Representative image
| Photo Credit: SASEC website
In the backdrop of massive cuts in the U.S. Agency for International Development funding of projects in South Asia and the dwindling presence of other western development agencies, focus is now shifting to the regional and national development funds that are active in South Asian region.
Out of the several funds that are active in the region, the South Asian Association of Regional Cooperation (SAARC) Development Fund (SDF) which is holding $1.5 billion in authorised funds and total capital base of $672 million is of special interest as it is entirely focused on the SAARC member countries (Afghanistan, Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan, and Sri Lanka).
In this context, diplomatic sources and experts are suggesting that the SDF should do more activities even though the SAARC as a regional organisation has been languishing without a summit for more than a decade.
The SDF was formed in 2005 after the South Asian Development Fund (SADF) was reconstituted into SAARC Development Fund with the aim to serve as the “umbrella financial mechanism” for all SAARC projects and programmes and “thereby enhancing the effectiveness and reach of regional development initiatives”. While the SDF has been active in a number of projects, its overall focus has been under the scanner for a number of reasons including India-Pakistan tension which has continued since the January 2016 terror attacks and the August 2021 return of the Taliban to Afghanistan where the SDF had identified a number of projects for operation. Diplomatic sources pointed out that despite the stalemate of India-Pakistan relation within the SAARC and the unstable condition of Afghanistan, the capital base of the SDF has remained intact endowing it with the potential to make a serious contribution to regional development.
The SDF under its ‘Economic Window’ has been prioritising agriculture, service sector, science and technology and other “non-infrastructure” areas. However, experts are suggesting that under the given set of circumstances, the SDF should broaden its focus and bring in infrastructure and connectivity projects under its ambit.
Economist Achyut Wagle who is the vice chancellor of Kathmandu University told The Hindu that the focus should be on projects that contribute to the economic integration of the South Asian region. “The priority area of the SAARC Development Fund can be further intensified and broadened to cover projects that will further the goal of economic integration of South Asia which is a long held ideal for the SAARC. This task can be attained without even holding of the SAARC summit through the route of special projects,” Prof. Wagle said indicating that the SDF with its large capital base can play a greater role in the expanding space that is emerging because of the changing landscape of development funding in South Asia.
A diplomatic source also argued that the SDF with its large resource base can play an equally important role in connectivity projects that will deepen the sense of regional connectivity.
SAARC has not held a summit since its Kathmandu summit in November 2014. The 2016 summit in Islamabad was not held as India boycotted the summit after terror strikes from Pakistan targeted Indian military posts. Subsequently, Bangladesh, Bhutan, and Sri Lanka also withdrew from the summit.
Published – April 11, 2025 09:40 pm IST
