We're Live Bangla Sunday, September 26, 2021

India’s anxiety over Bangladesh’s GDP growth

Screenshot 2020-10-18 070501
Victoria Station in Mumbai -- the financial hub of India 

This isn't exactly the best of time for India. This is largely due to COVID-19 pandemic and the border conflict with its old enemy, China. But another new irritation was added -- largely unnecessary-- when the IMF predicted that Bangladesh’s per capita GDP will overtake India’s this year.

The IMF had reported that for 2020, Bangladesh's GDP will be higher, though India’s will be higher again next year. But this news has caused quite a storm in both the media and the political world in India. 

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When Rahul Gandhi made a dig at Modi on this, India' Reserve Bank hit back saying India had 8 times more population but 11 times higher GDP than Bangladesh. That this news would be taken so seriously was a bit unexpected. India is the only State that matters in the region but perhaps the loss of a sense of security comes with being a permanent top dog.

What did IMF say? 

The IMF has said that in 2020, Bangladesh’s per capita GDP in dollar terms is expected to grow at 4% reaching $1,888. But India will probably see a decline by 10.5% and be at $1,877, it’s lowest in four years. 

However, in 2021, India will possibly grow at 8.2% touching $2,030. Bangladesh will have a 5.4% growth with per capita GDP pegged $1,990. So, it's just this year and no more. India will be the richest again.

But public and media reaction is hyper in India as if the Indian economy has collapsed and Bangladesh is taking over. The problem is psychological. India is having difficulties coping with being a "termite" even for a year.

India is experiencing an economic contraction which was confirmed by the Reserve Bank of India last week. This will not last long.

Pride is hurting Indians. The Indian newsmagazine The Wire says: "What makes this situation even worse is that till five years ago, India’s per capita GDP was nearly 40% higher than Bangladesh’s. In the last five years, Bangladesh’s per capita GDP has grown at a compound annual growth rate of 9.1%, compared with 3.2% growth reported by India during the same period." With Bangladesh’s GDP growing at an 8% rate, it may become the 26th., largest economy in the world by 2030.

Indian politics of comparative GDP 

What Rahul Gandhi basically said was that "you are so bad, you are worse than Bangladesh." It was similar to the reaction in Pakistan on their first cricket defeat at Bangladesh’s hands. Nothing is worse in Delhi and Islamabad than being beaten by Bangladesh.

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The RBI naturally countered by informing that going by the Purchasing Power Parity (PPP) index, India’s per capita GDP in 2020 is estimated by IMF at $6,284 compared with $5,139 for Bangladesh. "In 2019, India’s GDP was 11 times more than Bangladesh’s while the population was eight times more," Nobody doubts this but the gap is closing. 

Changing Times  

Bangladesh has been growing faster, and India less so. COVID-19 is not the only reason. Some economic policies such as demonetization have hurt India. Bangladesh has grown at 9.1% since 2015, while India has hovered round 3.2 %. Apart from imports, the pandemic does not seem to have had too much of a detrimental effect on Bangladesh’s economy.

The problem seems to be elsewhere. The Indian mainstream seems to be stuck in the status quo where nothing changes to challenge its perceived "superiority". The kind of attention the news got in India seems almost comical. It felt threatened by the news when it hardly caused a ripple in Bangladesh.

With China at the border, Nepal redoing maps, and now tiny Bangladesh overtaking in GDP, India feels that the old order is under siege.

India's border clashes with China were not a major military event but they showed two things: 1. China-Indian peace can't come on Indian terms even with US support. 2. India is more isolated in South Asia than ever before. The first was well known but the second was a shock to many Indians.

Basically, the old South Asia with India in charge is over. Other states have not only grown but they neither depend on India nor are they very fond of it. And India is in a state of denial.

South Asia is an asymmetric zone which has been the cause of its lack of clout in the international world. South Asia has in fact been synonymous with India but that has changed as the smaller states have gained. And in this equation building, China has been a major player. If India tried to scuttle SAARC, it could not push BIMSTEC. Others have changed in South Asia, its India's turn to sit up, take note and introspect.