The Financial Express

BD economy set to fly higher  

| Updated: November 15, 2020 20:54:22

BD economy set to fly higher   

The International Monetary Fund's (IMF) latest World Economic Outlook report has raised a massive clamour worldwide. According to this report, Bangladesh will surpass India in per capita GDP this year. Well, this is only a projection, and projections are often proved wrong. Many have already rejected this projection and can't accept the fact that the world's 5th largest economic giant, India, can fall behind Bangladesh, even in a single indicator. But what do the other indicators say? Is Bangladesh really doing better than India?

Per capita GDP is the most important indicator to show the prosperity of any country based on its economic growth. IMF's outlook has projected the per capita GDP for Bangladesh to be USD 1888 at current prices this year whereas India will have a per capita GDP of USD 1877 in 2020. India's GDP is almost 8 times as large as Bangladesh. The government sources of India are emphasising the higher purchasing power parity (PPP) of India which is 11 times more than that of Bangladesh now. Per capita PPP of Bangladesh is still less than that of India (Bangladesh- $5139, India- $6284) by 22.28 per cent, which the former CEA of India, Arvind Subramanian, claims as the greater tool for comparing welfare among countries.

From 2004 to 2016, Bangladesh had seen remarkable growth in its GDP but India's GDP growth had even been faster. From 2017, the wheel of growth has changed its track towards Bangladesh's favour. From then on, the rate of growth for this small country has become even faster than India's growth. Where the per capita GDP of India was 2 times greater than that of Bangladesh in 2007, the gap between both countries started to shrink in the last couple of years. What has made this shift? Numerous factors need to be considered to further dig into this matter.

The industry sector is the major contributor (53 per cent of GDP) of Bangladesh economy. The service sector comes next and agriculture is contributing the least to the GDP of Bangladesh. Industries create employment. For India, the Service sector (50 per cent of GDP) is the major contributor and too many people are still involved in agribusiness. For lack of industrialisation and unemployment, India's growth is decelerating.

The women of Bangladesh are phenomenal. RMG sector is contributing the most in Bangladesh's export earnings and most of these garments workers are women. World Bank report says, according to female labour force participation, 36 per cent of all Bangladeshi women are contributing to their national economy where India has this number only at 20 per cent. Including women into the national economy is so far the best thing that happened in Bangladesh.

50 per cent of Bangladeshi adults have a bank account where 80 per cent  of Indians have this. But according to the World Bank Global Findex database, the number of dormant bank accounts in India is more than that of Bangladesh. Banking is important and a clear indicator of a nation's active financial activity. With India having almost 8 times higher population than Bangladesh, more dormant bank accounts in India means the account holders are showing their back to their country's economic growth. This can also result in the negative GDP of India this year.

According to the Ministry of Foreign Affairs of Bangladesh, in the last few months, Bangladeshi emigrants have sent remittance that is almost half of last fiscal year's total remittance. Even this deadly coronavirus can't hold Bangladeshi people back from growing and earning for them and their country. Massive agricultural harvest, good exports, and this high remittance are primarily responsible for the magical growth of Bangladesh, and the people of this country deserve every bit of it.

In the Gender Parity Index, Bangladesh stands at 50 and India at 112. Gender Parity is a delicate index to show the political and economic opportunities that men and women can have in a nation. By this position, Bangladesh indeed shows a commendable progress.  

In the Global Hunger Index, Bangladesh stands at 75 and India at 94. Food availability, child nutrition, and child mortality are the important factors for measuring this index and this tells the amount of food security that Bangladesh has achieved for its people.

Bangladesh is facing many challenges as well. If someone wants to mention only one problem that Bangladesh has been fraught with since its birth, s/he will point at corruption. According to Transparency International's corruption index, Bangladesh is ranked 146 among 198 countries where India is at 80. Increased corruption is paving the way for this increased Gini coefficient of Bangladesh which is 0.48 currently. Income inequality is increasing day by day. The aggregate income of Bangladesh may increase but that doesn't nullify the 20 per cent poverty rate which has increased further in the last few months due to Coronavirus. The revenue to GDP ratio is only 8.17 per cent. For this low amount of revenue, the government has to lower its expenditure which has plummeted to 14.97 per cent this year.

The GDP of Bangladesh is also larger than that of Pakistan which was about $60 billion less only a decade ago. Bangladesh has controlled its population and inflation in which many of these subcontinental countries are still struggling. Yes, Bangladesh may not have any nuclear power or missiles to grab the attention of the developed countries but with its open perception towards global trade and being the new centre of the economic hub in the subcontinent, the country has fairly managed to attract global attention.

Mir Md Tasnim Alam is a development practitioner

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