"Poor quality of education in South Asia, as reflected in low learning levels, traps many of its young people in poverty and prevents faster economic growth and more broadly shared prosperity," the report said.
The report presented a disappointing picture of student-learning in South Asian countries including India, saying much of what is taught is "procedural" or rote-based.
The study was the first comprehensive analysis on performance of South Asian educational systems.
The report, however, noted that, governments across the region have come to realised that apart from providing education access to all, improving quality of education and learning outcome is critical for the growth of a nation.
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"Higher and clear standards must be enforced, absenteeism curbed and non-merit-based promotions halted," it suggested.
"Students are poorly prepared in practical competencies such as measurement, problem-solving and writing of meaningful and grammatically-correct sentences," the report said.
It said that one quarter to one third of those who passed out from primary schools lack basic numeracy and literacy skills that would enable them to further their education.
"Just spending time in school is not enough. There has to be a significant gain in skills that requires an improvement in the quality of education," said Philippe Le Houerou, World Bank Vice President for the South Asia Region.
"This will help countries in the region to reap the full expected returns on their investments and generate gains in productivity and economic growth," he said.
This investment resulted in an increase in the net enrolment rate in South Asia's primary schools from 75 per cent to 89 per cent from 2000 to 2010, bringing the region closer to the enrolment rates in Latin America and the Caribbean (94 per cent) and East Asia and the Pacific (95 per cent).