Terming the framework agreement on SAFTA as a 'major milestone,' India and other Saarc countries on Tuesday decided to work towards creation of a South Asian Economic Union and establishment of a regional food bank as part of its plan of action for poverty alleviation.

At the conclusion of the three-day summit, the seven Saarc (South Asian Association for Regional Cooperation) members adopted the 'Islamabad Declaration' which also decided to conduct a study for creating a South Asian Energy Cooperation, including the 'energy ring', and examine setting up of South Asian Development Bank.

• The SAARC Summit 2004: Complete Coverage

Hailing the framework pact on South Asian Free Trade Agreement at the summit, the declaration said it was important that this momentum was maintained and member countries moved towards further broadening of economic cooperation and ensuring equitable distribution of benefits of trade.

The SAFTA framework agreement which provides for setting up of a free trade zone by 2006 would enable the regional South Asian trade currently at modest $6 billion, to double every five years.

The agreement also favoured special and differential treatment to cater to needs of small and least developing countries while stressing on the need for harmonisation of standards, customs procedures and cooperation among central banks.

The four-page declaration decided to designate the year 2005 as 'South Asia Tourism Year' to develop tourism within the region to bring economic, social and cultural dividends.

The declaration signed by the governments of India, Bangladesh, Pakistan, Bhutan, Nepal, Sri Lanka and Maldives, however, underlined the need for suitable political economic environment for realising its objective of creating a South Asian Economic Union on the lines of European Union.

Stressing on the need for safeguarding their collective interest in the multilateral fora, it said the Saarc members should continue to coordinate and exchange information with a view to adopting common position on various issues including World Trade Organisation.

For accelerated and balanced economic growth, the declaration said it was essential to strengthen transportation, transit and communication links across the region.

Noting that public and private sector cooperation, particularly joint venture, had great promise in the region, the declaration said it was important towards project cooperation in the SAARC.

The declaration said there was a need for increasing cooperation to jointly promote tourism between South Asian countries as well as promote the region as a tourism destination by improving air links.

Recognising that poverty was the greatest challenge facing SAARC nations, it declared poverty alleviation as an overarching goal of the members.

Provision of basic needs, provision of literacy and better health care were a regional priority, it said, adding that the SAARC secretariat should periodically update and submit regional poverty profiles.

It also called for establishment of a network of centres of higher learning, training and skill development institutes across South Asia as investment in human resources was critical for future development of the region.