,000 per1,000 Expenditure (%ofCurrent
Peoplea Peopleb (%of Health
GDP)b Expenditure)b
South Asia
Afghanistan 2.3 0.5 0.6 75.5
Bangladesh 7.2 0.8 0.4 73.9
Bhutan 17.9 1.7 2.4 13.3
India 14.4 0.5 1.0 62.4
Nepal 12.5 0.3 1.2 57.8
Pakistan 9.1 0.6 0.9 60.2
Sri Lanka 7.6 3.6 1.6 49.8
Average for
South Asia 12.8 0.6 0.9 62.5
East and South East Asia
China 62.8 4.2 2.9 36.1
South Korea 30.7 12.3 4.4 33.7
Indonesia 5.6 1.0 1.4 34.6
Malaysia 30.2 1.9 2.0 37.9
Philippines 14.0 1.0 1.4 53.0
Thailand 10.3 2.1 2.9 11.1
Average for
all East and
South East Asia 43.3 4.2 4.4 27.0
Europe
France 45.6 5.9 8.7 9.4
Italy 114.4 3.2 6.5 23.5
United
Kingdom 239.7 2.5 7.6 16.0
Sources: a: https://ourworldindata.org/coronavirus-
testing, Ministry of Health, Sri Lanka, Ministry of Health,
Nepal and various newspaper links (as on 2 August 2020).
b: World Bank, World Development Indicators (data for the
most recent year).
Figure1:ProjectedGDPGrowthRatesin
SouthAsianCountries
Source: World Bank (2020a).
Afghanistan
Bangladesh
Bhutan
India
Maldives
Nepal
Pakistan
SriLanka
10
5
0
-5
-10
15
2021
2020
GDPGrowthRates(%)

3. COMMENTARY
Economic & Political Weekly EPW november 21, 2020 vol lV no 46 15
the domestic market have done relatively
well, bolstered by reasonable weather.
Exports of tea, coconut products, sea food
and spices have grown in response to
notable external demand and some large
apparel firms are switching lines to make
personal protective equipment such as
face masks, protective suits and surgical
gloves. E-commerce and some IT-related
services are also expanding due to
changes in the buying habits of consumers
and business practices.
The Way Forward
At the time of writing, it is uncertain
whether South Asian countries are likely
to experience a rapid V-shaped economic
recovery in 2021 or whether recovery
will be slow with a prolonged period at
the bottom of a U-shaped trajectory
(Wignaraja 2020). The projections by
international organisations, like the
International Monetary Fund (IMF) and
the World Bank, are rather pessimistic
both for 2021 and 2022. The prospects
for recovery in South Asia, however, are
closely linked to effectively managing
the health hazard of COVID-19, reducing
business uncertainty, resuming domestic
economic activities, and reviving global
demand. By focusing on the policy steps
ahead, governments of South Asian
countries can increase the likelihood of
recovery within a reasonable time span.
Stimulus measures: Fiscal and monetary
stimulus measures, tailored to national
circumstances, can mitigate long-term
economic damage in South Asia. The
pandemic has affected every sector of
the economy and every segment of the
population in South Asia. All the national
governments in the region have an-
nounced, albeit in varying degrees, fiscal
and monetary relief measures to respond
to damages wrought by the pandemic.
These include, on the fiscal front, cash
transfers and direct food assistance to
the poor, wage support to workers, sub-
sidies on electricity usage, and so on.
Similarly, on the monetary front, some
of the important measures taken are re-
ductions in repo rate, cash reserve ratio
requirements, and interest rates, deferrals
on interest payments, etc. Given the
limited financial resources of South Asian
countries, their relief packages are modest
compared to those of developed countries.
Afghanistan is a heavily aid-reliant
and import-dependent economy. The
pandemic is already affecting aid pre-
dictability. The Afghan government has
allocated about $500 million to deal with
the crisis, supported by donor grants
and concessional credits. The need for an
emergency support programme to house-
holds is enormous, and the government
has designed a $300 million project
(REACH: COVID-19 Relief Effort for Afghan
Communities and Households) to distri-
bute in-kind food supplies to poor house-
holds. However, the type and the struc-
ture of the programme, which currently
relies on in-kind distribution of food,
needs to be seriously reconsidered for
the reasons of efficiency, effectiveness,
value-for-money, and transparency.
Bangladesh, as of 14 May 2020, an-
nounced a $11.7 billion stimulus package
to support the economy, with a primary
focus on supporting the manufacturing
and service sectors, agriculture and social
safety nets. This support package is equiv-
alent to 3.7% of the GDP. The central bank
has also taken several steps to inject
liquidity in the banking sector (reducing
the cash reserve ratio and repo rates,
purchase of bonds and bills), delay non-
performing loan classification, relieve late
fees for credit cards, extend tenures of
trade instruments, and ensure access to
financial services to deal with the urgent
scenario (Haque and Mourshed 2020).
The Bhutan government wants to con-
tinue construction of hydropower projects
to minimise the impact of COVID-19 and
revive the land-locked country’s economy.
India responded by unveiling a $262
billion stimulus plan, amounting to 10%
of the GDP, providing direct cash trans-
fer to poor senior citizens and women
and free foodgrain and cooking gas
to give relief to the millions hit by the
lockdown. The central bank cut the key
interest rate. Also, a moratorium on
repayment of loans for three months
had been provided.
The Maldives government has an-
nounced an emergency $161.8 million
stimulus package, which includes $100
million in emergency loans for businesses
to meet short-term working capital needs,
and $2 million short-term financing
facility for the tourism industry.
The Nepal government has prioritised
health in the recently unveiled budget
for the fiscal year 2020–21. It has also
planned to create 7,36,000 jobs in the
agriculture and construction sectors and
provide vocational trainings and seed
capital to youth, among others. To sup-
port enterprises affected by lockdowns
ensued by the pandemic, the government
has announced, through the monetary
policy, enlarging the refinance funds by
five times up to about Nepalese rupee
(NPR) 200 billion, and the creation of a
special fund, particularly to support SMEs,
worth NPR 50 billion. It has announced
that the interest rates on loans provided
through these funds will not exceed 5%.
In Pakistan, the government announced
a rescue package of around $12.2 billion
for businesses, SMEs and vulnerable peo-
ple, and announced concessional loans
for businesses. The country’s largest social
safety nets programme—Ehsaas—dis-
bursed `81 billion among 6.6 million
deserving families to cover their liquidity-
related constraints. The actual welfare
impact of such spending will critically
depend upon the reform in disbursement
mechanisms of the existing and new forms
of payments to the poor. For revival of
jobs, a package for the construction sec-
tor has been announced and the govern-
ment sees the federal budget for the fiscal
year 2020–21 as an opportunity to intro-
duce greater redistribution through a re-
formed fiscal policy. Pressures on local
resources have subsided to an extent with
IMF allowing rapid finance instrument
facility and other multilateral develop-
ment partners also contributing to the
Pakistan Pandemic Response Plan.
Sri Lanka’s interim government is yet
to mount a major fiscal stimulus package
owing to difficulties in passing a national
budget until after parliamentary elections
on 5 August 2020. Accordingly, the country
has relied heavily on a monetary stimulus,
an activist Central Bank, trade policy
actions and some social protection meas-
ures. In order to lift liquidity constraints
and alleviate exchange rate pressures, the
Central Bank of Sri Lanka lowered policy
rates by 200 basis points across three
rate cuts since March. On 31 March 2020,

4. COMMENTARY
november 21, 2020 vol lV no 46 EPW Economic & Political Weekly16
the Central Bank of Sri Lanka also an-
nounced a $250 million refinancing fa-
cility for banks, enabling them to ex-
pand their lending capacity to businesses,
offer loan repayment moratoriums for six
months and provide working capital at
subsidised interest rates. To stabilise
foreign exchange reserves, import restric-
tions of some items, including agricultural
products were introduced on 19 March
2020, banks were prohibited from financ-
ing vehicle imports and outward remit-
tances were suspended. Furthermore,
emergency relief (totalling around 0.2%
of GDP) to around 5.7 million vulnerable
households was provided in the form of
monthly payments (LKR 5,000, approxi-
mately $26), food allowances and con-
cessional loans (IMF 2020b).
The success of the aforementioned
stimulus packages in the South Asian
countries will depend on three aspects—
financing, management and monitoring.
In the case of financing, given the likely
scenario of reduced government revenue,
it is necessary to suspend “unnecessary”
or less important projects of the govern-
ment. Also, borrowing from international
organisations, such as the World Bank,
IMF, Asian Development Bank and Asian
Infrastructure Investment Bank should
be explored. It is additionally opportune
for governments to revitalise existing
mechanisms under the South Asian
Association of Regional Cooperation, like
the SAARCFINANCE Forum, to exchange
ideas on stimulus measures and finance
where possible. In this vein, on 24 July
2020, the Central Bank of Sri Lanka and
the Reserve Bank of India entered into a
$400 million swap under the Framework
on Currency Swap Arrangement for SAARC
countries. Proper management of the
stimulus package is also very important.
There is a need for efficient supervision—
who will get the money and how. The
government needs to ensure transparency
and accountability in this whole process.
Without proper monitoring of the use and
management of stimulus package funds,
its purpose will be severely hampered.
Improving public health systems: The
crisis caused by COVID-19 has shown us
that investing in South Asia’s underdeve-
loped and overstretched health systems
is essential. Reflecting a history of
chronic underspending on public health,
lags behind others. For instance, in 2017,
South Asia spent only 0.9% of its GDP on
public health, which is half the figure for
sub-Saharan Africa (1.9%) and one-fifth
of that of East Asia and South East Asia
(4.4%). As Table 1 shows, strikingly,
Afghanistan, Bangladesh and Pakistan
even spend below the regional average.
The out-of-pocket health spending in most
South Asian countries is exceedingly high
in comparison to countries from East
and South East Asia. The pandemic has
exposed the dilapidated state of public
health services in most South Asian coun-
tries to the detriment of the region’s poor
and middle class. This has led to excess
demand for private healthcare services
from a relatively small private healthcare
sector. However, the cost of private hos-
pitals and healthcare services tends to be
prohibitively expensive and there is a lack
of accountability. It is also important to
keep in mind that with the expected signi-
ficant increase in public expenditure
in the health sector, transparency and
accountability in spending as well as
value-for-money services must be ensured.
With limited doctors, drugs and hospital
beds to cope with the pandemic, South
Asia should target a gradual increase in
public health spending to about 4% of
the GDP. Furthermore, the region should
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5. COMMENTARY
Economic & Political Weekly EPW november 21, 2020 vol lV no 46 17
invest in technologies to improve public
health efficiency, such as 24/7 helplines
that work and telemedicine to treat mild
cases as well as ambulances to ferry
serious cases to hospital. Rural- and com-
munity-based primary healthcare systems
should also be upgraded. Timely public
health investments will not only build
capacity in South Asia to deal with the
COVID-19 pandemic but also provide
insurance against future pandemics and
other health problems. Indeed, recent
research argues that the risk of pandem-
ics and ageing-related disease is on the
rise globally and that relatively smaller
investments in preventive measures could
substantially reduce the economic damage
caused by future pandemics (McKinsey
Global Institute 2020).
Reforms for pro-poor growth: Reforms
should focus on pro-poor growth. The
closure of manufacturing and services
activities across South Asia means rising
job loss and pay cuts for workers. House-
hold income of the poorest households,
linked to tourism, remittances and in-
formal sector activity, will be hard hit. A
protracted COVID-19-driven crisis may
threaten food security, particularly for
the most vulnerable and in least devel-
oped countries like Afghanistan and
Nepal. The progress that South Asia has
made in reducing poverty over the years
could be reversed by the current pandemic.
Therefore, after tackling the immediate
pandemic threat and putting in place
economic stimulus measures, attention
should focus on the more difficult issues
of formulating and implementing reforms
for pro-poor growth in all South Asian
countries. Such reforms should tackle
the challenging issues of agricultural
productivity and food security, targeted
social safety nets, women’s empowerment,
and small enterprises. These measures
will help mitigate the impact of the eco-
nomic crisis on the poor in South Asia.
Also, the country experiences in South
Asia suggest that there are problems of
coordination among health policy, lock-
down measures and economic policies in
most of these countries. Efforts should
also continue to improve the investment
climate in South Asia, including cutting
redundant red tape affecting business
(in areas such as tax collection, land for
business purposes, customs and local
government permits) and digitisation of all
public services. Improving the investment
climate would show that South Asian
countries are fully supportive of business
efforts to revive economic activity, foster
growth and create jobs.
Proper steps for opening up of the
economy: Lockdowns and social dis-
tancing measures interrupt transmission
of the virus and save overstretched health
systems from collapse. But a prolonged
lockdown risks causing significant eco-
nomic damage and personal suffering.
This is particularly so in South Asia,
which is unable to offer costly social
protection measures (such as unemploy-
ment benefits and universal healthcare)
feasible in developed countries. However,
lifting of lockdowns should be carefully
planned as ad hoc opening up could
encourage the spread of the virus and
induce huge health and economic costs in
the near future and may even lead to the
reimpositionofmorestringentlockdowns.
There is a need to develop and imple-
ment region-wise and sector-wise health
protocols for opening up of economic
activities along with the mandatory use
of face masks, an increase in testing ca-
pacity and more use of individual self-
quarantine practices in South Asian
countries.
Regional cooperation: In South Asia,
despite significant potential, regional
integration and cooperation processes
have been limited to date. A serious lack
of mutual trust among most of the South
Asian countries has constrained region-
alism in South Asia. However, a public
health emergency and economic crisis
like the one brought by COVID-19 provide
an opportunity for countries to work
together for the common good of all
South Asians.
First, South Asian countries need to
share their experiences of the national
policy measures to combat the crisis.
The SAARCFINANCE Forum, which was
established in 1998 as a regional network
of the SAARC Central Bank Governors
and Finance Secretaries, should be reac-
tivated. Though the primary function of
the network is to conduct a dialogue on
macroeconomic policies of the region and
share experiences and ideas of the member
countries, the forum has been suspended
since 2014 with the deadlock in the
SAARC process. As the Prime Minister of
India, in a video conference with SAARC
leaders on 15 March 2020, proposed an
emergency COVID-19 fund for SAARC
countries, the time is ripe to revitalise
the SAARCFINANCE Forum to discuss how
this emergency fund can be established
and operationalised. The SAARC COVID-19
emergency fund could be a useful build-
ing block to revive regional cooperation.
At the senior officials’ level, discussions
were also held on health issues arising
from the transit of goods and people as
well as fostering intra-regional trade.
The SAARC Comprehensive Framework on
Disaster Management provides a road
map for cooperation in natural disasters,
including pandemic like COVID-19.
Second, no country in this region
can boast to have health systems which
comprehensively cover the needs of its
citizens. Therefore, there is a case to
strengthen health sector trade value
chains in the region. In this regard, lib-
eralisation of trade in health services is
recommended; while countries in the
region will have to invest in national
public healthcare capacities in the medium
to longer term, they can explore the use
of the pool of doctors, nurses, medical
facilities, generic drugs and experience
available in this region to help each other.
Under the SAARC process, there is a forum
for a meeting of SAARC health ministers.
One may recall that in the wake of the
outbreak of the severe acute respiratory
syndrome epidemic, an emergency meet-
ing of SAARC health ministers was held
in Malé in April 2003 to develop a re-
gional strategy to deal with the deadly
epidemic. Between 2003 and 2017, there
were six meetings of the SAARC health
ministers. A promising sign of potential
regional cooperation occurred on 26
March 2020, when senior health profes-
sionals of all SAARC countries met by
videoconference and agreed that India
will share online training tools for
emergency responders and set up an
electronic disease surveillance platform
to help neighbouring countries trace and

6. COMMENTARY
november 21, 2020 vol lV no 46 EPW Economic & Political Weekly18
manage the coronavirus outbreaks. The
SAARC’s Disaster Management Centre,
which is housed in the campus of the
Gujarat Institute of Disaster Management
in India, has also set up a COVID-19 web-
site with daily updates about confirmed
cases throughout South Asia and national
actions. Furthermore, India has provided
training on management of Covid-19
pandemic for healthcare professionals
from SAARC countries since 17 April 2020.
Third, given that the global supply
chains have been severely disrupted in
several sectors, South Asian countries
should explore business opportunities
for localisation and regionalisation of
supply chains according to comparative
advantage. The current crisis highlights
the risk of over-reliance on a few countries,
both for exports and imports. Despite the
huge potential for intra-regional trade,
South Asian countries have been unable
to exploit this potential due to factors such
as non-tariff measures, opaque investment
rules, underdeveloped regional trade
logistics, weak supply capacity and po-
litical conflicts. The current situation
underscores the need for official dialogue
on how to promote regional economic
integration through supply chains in
South Asia in this COVID-19 era. Think
tanks can provide useful analytical work
to underpin such discussions.
Fourth, scarcity of resources in the
region for investment, at this point, may
slow down economic recovery. South
Asian countries are not in a position to
bail out national economies with just in-
ternal resources. Therefore, a calibrated
approach is needed to utilise foreign
investments in the areas like healthcare,
disease control and disaster management,
food security, infrastructure development,
etc. It is for that reason that some South
Asian countries are looking to Chinese
inward investment. It seems equally im-
portant that South Asian countries take
steps to promote intra-regional investment
through regional cooperation efforts.
Finally, the SAARC process and the SAARC
secretariat need to be rejuvenated. The
crisis brought by COVID-19 underlines the
importance of efforts to deepen regional
cooperation in South Asia. Cooperative
efforts to work together to tackle the public
health emergency could re-emphasise
the economic benefits of regional coop-
eration at least in limited areas such as
public health and management of natural
disasters. Over time, improved trust and
demonstrated benefits of regional coop-
eration could provide an incentive for
countries in South Asia to make sincere
efforts to put aside their political differ-
ences which hamper the development of a
broader agenda for regional cooperation.
Concluding Remarks
The COVID-19 pandemic has exposed
fragilities in health and national economic
systems in South Asia, which additionally
lacks the supportive buffer of shared
resources, mechanisms and expertise that
close regionalism can bring. The public
health crisis, lockdowns and economic
slowdown in the wake of COVID-19 are
disrupting economic activities and in-
creasing poverty on an unimaginable
scale across the region. Governments in
South Asia are responding nationally on
the public health and economic fronts
with varying degrees of effectiveness.
However, there is a need for a stronger
coordination among health mitigation
policies, lockdown measures and eco-
nomic recovery policies among the South
Asian countries. The recent effort at re-
gional cooperation is a good beginning
to share responsibilities and to reactivate
the SAARC process, which may help miti-
gate a prolonged downturn. The process
of trust-building can be enhanced by the
regular regional dialogue of governments
and relevant stakeholders to strengthen
SAARC cooperation in the COVID-19 era.
Think tanks in South Asia region can be
tasked with relevant research and advoca-
cy. To tackle the pandemic and economic
crisis, South Asia needs to ramp up its
response. Working together offers the best
hope for the region to succeed.
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