Hopes for a post-Cold War world order based on cooperation are rapidly disintegrating. The US-China rivalry has turned into open hostility. Multilateralism is heading towards institutional collapse. In the middle of such a geo-political storm, South Asia, which has a population of about two billion people and a complex network of diverse civilizations, has come to the center of world restructuring not only geographically, but also politically and strategically. The next question is whether South Asia is important or not? Not that. Of course it is important. The question arises – can South Asia hold significance on its own terms? Or will it only become a shell of the strategic ambitions of others?

Development mirage

South Asia is often portrayed as the emerging engine of the world economy. India, in particular, is described as an 'emerging power', consistently showing growth in gross domestic product (GDP) of over 6 percent. But this commentary masks the alarming reality of a rapidly growing, but structurally stable situation. 

Even with total GDP reaching $4.8 trillion in 2024 (World Bank), South Asia is still a small economy compared to both China and the US. More seriously, this economic growth has not contributed much to human development. India ranks 130th in the 2023 United Nations Human Development Index (Bangladesh 130th, Nepal 145th). This reveals the hollowness of the slogan 'Emerging India'. Even more alarming is the fact that 402 million people live in poverty in South Asia.

The region has the second highest multidimensional poverty after sub-Saharan Africa. Multidimensional poverty rate is 37.5 percent in Bangladesh and 16.2 percent in India (UNDP-2024). It is a shame that a region seeking to gain global influence occupies almost half of the world's poor population. South Asia's development model is still tied to the exploitative norms of the colonial economy and dependency on donor agencies. The sector is still plagued by low productivity, informal labor and weak public investment, dilapidated infrastructure and systemic governance problems. 

Chepuwa of competing forces 

South Asia's geopolitical landscape is torn by two mutual pressures – US-China rivalry and India-China rivalry. India is seen by America as a 'balancer' against China. According to US trade representatives, bilateral trade will reach $129 billion in 2024. India now counts among the pillars of the 'Quad' (Strategic Forum of the US, Japan, Australia and India) and the 'IPEF' (Indo Pacific Economic Framework for Prosperity). But India's relationship with China is still indispensable economically. China remains India's major trading partner despite military conflict and deep mistrust. According to China's customs administration, bilateral trade will reach $127.7 billion in 2024. Such strategic duality, military tensions and economic dependence are fatal contradictions of South Asian foreign policy.

Meanwhile, Pakistan has become a case study for China's Belt and Road Initiative (BRI). The China-Pakistan Economic Corridor (CPEC), with China's investment of $25.2 billion since 2013, is a symbol of its physical infrastructure ambitions. But this ambition is under pressure due to the deepening debt crisis, terrorism and external pressures. Pakistan's external debt to GDP ratio reached 35.1 percent in 2023. More than half of the loans were from Western institutions or multilateral agencies. Due to the increasing political instability and terror and violence, Pakistan is in danger of becoming a lesson that without institutional reforms, infrastructure development can become a trap.

Debt, dependency and inefficient governance

First, South Asia is still mired in debt and dependency. Universality often appears to be an illusion. The crisis in Sri Lanka is an example of this. In 2022, Sri Lanka 'defaulted' on $51 billion in external debt. 90 percent of which were with Western organizations or multilateral bodies. It was not just a failure of revenue, but a broken model of development with conditional loans, material risks and a complete collapse of 'crony' capitalism. According to the International Development Association, six South Asian countries are currently facing high credit risk. Public spending results across the region reflect that.

According to the Asian Development Bank, more than 27 percent of South Asian countries' budgets are being spent on debt repayment. Investments in education, health and basic services are shrinking. As a result, inequality has increased, capacity has weakened, and political instability has increased.

Second, institutional paralysis and lack of governance skills have blocked the path to regional unity. The South Asian Association for Regional Cooperation (SAARC) is currently ineffective. Since the Kathmandu Summit in 2014, regional dialogue has been suspended due to India-Pakistan tensions. Promising sub-sectoral efforts such as BBIN and BCIM are also stalled. The main reason is clear – national security concerns have superseded collective development.

Although China's BRI is active, it has itself become another competitive arena. India sees it as a tool of China's hegemony and many projects have been accused of 'debt trap'/'interference with sovereignty'. In the absence of reliable regional institutions, South Asia has not been able to leverage external resources for development, but instead has been mired in authoritarian regionalism.

Third, non-traditional security challenges such as climate, food crises and systemic fragility are undermining regional stability and development. South Asia is in the front circle of climate catastrophe. According to the World Bank, climate disasters are estimated to cause losses of 50 billion dollars every year in South Asia. In Bangladesh alone, 13 million people could be displaced by sea level rise and salinization by 2030. Meanwhile, food insecurity has reached epidemic levels. According to the World Food Program (WFP), 360 million South Asians, about one-third of the world, were food insecure in 2023. The COVID-19 pandemic exposed the weak state of the region's public health system. Another pandemic is likely within our lifetime, but the region is still unprepared.

strategic autonomy and regional dependence 

If South Asia takes the institutional initiative and reimagines its development model, an alternative path is possible amid this bleak state of deep dependency, sharp division and even weaker sovereignty.

South Asia needs new regional development agreements. SAARC is over, stop pretending. A new, bold and pragmatic unity is needed. For that, 'South Asian Regional Development Community' (SARDCOM) should be formed. It should have three main priorities. 

Green connectivity: A regional energy grid linking Nepal's hydropower with India and Bangladesh, for energy security and climate adaptation.

Poverty Reduction Fund  : A structure similar to the African Development Fund, which aims to halve multidimensional poverty by 2035.

Digital infrastructure alliance: Building a cross-border payment system based on India's UPI model.

South Asia must now actively advocate for multilateralism and the unity of the Global South. For that 

Regional governments should collectively demand the following:

Global South Green Development Fund: $100 billion per year to implement climate commitments.

A global equitable arbitration system for debt resolution: Instead of creditor-centric structures like the IMF/World Bank.

medical universality initiative: for open-source vaccine and regional drug production.

South Asia must redefine security and build humanitarian resilience from militarization. This requires : 

South Asian Epidemic Surveillance Network: Epidemic Prevention and Precaution.

Climate Risk Sharing Mechanism: For Group Insurance and Early Warning Systems. 

India and China must build mutual trust in this common development journey.

There is a tradition of calling South Asia a 'superpower competition area'. But this is narrow thinking. South Asia is not just a stage for the ambitions of others. It can become a laboratory of institutional innovation. It can become an area of ​​leadership through moral clarity, strategic autonomy and a developmental vision, not military might or economic dominance.

Fragmentation and underdevelopment are not the destiny of South Asia. The wrong organization has only defined it this way. Likewise, dependence is not destiny. South Asia does not have to choose Washington or Beijing. He has to choose himself. That means strategic autonomy, regional interdependence and multilateralism. Universality is not isolation, but collaboration on its own terms. The road to prosperity is rebuilt not through foreign embassies, but through our own institutions, ideas and partnerships. The future of South Asia should be charted in Dhaka, Kathmandu, Colombo, Islamabad and New Delhi, not in Washington or Beijing. The world is waiting. This region has to decide for itself – what history to make? Or to be made?