This report offers an original perspective on HIV and AIDS as a development issue in South Asia, a region with a heterogeneous epidemic and estimated national HIV prevalence rates of up to 0.5 percent. The analysis challenges the common perception of HIV and AIDS, which has been shaped to a large extent by analysis of HIV and AIDS in regions with much higher prevalence rates. Three risks to development are associated with HIV and AIDS in the region: first, the risk of escalation of concentrated epidemics, second, the economic welfare costs, third, the fiscal costs of scaling up treatment.