South Asia, covers 7 countries – Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan and Sri Lanka; and accounts for about 34% of Asia's population or over 16.5% of the world's population and are home to a vast array of people. South Asia has experienced a long period of robust economic growth, averaging 6% a year. The proportion of poor is lower now in South Asia than any time since 1981. Yet, it is the poorest region in the world after Sub-Saharan Africa. Across the region, democracy has been weakened, corruption has increased and the rights of citizens are denied. In April 1993, the Heads of States of South Asia unanimously committed to poverty eradication. It opened up new political space in South Asia and was the beginning of decentralisation of government authority in this region. Although political decentralisation has taken place, fiscal and administrative decentralisation lag behind in most of the South Asian countries. Decentralisation has resulted in establishment of local government institutions, provision of their constitutional recognition and empowerment. As part of democratization, the local bodies are having elected representatives, who determine the policies and strategies and executive wing implements and carries out day-to-day functions. The foremost challenge for effective local governance is enhancing the capabilities of local bodies and staffing by officials who are adequately trained and equipped for the tasks assigned to them. Also, to be successful at local level it needs to be backed by political will and clear legal responsibilities for local government. South Asia is in midst of transition and reforms for democratic decentralization. The road is long and tortuous, but is the only ‘one-way’ path to alleviation of poverty, inclusive growth, and participatory governance.