by Tripti Nath in New Delhi
The International Monetary Fund projections on Bangladesh overtaking India in per capita GDP has generated anxious jaw dropping reactions in India. Responding to scathing criticism by the opposition, sources in the Modi government attempted quick damage control by asserting that in terms of purchasing power parity, India’s per capita Gross Domestic Product in 2019 was actually 11 times higher than that of Bangladesh while the population was eight times more.
India is set to drop below Bangladesh in terms of per capita Gross Domestic Product. The IMF has projected India’s gross domestic product to plunge by a massive 10.3 per cent in financial year 2020-21. This is a cause of huge concern also because this projection is even more grim than that of the Reserve Bank of India which forecast a contraction of 9.5 per cent GDP for the current fiscal year.
According to the IMF’s ‘World Economic Outlook’ report released on Tuesday, India’s per capita GDP is set to plunge to $1,877 this fiscal year ending March 31, 2021. Bangladesh’s per capita GDP in dollar terms is expected to grow to $1,888, according to the IMF report.
India can derive solace from the IMF positive projections about the succeeding financial year. According to IMF, India is expected to bounce back in 2021 with 8.8 per cent growth rate thus regaining the position of the fastest growing emerging economy, surpassing China’s projected growth rate of 8.2 per cent.
Rahul Gandhi, one of the most visible faces of India’s grand old party, the Indian National Congress, was quick to tweet in news headline style with graphics of sarcastic applause, “Solid achievement of six years of BJP’s hate-filled cultural nationalism: Bangladesh set to overtake India. “
Rahul, a member of Parliament from Wayanad in the southern state of Kerala, also tweeted statistical projections from the IMF World Economic Outlook. The report is released ahead of the annual meetings of the IMF and the World Bank.
As news of IMF projections began to surface, social media too began disseminating pictures on the IMF report by putting out pictures of an elated Bangladeshi Prime Minister Sheikh Hasina standing with a rather upset Indian Prime Minister.
Noted economist, Dr Prabir De who works for New Delhi-based think tank RIS (Research and Information System for Developing countries), says that the contraction of GDP is temporary. “This scenario is because of the Covid-19 pandemic-triggered lockdown. Once it is over, we will register a very sharp V type recovery. In an economic crisis caused by the global pandemic, a nation’s GDP is bound to shrink. We need to keep in mind that this discussion on IMF projections for India and Bangladesh, has acquired a political tone. During the Covid time, Bangladesh is the only country in South Asia that had registered a positive growth rate in the first half of 2020 because they were faring well before COVID. So, they could sustain the growth momentum whereas India had already slowed down before COVID.”
Dr De also drew attention to the fact that the Bangladeshi taka is appreciating against the US dollar in comparison to the US dollar and the Indian rupee. “Bangladesh’s economy is doing well for quite some time now and it enjoys a trade surplus with the United States.’’
In an interview with India Today TV Consulting Editor Rajdeep Sardesai, IMF’s Chief Economist Gita Gopinath attributed the reversal in IMF’s forecast for the Indian economy to “a surge in the pandemic, longer duration of containment measures and collapse of various activities.”
In response to a specific question by India Today TV about “even Bangladesh seems to be doing better than us”, Gita Gopinath said, “Initially, it looked like that but it would be controlled but you will see a return. But, again lockdown has hit many economies across the world.”
The IMF Chief Economist also ruled out a V-shaped recovery saying “There is no V-shaped trajectory. You will see a rebound in growth. It will be a partial recovery- more like a combination of V and L. It will be gradual.”
Addressing the annual meeting of the Board of Governors, the IMF Managing Director Kristalina Georgieva said on Thursday, “Today, we face a new Bretton Woods moment. A pandemic that has already cost more than a million lives. An economic calamity that will make the world economy 4.4 per cent smaller this year and strip an estimated USD 11 trillion of output by next year. And untold human desperation in the face of huge disruption and rising poverty for the first time in decades.”
As per Georgieva’s prescription, India’s priority should be to protect the vulnerable population and improve healthcare.