The political economy of South Asia cannot be fully understood without recognizing the benefits of engagement with India. Read more
At first glance, the struggling countries of South Asia may seem like a formidable threat to Indian stability. But a closer look reveals that the region's uncertainty could be a silver lining for India. From the textile and sports hubs of Tirupur and Jalandhar to the seafood exporters of Andhra Pradesh and Gujarat to the lush tea plantations of Assam, Indian companies are increasingly positioning themselves to outperform their South Asian peers.
The turmoil enveloping South Asia is like an economic neutron bomb: it will spare physical infrastructure but will devastate exports and jobs.
For global investors, the map of South Asia now highlights one destination: India's $3.2 trillion economy, growing at a robust 7 percent, remains the only country capable of absorbing significant capital inflows and foreign direct investment.
India's strategically calibrated economic reforms have strengthened its already significant competitive position, enabling it to outperform its neighbors. An implicit economic Monroe Doctrine seems to be in place, and India's hegemony in the region is unchallenged.
No China option
Attempts by South Asian countries to circumvent India through Chinese aid have so far proven to be costly miscalculations.
China’s development paradigm, premised on building huge physical infrastructure – ports, roads, energy projects – assumes that investment and consumer demand will arise naturally. Indeed, Sri Lanka and Pakistan are building such infrastructure at a rapid pace, but with little corresponding economic vitality. Much of this construction is proving to be burdensome liability rather than true investment, as is the case with Pakistan’s Gwadar port, where ships rarely depart. The Maldives is finding that a sustainable economic situation is impossible without India, and even drinking water must be sourced from India.
Thus the rest of South Asia faces a conundrum: Bangladesh, once a model of economic dynamism, is now gripped by the twin threats of Islamic extremism and military rule that threaten to scare away investors, Pakistan is struggling under the weight of huge domestic and international debt, and Nepal's economy has yet to find a sustainable growth trajectory.
Political resistance to partnering with India is evident across the region, from Sri Lanka to Afghanistan.
Prosperity will therefore not come without economic cooperation with India. The political economy of South Asia cannot be fully understood without recognizing the benefits of engagement with India. South Asian political leaders and their supporters face a stark choice: persist in anti-India rhetoric and tolerate continued poverty, or integrate into India's fast-growing economic engine.
The author is a senior journalist with expertise in the defence field. The views expressed in the above article are the author's alone and do not necessarily reflect the views of Firstpost.
