Lessons for India from the Bangladesh growth story
The International Monetary Fund released the biannual World Economic Outlook this month with a sombre warning that even though the global economy is reviving, the ascent will be “long, uneven, and uncertain.” However, the report made headlines for quite a different reason in India. The database released with the report showed that India’s projected per capita GDP will fall below that of Bangladesh in 2020. The numbers show that the Covid-19 crisis has hit the Indian economy much harder than Bangladesh in terms of growth. But even before the pandemic, the latter had maintained a much steadier pace of growth over the last decade with its focus on low-skilled labour exports. So, it was inevitable for the economy of Bangladesh to catch up to India in per capita terms.
The IMF projections, however, need to be understood in greater detail to obtain a clearer picture. The issue centres around the IMF projections for GDP per capita in current prices for 2020, which stands at $1887.97 for Bangladesh and $1876.53 for India. The same projections for 2021 put India above Bangladesh again. The interesting thing to note is that India’s GDP per capita projections for 2019 stood at $2097.78 while for Bangladesh they stood at $1816.04. The Covid-19 blow to India has, thus, been quite significant but almost non-existent for its subcontinental neighbour. This difference is reflected in Covid-19 numbers as well. Currently, India has 5,534 cases per million people as opposed to 2,380 in Bangladesh. Economic arguments aside, India can draw lessons from Bangladesh on its relative resilience to the pandemic.