India’s economy not lagging behind Bangla’s
The current furore of Bangladesh surpassing India in economic terms is a deliberate hoopla to show the Narendra Modi government in bad light and one that is based on selective pieces of information that do not reflect the big picture.
The headlines were disturbing. One newspaper categorically declared: India set to slip below Bangladesh in 2020 per capita GDP, says IMF. Another report penned by a person of Indian origin in a foreign news paper was provocatively insulting; the title read: The Next China? India Must First Beat Bangladesh.
Interpreting economic indicators is not for the dim-witted. It needs a certain degree of educational training and intellectual sophistication to tease out the intricacies of economics to come to a reasonable conclusion. So, it is understandable when a political leader not well known for the level of his IQ indulges in loose talk about economic indicators. But when the news media, which is supposed to educate and clarify public doubts, weighs in with its own two-bit of misleading information to perpetuate the ignorance it is neither acceptable nor excusable.
What is even more concerning is when a leading economist, who should know otherwise, adds to this misconception with his own terse tweet. Kaushik Basu, a Professor of Economics, Cornell University, and former Chief Economist of the World Bank commented: “IMF’S estimate shows Bangladesh will cross India in real GDP per capita in 2021. Any emerging economy doing well is good news. But it’s shocking that India, which had a lead of 25% 5 years ago, is now trailing. This calls for bold fiscal/monetary policy.”
How valid is this claim of Bangladesh surpassing Indian in terms of economy? Or is it an attempt to mislead the lay public with an ulterior motive?
The current furore of Bangladesh surpassing India in economic terms is much ado about nothing; a deliberate hoopla that aims to show the Narendra Modi government in bad light and one that is based on selective pieces of information that do not reflect the big picture.
First, all the incriminating reports reference the IMF and its World Economic Outlook (WEO) report. True the quoted pieces of information can be teased out from the IMF website through the search option but a rapid perusal of the recently released 182-page World Economic Outlook (WEO) October report fails to reveal any direct reference to a comparison between the GDPS of the two countries. The information being highlighted by certain sections of the media is the result of a fishing expedition and not something that the IMF has emphasised.
Second, the economy cannot be correctly assessed by any one single parameter. An array of complex indices must be factored in to accurately define a country’s economy. Focusing on one parameter—the real GDP per capita as some newspapers have done—is grossly misleading.
With Covid-19 denting
India’s economy more than that of Bangladesh, India’s real GDP per capita fell to $1,877 in 2020 compared to $1,888 for Bangladesh. However, even these numbers when analysed in terms of purchasing power parity (PPP), which takes into account the cost of living factor, we find that India’s per capita income of $6,284 clearly surpasses that of Bangladesh, $5,139.
Either way the current setback is a transient phenomenon. As per the IMF India’s GDP is set to rebound to 8.8% in 2021 as opposed to 4.4% for Bangladesh.
Former Chief Economic Advisor Arvind Subramanian put this controversy to rest in an unequivocal tweet: “The India-vs.-bangladesh GDP per capita comparison (post IMF WEO) has sparked anxiety and acrimony. But wrong numbers being compared. NO, on more appropriate metric, India has not been surpassed and, according to IMF, unlikely to be in near future.”
Comparisons can be odious especially so when they involve sensitive neighbours like Bangladesh. Bangladesh is no longer the basket case that it was supposed to be. Over the last few decades, extraordinary effort on the part of Bangladesh has transformed its economy and the outcome needs to be lauded. Attempts to shame India by unfair comparisons with Bangladesh also inadvertently result in demeaning Bangladesh.
Highlighting selective snippets of data at odds with the big picture specifically sourced from foreign agencies to overwhelm and mislead the lay public and embarrass the government has become a popular pastime of certain sections of the media. Remember the false campaign in 2015 to make Indians believe that Moody’s had censured the Modi government ? Such deeds are deplorable and must be desisted.