The International Monetary Fund’s forecast that Bangladesh will overtake India in terms of GDP per capita in 2020-21 has sparked a wave of counter-arguments that the projected scenario would represent a short-term aberration as Asia’s third largest economy surpass its neighbors again in 2021.
The IMF caused a big flutter on Wednesday when its World Economic Outlook report stated that India’s GDP per capita is expected to decline 10.3 percent to $ 1,877 due to the sharp economic slump following the Bangladesh nationwide lockdown Will – its lowest level in four years GDP per capita is expected to grow by four percent to $ 1,888.
However, Indian government sources have been quick to counter this, arguing that in terms of purchasing power parity (PPP), India is still maintaining a head start with its 2020 GDP per capita, estimated by the IMF at $ 6,284, compared to $ 5,139 for Bangladesh. They claimed that data showed that Bangladesh will overtake India in 2020, a temporary anomaly, and that India will overtake Bangladesh again in 2021.
They also pointed out that, according to the IMF, India’s GDP would grow 8.8 percent in 2021, double that of Bangladesh’s 4.4 percent.
With an estimated GDP of 2.8 trillion US dollars, India is currently the fifth world economic power after the US, China and Japan.
Until a few years ago, India was well ahead of Bangladesh in terms of GDP per capita, but the gap has been closed significantly due to the country’s rapidly increasing exports. While India’s savings and investment have remained tepid meanwhile, the corresponding numbers for Bangladesh have seen a significant increase, according to analysts.
Analysts believe that if the IMF’s forecast proves correct, India will become one of the slowest growing companies in South Asia, dropping the country as the third poorest country in South Asia, just above Pakistan and Nepal to have lower GDP per capita identify.
The IMF’s strong forecast for India is a severe blow after the country reported a miserable 23.9 percent GDP decline in the first quarter of the calendar year.
Recently, the World Bank also revised its forecast for the Indian economy downwards by forecasting a decline of 9.6 percent for fiscal year 2020-21, which was sharper than previously assumed.
The World Bank’s dire forecast is a reminder that India’s drive to boost its economy to $ 5 trillion by 2024-25 is unlikely to be achievable unless the country achieves nominal growth of at least 12 percent and nine percent in real terms.
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