Forbes 2016 has listed 100 dollar billionaires in India. It is high time that these super rich began giving serious thought to the fate of South Asia for their own business interests. We ask them not just to speak out against bad governance but assume transformational leadership of the process of economic integration in South Asia. This is a must to rescue the South Asian Association for Regional Cooperation (Saarc) from its precarious position of being a near-failed regional organisation, led by politicians and bureaucrats (G2G), and help it become a global economic superpower by 2050. A lot will depend on how businesses address collective challenges through their federations (B2B).

Strident inequality

The sad reality remains that South Asia suffers from jobless growth, and no more than 10-12 percent of the population is in the middle-income category. Around 25 million youths require jobs annually for which a sustained 7-8 percent gross domestic product (GDP) growth rate is necessary. South Asia’s economy requires seamless growth with the capability for inclusiveness. But this is possible only through a robust public private partnership (PPP) where the entrepreneurial spirit can get traction from policy establishment.

There is no doubt that globalisation has helped to lift many of the poor out of mass hunger, illiteracy, deprivation, ill health and early death, but it has occurred at the cost of rising inequality between classes, castes, regions and races. In India, it is reported that 57 billionaires own wealth equal to the bottom 70 percent of the nation’s population. Inequality is more strident. For a country driven by the ideology of socialism since independence, capitalism will come under more vigorous attack than elsewhere in the world. Just 1 percent holding 58 percent of the nation’s wealth is a stunning shocker that no amount of corporate social responsibility (CSR) endeavours can redeem. No amount of poverty eradication is going to turn the tide of the aspiring middle class faced with a jobless growth rate and ill equipped with skills required for the jobs available.

In 2016, Oxfam, a grouping of charitable organisations, predicted that “over the next 20 years, 500 people will hand over $2.1 trillion to their heirs—a sum larger than the GDP of India, a country of 1.5 billion people”. Will the world’s polity idly stand by such ‘sovereign individuals’ and the financial capitalism that globalisation has driven us to? Is this the desirable form of globalism towards which the globalisation process is leading us?

Our billionaires must keep uppermost in their hearts and minds that the kind of globalisation by which we have been driven since 1990 in South Asia is fundamentally anti-agriculture and thus anti-poor. As early as 1992, the Saarc Independent Commission on Poverty Alleviation in its report entitled ‘Meeting the Challenge’ remarked that the globalisation being promoted by the West and multilateral institutions was like walking on one leg as perceived from the world of the poor, especially the poorest of the poor.

Rapid transformation

For modernity to be a social reality in South Asia, more than 60 percent of the population in the rural sector must be rapidly transformed into the middle class by creating new urban and semi-urban centres. Top priority should be given to farm modernisation, and drastic reforms should be made in the agricultural wholesale and retail markets so that middlemen do not benefit illegally by exploiting both farmers and consumers. Alone, this will not suffice since South Asia needs to have 25-30 percent of its GDP in manufacturing be able to cater to the job demands and take advantage of our demographic dividend.

All the above naturally calls for leadership from India’s business houses to think and act regionally and sub-regionally. After all, 77-80 percent of the regional GDP lies in India. The progress of the World Trade Organisation (WTO) has been slow for years due to its inability to arrive at a multilateral agreement over agriculture and rural development with the collapse of the Doha Round. Structural stagnation of industrial Japan and the European Union (EU) and a similar tendency in North America has meant that growth has to be generated by China, South East and South Asia for continued global prosperity.

Let’s consider how India’s billionaires might embark on this hard mission for the integration of the South Asian economy. This can be continued on the South Asian Free Trade Area (Safta), but will need to be combined with other initiatives, as it will be far too slow and cumbersome to have a transformational impact by itself. The other front is to revive the Saarc Preferential Trade Arrangement (Sapta). It has all the needed provisions for moving from traditional thinking along the lines of comparative advantage and competitive advantage to supply chain formation and management regionally and sub-regionally. The foremost advantage of Sapta is that it permits sectoral integration which is not permissible with Safta. 

How should the billionaires proceed with negotiations within the Sapta agreement? They may negotiate selected products within sectors with potential comparative and competitive advantage globally, regionally and sub-regionally in each Saarc member state which needs to be scaled up while keeping in mind the need to avoid inter- and intra-regional and sub-regional competition. 

What we are aiming to propose is an integrated regional economic model that can help to bring back our workers from West Asia to serve in the region. They will gain untold benefits and they will be able to escape the exploitation they are currently facing. It may be recalled that as far back as 1984, Sri Lanka’s foreign minister ACS Hameed proposed that we should think of creating regional joint ventures (RJVs) for commodities to access each other’s and global markets. And for this purpose, independent corporations supported by all governments was proposed as the modality. Now, perhaps, the private sector has become sufficiently mature to develop this concept.

Rana is an economist and a former finance minister of Nepal; Thakur is a New Delhi-based public policy professional and columnist