India’s Central Bank Governor Shaktikanta Das has said that regional economic cooperation among South Asian economies will help the governments in the region counter global economic headwinds.
The Central Bank chief noted that in spite of the global headwinds, India, Bangladesh, and the Maldives are projected to be the fastest-growing economies globally this year.
Das said that New Delhi had also started to “move forward” on a proposal to introduce the Central Banking Digital Currency (CBDC).
He said the measure would also help enhance “cooperation” among the regional economies.
Citing World Bank estimates, the Central Bank chief noted that trade among South Asian countries was just a fifth of its overall potential at present, resulting in an annual average shortfall of $44 billion.
According to Das, a “common electricity market” in South Asia is needed in order to achieve economic integration, which he said would save governments around $17 billion annually. India and Bangladesh have already decided to link their national electricity grids, he added.
Further, Das said that enhanced investments in transport and logistics would reduce the costs of cross-border trade in the region.
Das spelled out six key policy priorities for South Asian governments – taming inflation, managing external debt vulnerabilities, raising economic productivity, strengthening intra-region energy cooperation, green energy transition, and promotion of tourism.
Das noted that
food inflation in the first three quarters of 2022 in the South Asian region averaged around 20 percent.
With regards to rising external debt in the region, Das underscored that foreign debt of low and middle-income nations surged by $1.1 trillion between 2019 and 2021. He noted that several South Asian countries, which include Sri Lanka and Pakistan, have been reeling from the impacts of high debt burdens.
Further, Das said that enhancing energy cooperation among the nations would help them counter global volatility in energy prices caused by external factors.
The RBI governor noted that the South Asian region was one of the most “vulnerable” across the world to climate change. “The South Asian region must strengthen cooperation to make green transition of the region faster and at reasonable cost,” Das concluded.