South Asia is at a historic moment of transforming the economic conditions of its people and playing a leadership role in the global economy. For the first time in the last three centuries, the global economy is undergoing a shift in its centre of gravity from the continents of Europe and North America to Asia. If present trends of GDP growth in China, the USA and India respectively continue, then in the next 25 years, China will be the largest economy in the world and India the third largest after the USA. If South Asia achieves economic integration it could emerge as the second largest economy in the world. Thus South Asia together with China could become the greatest economic power house in human history. The challenge before the political leadership of the various SAARC countries is to actualize this great potential for together transforming the material conditions of their people and performing a leadership role in building a better world. It is in this context that the 17th SAARC Summit in Addu (Maldives) on the theme of “Building Bridges”, gains significance. 

Five inter-related policy challenges need to be addressed at the individual country level on the basis of regional cooperation within the SAARC framework:

1. Rapid implementation of free trade and investment envisaged in the SAFTA agreement needs to be undertaken. Inspite of commendable recent progress, South Asia remains the least integrated region in the world. Intra regional trade as a share of total trade in South Asia remains at about 5 percent which is the lowest for any region in the world. Other measures of integration such as cross border investment; cross border movement of people; sharing of ideas; communication as measured by telephone calls (only 7 percent of international telephone calls are regional compared to 71 percent in East Asia); transfer of technology and royalty payments are all extremely low. Achieving greater economic integration will require substantially improved regional connectivity and overcoming inter-state tensions and mistrust.
2. The process of economic integration and the welfare of the people should not be held hostage to the resolution of inter-state disputes. Indeed, as economic integration is undertaken, new constituencies for peace will emerge which will facilitate the resolution of inter-state disputes. Nevertheless, the core issues of cross border terrorism and outstanding territorial disputes such as Kashmir must be addressed to establish the basis of lasting peace.
3. Inspite of impressive economic growth rates in the last two decades, mass poverty persists in South Asia as this region is home to half of the world’s poor population. Therefore it is necessary to change the structure of the existing elite based economic growth process which induces increasing income inequalities and constricts the poverty reduction effect of growth. A new inclusive growth process needs to be undertaken whereby the middle classes and the poor can have access over productive resources, high wage employment and equitable access over factor and product markets. Such a process would enable sustained growth by making growth by the people and for the people. SAARC can provide the framework for sharing and pursuing best practices in this regard.
4. Strengthening democracy by making it more participatory. This involves creating institutional structures for decentralized governance from the federal to the provincial/state, district and down to the grassroots levels: the purpose being to enable the people to participate systematically in the decisions that affect their economic and social life, their physical security and the life support systems of the natural environment.
5. Climate change and the expected intensification of the existing water stress in some countries of South Asia, food shortages and rising sea levels, threaten the stability of economies and societies in South Asia. Regional cooperation to undertake joint adaptation and mitigation measures to face this crisis are therefore necessary.

The future of South Asia is delicately poised like a dew drop on a blade of grass. We can remain mired in poverty, conflict and brutality. Or we can draw upon our civilizational well springs of innovativeness, harmony with nature and with our inner nature of love, to chart a new course for ourselves and the world.