Why is India Falling Behind Bangladesh?
In October 2020, there was widespread resentment in India when it was reported that India's per capita GDP (gross domestic product), according to estimates from International Monetary Fund (IMF), had fallen below that of Bangladesh. The media and pundits at that time were selective in their outrage upon this news item. At that time, I pointed out media's bluff by giving full details of the IMF data.
Now, IMF has published new and revised data in its World Economic Outlook of April 2022. According to these latest estimates, India was still behind Bangladesh on per capita income basis in 2020. India's per capita GDP (at current prices) in 2020 was USD 1,935; while Bangladesh was ahead with USD 1,962.
What is not reported in the media now is: India had caught up with Bangladesh in 2021 and 2022 and in fact is ahead of Bangladesh on per capita GDP basis, according to the latest IMF data.
Table 1: Bangladesh versus India - per capital GDP:
All the data presented here are in US dollars; and PPP data are in international dollars
(please click on the table for a better view)
As can be seen from the above table, India's per capita GDP is USD 2,515 in 2022 while Bangladesh is now behind India at USD 2,362. These numbers are at current prices expressed in US dollars for comparison purposes.
Bangladesh's per capita GDP is just USD 6,633 in 2022 on purchasing power parity (PPP) basis. But India is much ahead with per capita GDP (PPP) of USD 8,358.
However, if you look at the long term data, growth rates of India's per capita GDP and GDP under PM Modi government are way behind those of Bangladesh under Sheikh Hasina government.
Comparing Growth under PM Modi and PM Manmohan Singh:
As clearly shown in Table 1 above, India's GDP had grown at an annualised rate of 10.95 per cent between 2004 and 2014 under prime minister Manmohan Singh. Bangladesh had grown at a CAGR (compounded annualised growth rate) of 10.16 per cent during 2004-2014.
Let us compare Manmohan Singh's track record with that of PM Modi. Between 2014 and 2022 under PM Modi government, India's annualised growth rate is just 7.12 per cent versus Manmohan Singh's 10.95 per cent. How is Bangladesh doing during 2014 and 2022. Between 2014 and 2022, Bangladesh has grown at a CAGR of 10.93 per cent versus India's dismal 7.12 per cent.
Even on per capita GDP basis, India under PM Manmohan Singh has done much better than Bangladesh during 2004-2014; India under PM Modi has failed to surpass the annualised growth rates of Bangladesh during 2014-2022.
To sum up, India under PM Manmohan Singh was ahead of Bangladesh in 2004-2014 period on all parameters--GDP, GDP per capita and GDP per capita on purchasing power parity (PPP) basis (see Table 1). But India under PM Modi is way behind Bangladesh during 2014-2022.
India's growth rates under Singh are much better than those under PM Modi. All data points to this fact despite intense propaganda to the contrary by the current regime.
Why Is India Falling Behind Bangladesh?
It's clear the economic policies of the PM Modi government have failed to generate employment opportunities for the youth in India. There are many failures of his government: disastrous demonetisation or note ban of November 2016, sloppy rollout of goods and services tax or GST, draconian Corona Virus lockdowns of 2020, continued suffering of the unorganised, small and medium businesses, runway inflation for the past three years and so on.
Bangladesh has attracted a lot of investments in manufacturing and its export economy has been growing by leaps and bounds. It has been thriving in exports of readymade garments, footwear and other sectors. India has failed to match the progress of its small neighbour.
It is time PM Modi government focused its attention on job creation, instead of focusing 100-per-cent attention on winning elections.
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References:
World Economic Outlook, Apr2022
Tweet 14Oct2020 India vs Bangladesh
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Disclosure: I've vested interested in Indian stocks and other investments. It's safe to assume I've interest in the financial instruments / products discussed, if any.
Disclaimer: The analysis and opinion provided here are only for information purposes and should not be construed as investment advice. Investors should consult their own financial advisers before making any investments. The author is a CFA Charterholder with a vested interest in financial markets.
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