COVID-19 creates hurdles in yet another progress of India with a sharp contraction in the Indian economy being seen. The neighbor Bangladesh is set to beat India in terms of per capita gross domestic product (GDP), as claimed by International Monetary Fund (IMF).
The international agency’s World Economic Outlook (WEO) for year 2020 estimates that Bangladesh’s per capita GDP may grow at 4%, while that of India may decline 10.5%. The figures make India the third-poorest nation in South Asia and only Pakistan and Nepal behind it. The other countries Sri Lanka, Bhutan, Bangladesh, and Maldives would be ahead of India.
Contrary to the expectations due to the pandemic, two countries in South Asia, Nepal and Bhutan, are expected to grow their economies.
There is a silver lining for India in that the agency sees a sharp recovery in 2021 and sees this pushing the per capita GDP ahead of that of Bangladesh.
The geographic size of the two neighbors, India and Bangladesh, is quite different and the former has led the latter till five years ago by 40%. However, the strong exports of Bangladesh coupled with a steady growth in rate of savings and investments are giving the country lead.
The WEO database clarifies that India’s economic contraction in this year will be the worst since the 1990-91 economic crisis and the contraction at that time was 17.5%.
In 40 years, the per capita GDP has contracted 8 times, and this year will be the first time in the last 20 years.