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Kovid Kumar asked: How do we achieve economic integration in South Asia?

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  • Nitya Nanda (Fellow, TERI) replies: The question presumes that the level of economic integration in South Asia is very low compared to other regions of the world. This may appear so if one looks at the intra-regional trade in South Asia which is very often considered an indicator of regional integration. But this may not be the right indicator to measure the level of economic integration in South Asia due to its extremely skewed size distribution in the region as well as due to the fact that most countries do not share border with each other. In fact the level of trade integration of Nepal, Bhutan, Bangladesh and Sri Lanka is reasonably high with India. Indian investment is also quite high in these countries except Bangladesh. Thus even higher level of integration can happen only if there is better relationship between India and Pakistan. This will strengthen economic ties not only between India and Pakistan but also between India and Afghanistan as well as Pakistan and Nepal. There can also be sectoral cooperation, particularly in the fields of energy, telecom, transport, information technology and education. Economic integration also requires greater movement of people. As of now people can move freely betwen India and Nepal and India and Bhutan. Indians also get visa on arrival in Sri Lanka. India can also offer similar facility to Sri Lankans. Making movement of people between India and Bangladesh easier should not be too difficult. Overall, I would argue that the level of economic integration is not as low as is often made out to be. But the the key to furthur economic integration lies in the domain of politics, particularly in India Pakistan relationship.