Bangladesh is all set to overtake India in terms of per capita gross domestic product (GDP) this calendar year. The reason is behind Bangladesh's jump is India's severe contraction in the Indian economy due to Covid-19 and the economic lockdown.
As per the International Monetary Fund (IMF) -World Economic Outlook (WEO), the per capita GDP of Bangladesh is expected to jump by 4% to $1,888 in 2020. In contrast, India's per capita GDP is likely to tank 10.5 per cent to $1,877. The numbers are concerning as it directly affects the Modi government's aspiration to make India a $ 5 trillion economy by 2025.
India third poorest country in South Asia
The GDP figure for both countries is at current prices. As per a report by Business Standard, the figures would make India South Asia's third poorest region, with only Pakistan and Nepal reporting lower GDP per capita. Other South Asian countries including Bangladesh, Bhutan, Sri Lanka, and the Maldives.
The WEO database indicates that after Sri Lanka, which is projected to will its per capita GDP by 4 per cent in the current calendar year, the Indian economy will be the worst affected by the pandemic in South Asia.
However, next year, the IMF expects a sharp economic growth in India, which is expected to drive per capita GDP marginally ahead of Bangladesh in 2021. In dollar terms, India's per capita GDP is projected to rise by 8.2 per cent in 2021, compared to a projected 5.4 per cent growth for Bangladesh. This will lift India's per capita GDP to $2,030 next year, compared to $1,990.0 for Bangladesh.
India's per capita GDP was 40% higher than Bangladesh in 2015
At the current pace, Bangladesh is expected to be richer than India by 2030. It already fares better on several social development indicators, including youth literacy, gender, nutrition, life expectancy, etc. India's per capita GDP was around 40 percent higher than Bangladesh's until five years ago. Bangladesh's per capita GDP has risen at a compound annual growth rate of 9.1 percent over the last five years, compared to the 3.2 percent growth recorded by India during the time.
Bangladesh has been able to close the economic gap with India. The WEO database has further highlighted that India's economic contraction in 2020 will be the worst since the 1990-91 economic crisis. Indian economy had witnessed a contraction of 17.5 per cent in 1991.