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Regional South Asia

Overview of Australia’s aid program to Regional South Asia

2013/14 Estimated Outcome: $9.6 million

2014/15 Budget Estimate: $33.1 million

Australia’s development assistance to South Asia promotes economic growth, human development and stability in a region that is of growing strategic significance for Australia. The regional program targets cross-border development challenges that cannot solely be addressed at the country level, and complements Australia’s seven bilateral country programs in the region.

South Asia is home to the world’s largest number of people living below the poverty line, with over 500 million people living on less than US$1.25 per day. Development gains continue to be offset by high population growth, weak governance, conflict and natural disasters. It is one of the least integrated regions in the world and faces long term challenges associated with food, water and energy security. It also has the second highest trade costs. Intra-regional trade stands at 5 per cent of total trade compared with 50 per cent for East Asia and 30 per cent for Southeast Asia and non-tariff barriers are a primary cause. Gender inequality is widespread, holding back the region from achieving its full productive potential.

Australia’s regional aid investments in South Asia aim to reduce poverty and promote sustainable and inclusive growth by improving regional cooperation and connectivity. The regional program focuses on two key trans-boundary development challenges in South Asia:

  • Sustainable development, with a specific focus on improving water, food and energy security
  • Regional connectivity with a focus on trade facilitation and infrastructure connectivity.

Australia’s development assistance is delivered mainly through partnerships with multilateral agencies, civil society, and other Australian Government agencies.

Sustainable development

Australia’s investment in sustainable development in South Asia aims to support improved water resource management, better agricultural practices to generate higher farm productivity and incomes, and increased access to energy. Our investments target female-headed households, agricultural productivity, improving access to modern energy sources, and leverage Australia’s expertise in water resource management.

Sustainable development in the South Asia region

Regional connectivity

Australia’s regional aid investments aim to increase the potential for economic growth and reduce poverty by addressing low levels of intra-regional trade and poor infrastructure connectivity. Our investments are helping to promote economic opportunities for women, strengthen key institutions, and to close the infrastructure gap by supporting analytical work and technical assistance to facilitate policy and institutional reform in sectors including transport and energy.

Regional connectivity in South Asia

Our results

Sustainable development

Results to 30 June 2014

  • Completing a comprehensive study on landscape, hydrology, precipitation, geology and local economy in Zhangmou, the border trade post connecting China and Nepal, and preparing a landslide risk reduction plan in close consultation with local authorities.
  • Working with communities in the middle hills of Nepal to identify 15 groundwater recharge sites and supporting the construction or rehabilitation of ponds to improve the reliability of water supply to villages.
  • Completing 154 on-farm agricultural participatory research trials in West Bengal and Bangladesh, with preliminary results indicating up to 17 per cent better productivity for wheat and up to 11 per cent improved yields for maize.

Regional connectivity

Results to 30 June 2014

  • Strengthening South Asia Subregional Economic Cooperation countries’ capacities for trade facilitation through regional workshops on customs and logistics issues and trade processes/ reforms.
  • Utility assessments conducted in six Indian states to identify key challenges to institutional reform and capacity building needs to improve energy transmission.
  • Inception workshops held in Delhi, Dhaka, Islamabad and Kathmandu, to inform a regional study on energy security and trade—the study will highlight key domestic policy challenges to be addressed to meet growing regional demand for energy, and propose approaches to regionalisation for further analysis.

Related documents

Regional connectivity in South Asia


Regional cooperation and integration is vital for long term inclusive growth, sustainability and stability, but South Asia is one of the least integrated regions in the world based on a range of economic, political and social indicators and has the second highest intra-regional trade costs. This lack of connectivity has restricted the region’s potential.

Improved connectivity and reduced trade costs could achieve accelerated and sustainable growth to reduce poverty, support access to cheaper goods, improve economic opportunities and support access to markets and services by poor households; increase competitiveness and diversification; and promote private sector development.

Australia will support inclusive economic growth by addressing low levels of intra-regional trade and poor connectivity through an aid for trade activity which aims to promote economic opportunities for women and small to medium enterprises by improving regulation, harmonising border procedures, and strengthening key institutions to build an enabling environment for business and trade.

South Asia also has large infrastructure deficits, particularly in energy and transport. This infrastructure gap is another major challenge to connectivity both within countries and the region, and a major driver of poverty. Significant infrastructure investment is needed if development goals, including alleviating poverty for its growing population, are to be met.

Australia’s investments will help to close this gap by supporting analytical work and technical assistance to facilitate reforms in the transport and energy sectors. Technical assistance activities will examine issues of economic and social connectivity, institutional capacity, governance, and drivers of conflict and fragility to develop a knowledge base for assessing opportunities and challenges to meeting the infrastructure gap in these sectors to promote trade and integration across and within the South Asia region.

Related initiatives

Infrastructure for Growth (World Bank)

$20 million, 2012-2016

The objective of this program is to meet the infrastructure gaps in the region by addressing the major challenge of connectiv¬ity and integration, both within countries and within the region. It focuses on accelerating economic growth through regional economic integration (integrating lagging regions; regional economic development; rural-urban connectivity) and also addressing climate change.

DFAT contributes grant funding to support analytical work, pro¬vide technical assistance, and improve knowledge gener¬ation and dissemination to enable policy and institutional reforms in infrastructure. This grant funding can provide essential 'seed money' that can be the catalyst for shaping and directing the policies and programs of much larger infrastructure investments undertaken by national governments themselves, or in collaboration with the World Bank.

p>Under this program, DFAT has funded phase 1 and phase 2 of the Options Paper for Developments along the Eastern Dedicated Freight Corridor, including:


  • an in-depth database of multi-sector indicators and development potentials for the six corridor states
  • an analysis that identifies three sub-regions in the state of Uttar Pradesh (which has more than 50% of the corridor length) with the highest potential to benefit from the investments being made.

In the period January-July 2014, ten new activities (four regional and six bilateral) totalling $2.6 million were funded, including a South Asia Regional Facility for Women’s Economic Empowerment and Integration.

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Australia-Asian Development Bank South Asia Development Partnership Facility

$14 million, 2006-2014

The objective of this facility is to support technical assistance operations, components of investment projects, stand-alone grant-financed activities and other activities. In 2013-14, three sub-projects totalling $1.975 million that were designed to carry out regional connectivity and integration (RCI) activities were completed. Solid progress was made in strengthening RCI through consultations and policy dialogues, institutional strengthening of the South Asia Subregional Economic Cooperation (SASEC), and partnership with development agencies. Specific results include:

  • ensuring proper planning, implementation and monitoring of SASEC projects, through support for SASEC working group meetings and follow up consultations. These meetings helped prepare, update and enhance country ownership of sector road maps, including in energy efficiency.
  • strengthening SASEC countries’ capacities for trade facilitation through regional workshops on customs and logistics issues and trade processes/ reforms
  • improving understanding of the needed transport and trade facilitation strategy for SASEC through consultation, knowledge sharing and capacity building activities and equipment support.
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Sustainable development in the South Asia region


Australia’s investment in sustainable development in the South Asia region aims to strengthen trans-boundary cooperation to improve water, food and energy security focusing on the needs of the poorest and most vulnerable, particularly women and girls.

The Himalayan rivers region of South Asia has an estimated 300 million people living in extreme poverty—the single largest concentration of poverty in the world. The economies and livelihoods of the majority of people in the sub-region are heavily dependent on the shared water resources that emanate from the Himalayas, particularly the Ganges and Indus river basins.

Projected population growth, increased demand for water from industry and agriculture, and climate variability are likely to exacerbate water scarcity issues. This could undermine economic growth prospects and lead to cross boundary tensions. Sustained increases in agricultural productivity and reducing energy poverty are required to maintain food security and increase the incomes of the poor. Increased cross border trade in agriculture and energy, and strengthening value added supply chains is also essential to improved economic outcomes in this sub-region.

Related initiatives

Sustainable Development Investment Portfolio (SDIP)

$49.4 million, 2012-13 to 2015-2016

The Sustainable Development Investment Portfolio (SDIP) targets a sub-region of South Asia defined by three major Himalayan river basins—the Indus, Ganges and Brahmaputra—covering north-east Pakistan, northern India, Bangladesh, Nepal and Bhutan. The SDIP targets sectors where Australia has a comparative advantage including:

  1. Water resource management—improving trans-boundary water resource management and governance, particularly through the transfer of Australia’s best practice technology and science, and strengthening policy and civil society dialogue.
  2. Agricultural productivity—increasing the region’s agricultural productivity and farm incomes through the adoption of more efficient and sustainable agricultural practices, drawing on Australian expertise in this sector.
  3. Energy access and trade—targeting access to modern energy services, especially for poor rural households and the development of increased cross border energy trade in South Asia.

The SDIP operates through a portfolio approach where partners are given 'earmarked' core funding to progress an overarching goal and objectives. Partnerships are established following a comprehensive institutional assessment that identifies whether each partners' institutional capacity, mandate, purpose and history of strong performance positions them to support and progress the goal and objectives of the SDIP. There are six current partners to the SDIP:

  1. Australian Centre for International Agricultural Research (ACIAR):
    Improving the livelihoods and resilience of smallholder farmers to climate variability by facilitating the adoption of more productive, profitable, and lower-risk farming systems in the Eastern Gangetic Plains.
  2. Commonwealth Scientific and Industrial Research Organisation (CSIRO):
    Supporting the uptake and implementation of Australia’s national hydrological water modelling tool SOURCE to improve water resource management in the Ganges, Indus and Brahmaputra river basins.
  3. Consumer Unity and Trust Society International (CUTS):
    Providing access to civil society organisations and communication/media channels that can support advocacy from the ‘grassroots’ level regarding water, food and energy security in South Asia.
  4. International Centre of Excellence for Water Resource Management (ICE WaRM):
    Developing capacity and build networks of water resource management professionals across South Asia, including through scholarships and fellowships, study tours and short courses.
  5. International Centre for Integrated Mountain Development (ICIMOD):
    Providing knowledge and evidence to influence policy and practices to meet the challenges of water resource management in South Asia, with a particular focus on the Koshi Basin through the SDIP.
  6. World Bank—South Asia Water Initiative Phase II (SAWI)
    Building knowledge and institutions and promote information-based dialogue within countries and across river basins, with a particular focus on the Indus, Ganges, and Brahmaputra. SAWI was developed by the World Bank, and the UK, Norwegian and Australian governments.
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Last reviewed: 16 December, 2014