South Asian infrastructure a 'roadblock to growth'

Will Green is news editor of Supply Management
3 October 2018

South Asia needs to spend almost 9% of its GDP up to 2030 on infrastructure to sustain growth and tackle climate change, according to a report.

In the report the Asian Development Bank (ADB) said India alone needed to invest $260bn to address its infrastructure challenges.

“Unless it takes urgent steps, South Asia’s existing infrastructure could soon prove to be a roadblock in sustaining its growth momentum and addressing poverty and inequality,” said the report.

The ADB said there were “large deficits” in transport and connectivity, “poor logistical performance” at borders and ports and a “consistent deterioration over the last decade” in the quality of roads due to lack of maintenance.

The report said South Asia, which includes Afghanistan, Bangladesh, Bhutan, India, Nepal, Maldives, Pakistan, and Sri Lanka, lagged behind other regions such as East Asia, Latin America and the Caribbean.

“Sectors such as mobile cellular subscriptions and sanitation facilities surpass the performance of only sub-Saharan Africa,” said the report.

In 2015, only 56% of South Asian residents used a safely managed drinking water service, compared to 71% of the global population, said the ADB.

“With only 48% of its population having access to at least basic sanitation services, that is, use of facilities not shared with other households, South Asia performs worse in this respect than all other world regions except sub-Saharan Africa,” the report said.

The report said only about 60% of people in Bangladesh and 80% in India had access to electricity.

Firms in South Asia experienced on average 25 power outages a month, compared with 2.2 in Latin America and five in East Asia. It has been estimated such power outages reduce revenues in India by 5-10%.

The ADB said South Asia needed to leverage private sector finance to improve its infrastructure and make more efficient use of public budgets. There were also challenges around corruption in procurement. “Corrupt practices are found to pervade publicly provided infrastructure services from the planning stage through to service delivery,” said the report.

“Globally, about 30% of potential benefits from infrastructure investment is lost due to inefficiencies in investment planning and implementation. Closing this efficiency gap could yield twice the output bang for public investment expenditures.”

The ADB added: “Despite decades of investment, the state of infrastructure in South Asia continues to remain wanting in comparison with global standards, deterring private investors.

“Insufficient and low quality infrastructure services act as major impediments to business growth, thus affecting the rate of investment and capital formation.”

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