World Bank managing director Graeme Wheeler has said that India-Pakistan trade has the potential to cross $9 billion in the next five years from the current $1 billion if barriers such as inadequate infrastructure, corruption and red-tape are addressed.
"Everyday we see obstacles–protective policies, poor infrastructure, corruption and red-tape. Trade between India and Pakistan is about $1 billion a year. Without barriers, it could be $9 billion within five years," Wheeler said at the SAARC business leader’s conclave here on Sunday.
Citing geography and its young population as the two major weapons to fight poverty, Wheeler said South Asian nations needed to integrate for the economic betterment of the region. Pointing out that severe infrastructure bottlenecks impede the region’s growth, he urged countries to share energy and water resources.
"Trade integration is a major opportunity. But regional cooperation in energy and water could produce even bigger returns. India, one of the most energy-hungry nations in the world, sits next to three energy-surplus countries namely, Bangladesh, Nepal and Bhutan. Yet, except for Bhutan, energy trade between them is miniscule," he observed.
He said that for South and East Asia to be the growth hubs of global economy, countries in the region should transfer their dynamism in services sector to manufacturing.
However, when asked about the threats posed by a two-year high rate of inflation in India and expectations of a higher current account deficit fuelled by high domestic demand for imported goods, he declined to comment.
Speaking at the conclave, the former chairman of the US Federal Reserve, Paul Volcker, who had led the UN investigation into the Iraq’s food-for-oil scam, stressed on the need to deal with corruption and implementation of a more transparent regime in developing countries.
"Corruption is a tax on the poor. Lack of transparency and corruption are pervasive and if not curtailed would be self-defeating. Strong responses to specific instances of corruption is warranted," he said.
Commenting on the worrisome rate of inflation the country is facing, Volcker said surging inflation in India was a matter of concern, but added that the response of the Reserve Bank of India was on track.
India’s rate of inflation had of late hit a two-year high of 6.73 per cent, well above the central bank’s projection of 5-5.5 per cent, thus forcing it to hike the cash reserve ratio of banks by one per cent in the last three months.