The news that Bangladesh has sneaked ahead of India in terms of per capita GDP according to the International Monetary Fund's latest projections, certainly ruffled a few feathers in the region when it came out this week. In its latest World Economic Outlook released this week, the IMF has projected the Indian economy to contract 10.3 per cent in 2020-21, a deeper hit than the June estimate of a 4.5 per cent contraction in the wake of the economic slump due to the Covid-19 pandemic. Bangladesh's gross domestic product growth decelerated to 3.8 per cent in 2020, by which it meant the 2019-20 fiscal. Growth is projected to rise to 4.4 per cent in the fiscal year 2020-21.
India's per capita GDP, in nominal US dollar terms, is projected to be $1,876.53 in 2020, lower than $1,887.97 projected for Bangladesh. On average, India's per capita GDP has been 24 percent higher than Bangladesh's during the last five years, IMF data show. After a blip however, India's per capita GDP is expected to overtake Bangladesh's per capita GDP in 2021, with the IMF projecting it to be $2,031 as against $1,990 of the latter. However, the trend is not expected to sustain for long as in 2025, India's per capita GDP is projected to be $2,729, again lower than Bangladesh's projected per capita GDP of $2,756.
Although this has been speculated for some time, especially after growth started slowing in India recently at the same time as Bangladesh settled on a faster, sharper growth trajectory, the Coronavirus pandemic has certainly acted to hasten the switchover. India's per capita GDP, up until five years ago, was around 40 per cent higher than Bangladesh's. However, over the last five years, Bangladesh's per capita GDP has increased at a compound annual growth rate (CAGR) of 9.1 per cent, compared to 3.2 per cent growth recorded by India during the said period. One may view it as a vindication of the government's policies in handling the local outbreak of the pandemic, and most certainly, when you consider that among other South Asian countries, the IMF estimated a 10.3 per cent contraction for India's GDP in 2020, while Bhutan's growth is estimated at 0.6 per cent, Sri-Lanka at -4.6 percent, Pakistan -0.4 per cent and Nepal's to remain flat, Bangladesh's performance does come off as stellar.
But the government will do well to not rest on its laurels at this stage, for it cannot be denied that there has been a deceleration, and the long road to rebuilding in the post-Corona period still lies ahead.
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