Indo-Bangla ‘GDP war’ ruffles a few feathers .
The International Monetary Fund’s sober forecast that Bangladesh is all set to overtake India in terms of per capita GDP in 2020-21 has drawn a wave of counter arguments stating that the projected scenario would be a short-term aberration as the third largest Asian economy would again outpace its neighbour in 2021.
The IMF on Wednesday caused a big flutter when its World Economic Outlook report said India’s per capita GDP is likely to plummet 10.3 per cent to $1,877 – the lowest in four years – due to the sharp economic plunge in the wake of the nationwide lockdown, while Bangladesh is expected to see its per capita GDP grow by four per cent to $1,888.
Indian government sources, however, swiftly countered this, arguing that in purchasing power parity (PPP) terms, India still maintains an edge with its per capita GDP in 2020 is estimated by the IMF at $6,284 as compared to $5,139 for Bangladesh. They contended that data showed that Bangladesh overtaking India in 2020 is a temporary aberration and that India will again overtake Bangladesh in 2021.
They also pointed out that as per the IMF, India’s GDP would grow at 8.8 per cent in 2021, twice that of Bangladesh at 4.4 per cent.
With GDP estimated at $2.8 trillion, India is currently ranked as the fifth global economic power after the US, China and Japan.
Until a few years ago, India was significantly above Bangladesh in per capita GDP terms, but the gap has been substantially closed owing to the country’s rapidly-rising exports. Besides, during the intervening period, while India’s savings and investments remained lukewarm, the corresponding numbers for Bangladesh saw a sizeable surge, analysts said.
Analysts are of the view that if the IMF’s projection turns out to be accurate, India would become one of the worst performers in terms of growth in South Asia, relegating the country as the third-poorest in South Asia, just above Pakistan and Nepal who are set to report a lower per capita GDP.
The unexpected development drew flak from Congress leader Rahul Gandhi, whose tweet said: “Solid achievement of six years of BJP’s hate-filled cultural nationalism: Bangladesh set to overtake India.” Countering Gandhi’s some analysts argue that under the present government, per capita GDP increased 30.7 per cent as against an uptick of 19.8 per cent under the Congress-led UPA government’s second term.
The IMF’s stark projection for India comes as a big blow after the country reported an abysmal 23.9 per cent GDP contraction in the first quarter of the calendar year.
Recently, the World Bank also revised downward its forecast for the Indian economy by projecting a contraction of 9.6 per cent, sharper than earlier estimated, for fiscal year 2020-21.
The World Bank’s grim forecast comes as a sober reminder that India’s aspirations to propel its economy to $5 trillion by 2024-25 will be hardly achievable unless the country attains a growth rate of at least 12 per cent in nominal terms and nine per cent in real terms.
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