To answer this question we have examined the dynamics of the HIV epidemic, the economic and social impact, and the fiscal burden of HIV and AIDS in South Asia. We published the findings in the book “HIV and AIDS in South Asia: An Economic Development Risk,” launched in New Delhi on February 27. At the launch, we discussed the risks to development with Dr. Rangarajan, MP and Chairman of National Institute for Public Finance and Policy, and Sujatha Rao, Secretary and Director General for the National AIDS Control Organization in India. We conclude in our report that the impact of HIV and AIDS in South Asia on the overall economic activity is likely to remain small, while the direct welfare costs of increased mortality and lower life expectancy is more substantial, accounting for 3 percent to 4 percent of GDP in India and Nepal, respectively. The economic impact on individual households affected by the disease is substantial. In addition to shortfalls in income, which in some cases can be very significant, HIV and AIDS are also associated with an increased demand for health services. Dr Rangarajan commented on several adverse consequences, including neglect of health conditions, indebtedness, the additional burden on women and children’s education. The extreme case, he noted, is that of the AIDS orphans, for whom very little has been done until now in Asia.
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