Bangladesh surpassing India in per capita GDP in 2020 as forecast by the International Monetary Fund is not a fluke and is rather a reflection of the country's steady economic growth and a solid foundation, said economists yesterday.
According to the IMF's latest World Economic Outlook report, Bangladesh's per capita growth of gross domestic product (GDP) would rise to $1,887.97 in dollar terms and at current prices at the end of this year, while India's per capita GDP would fall to $1,877.
"Aside from technical issues and the projection that Bangladesh will just be a notch richer than India this year, as well as five years later, for Bangladesh which started its independent journey 24 years later, this is a distinction worth savouring," said Zahid Hussain, a former lead economist of the World Bank's Dhaka office.
The progress is an achievement thanks to Bangladesh's steadily growing economy, said Mustafizur Rahman, a distinguished fellow of the Centre for Policy Dialogue.
"Bangladesh's economic foothold is not a fluke. We also beat India in many social sectors a long ago," said Monzur Hossain, research director of the Bangladesh Institute of Development Studies.
"We are consistently doing better and moving forward and India is not doing well. This is clear."
India's GDP per capita growth has been consistently slowing since 2016 and is likely to have slipped below Bangladesh this year due to a 10.3 per cent contraction in the size of the economy.
Bangladesh has maintained steady growth, as officially reported, and is estimated to have a 3.8 per cent growth in the last fiscal year, Zahid Hussain said.
India has taken a more severe hit due to the Covid-19 and is also expected to take longer to recover from the pandemic. Both countries are projected to remain remarkably close, however.
India's slower ascent back reflects the continuing spread of the pandemic and overwhelmed health care systems, the greater importance of severely affected sectors such as tourism and the greater dependence on external private finance.
Notwithstanding the Covid-19 hit, Bangladesh's economy managed to fare better because it was in a better state relative to India before the hit. Exports and investments, although weak, were better than India and less vulnerable to global shocks.
But Bangladesh should not get carried away and be complacent, said Zahid Hussain.
"Economic prosperity in both countries can complement each other and produce synergies if we can cooperate better to expand inter-regional trade, strengthen regional infrastructure connectivity, share water more equitably, build our resilience to climate change and get the Rohingyas back to their original homes safely."
Ahsan H Mansur, executive director of the Policy Research Institute of Bangladesh, said despite the growing per capita GDP, Bangladesh is still a developing country.
He said Bangladesh's per capita GDP is about $1,800 whereas it is more than $60,000 for the United States and the country is shivering because of the pandemic.
"We have our problems and we have to address them. We need to bring in reforms. We need to grow further."
Bangladesh has to boost revenue collection and raise investment to GDP ratio to sustain the growth, said Mansur. Monzur Hossain said Bangladesh's long-term investment in the social sectors such as health and education has created a sound base for economic growth.
Going forward, the sectors, including the cottage, micro, small and medium enterprises that have been hard-hit by the pandemic should be given stimulus support so that they can get back on their feet again, he said.
"The government should emphasise more on raising investment in the infrastructure sector and other areas to push GDP growth to a new high. At the same time, entitlement support should continue for the poor and vulnerable."
According to Monzur, implementation of the mega projects has to be accelerated. Export sectors have to be made more vibrant and competitive and diversified.
There should be a mapping of the poor regions to give a leg-up to poverty reduction by way of expanding the social safety net coverage and creating jobs, the research director said.
CPD's Mustafizur said Bangladesh has to create decent jobs, diversify exports and distribute the fruit of the growth equitably to sustain the growth.
"We have structural challenges. We have to be brought in reforms."
Shekhar Gupta, editor-in-chief and chairman of ThePrint, an Indian news website, said if Bangladesh's per capita income exceeds India's, then the latter will be the fourth-richest country in South Asia after Sri Lanka, the Maldives and Bangladesh.
"This would be an eye-opener and a very rude shock due to the common perception among Indians that Bangladesh is a basket case, especially in the current political atmosphere and in the context of the Citizenship Amendment Act," he said on the media outlet's YouTube channel.
Furthermore, if Bangladesh is growing fast it is because it is an export powerhouse today, something India no longer is. And while Bangladesh's exports have boomed, India's exports have stalled and declined, he said.
"India has to acknowledge that Bangladesh is leaving us behind and that it is no fluke."
India's exports declined about 5 per cent to $330 billion in the fiscal year that ended on March 31.
For Bangladesh, earnings from merchandise exports in the immediate past fiscal year fell 16.93 per cent year-on-year to $33.67 billion because of the Covid-19, which has affected production and dampened demand.