Is Bangladesh has really overtaken India?

 When we think of Bangladeshis, we feel that they are extremely poor, fed up of hunger, that's why they come to India in search of work. But as you may have heard the story of a turtle and a rabbit in childhood, nowadays India is doing the same with Bangladesh. India, which was supposed to be a $ 5 trillion economy till 2020, has slept somewhere like that rabbit. And Bangladesh's tortoise is slowly overtaking us. Because according to the estimates of the International Monetary Fund, in 2020 the income of an average Bangladeshi will be more than that of an ordinary Indian. It may sound strange to you, but how right is it? Is Bangladesh's average income really higher than India? Let's calculate it.

In the new report of the IMF, the IMF is saying that in 2020, the capita GDP of Bangladesh will exceed the capita GDP of India.

What is Per capita GDP?

By dividing the total GDP of any country by the total population of that country, the capital GDP of that country gets.

And the IMF estimates that in 2020, the capita GDP of Bangladesh will be $ 18888 and India's will remain at $ 18877. Yes, I believe that the gap is less, but still the per capita income of Bangladesh will be higher than ours. But the government says that this data does not reveal the reality, because the inflation rate has not been removed. Which is also true, because if we have to compare the living standards of any two countries, then we have to look at PPP and India is far ahead of Bangladesh in this. In PPP dollars, the capita income of India makes $ 6284 and that of Bangladesh becomes $5139.

 What is PPP (purchasing power parity)?

If we can  buy anything  in the US for $ 1, the same thing if we want to buy in other countries then the amount which we have to pay in that country's currency  , is called purchasing power property.

Like if we buy something in the US for $ 1, if we buy it in India, then we have to give ₹ 22. Meaning the PPP here is just ₹ 22. But if you go to exchange the dollar in an Indian bank, then you have to pay ₹ 75, it means ₹ 75 in dollar value exchange rate, but only ₹ 22 in PPP. The goods we buy in India for ₹ 22, we will buy in the US for $ 1. Similarly, if we go to any bank in Bangladesh to give $ 1, we will have to pay 85 Bangladeshi Taka but in PPP it remains only 33 Taka.

Bangladesh Growth Rate vs India Growth Rate in 5 Years Excluding Corona Period

Before 2014, the Capita GDP growth of Bangladesh in 2014 to 19 has been 49% whereas in India this growth has been only 35%. This means that we are far behind the growth rate of Bangladesh, and if we include the effect of Kovid-19 in it, then the situation will get worse because the income of a common Bangladeshi has increased by 38% in the last 5 years. At the same time, the income of a common Indian has increased by only 15%.

 In simple language, if the income of an Indian in 2014 was ₹ 100, then the income of Bangladesh was ₹ 67, but in 2020 the income of the same Indian will be 120 and the income of the same Bangladeshi will reach 98. The gap which was earlier 49% will now remain only 22%.

How did this happen? isn't India one of the world's biggest economies?

Typically, countries are compared on the basis of GDP growth, or on the absolute GDP.

For the most part since independence, on all the counts India's economy has been better than Bangladesh.

1. The first thing to note is that Bangladesh's economy has been clocking a rapid GDP growth rate since 2004. This piece did not change the relative position of the two economies between 2004 and 2016 because India grew even faster than Bangladesh. But from 2017 onwards India's growth rate has declined sharply while Bangladesh has been even better.

2. Secondly over the same 15 year period India's population grew faster (around 21%) in Bangladesh population just (under 18%) the combined effect of these two factors can be seen in how the per capita GDP gap has closed significantly even before covid -19 Bangladesh per capita GDP was nearly half of India in 2007 but this was just before the global financial crisis. It was roughly 70% of India in 2014 and this cap closed rapidly in the last few years.

3. Lastly the most immediate factor was the relative impact of covid-19 on the two economies in 2020. While India GDP is set reduced by 10%, Bangladesh is expected to grow by almost 4% .In other words, India as one of the worst affected economies, while Bangladesh is one of the bright spots.

Is India expected to regain the lead again?

Yes, the IMF projections show that India is likely to grow faster next year and in all likelihood again Surge ahead. but, given Bangladesh lower population growth and fast economic growth, India and Bangladesh are likely to be neck and neck for the foreseeable future in terms of per capita income.