According to the IMF report, India is on the verge of falling below Bangladesh in per capita gross domestic product in 2020 (calendar year) as a result of the impact of the lockdown.
The IMF expects India’s per capita GDP (in dollars, current prices) to fall to $ 1,877 in 2020, a decline of 10.3 percent. For Bangladesh, the corresponding figure is projected to rise to $ 1,888, an increase of 4 percent.
In terms of GDP per capita, India was significantly above Bangladesh until a few years ago, but the gap has been substantially closed due to the rapid increase in the country’s exports. Furthermore, during the interim period, while Indian savings and investments remained tepid, the figures for Bangladesh saw a significant increase.
If the IMF’s forecast hits the mark, it will leave India just ahead of Pakistan and Nepal in the regional GDP draw. It means that others in South Asia (Bhutan, Sri Lanka, Maldives, and of course Bangladesh) will be ahead of India.
Compared to the projected decline for India, the economies of Nepal and Bhutan are expected to grow this year, the report noted.
The IMF forecast for India is worse than the RBI’s projection of a 9.5% contraction for the full fiscal year. It is also bleaker than the World Bank forecast, which predicted a 9.6% decline for fiscal year 21. Furthermore, the World Bank also said that the situation in India is “worse than ever.”
India’s 10.3% contraction will be the third steepest decline in the world after Spain and Italy, according to the report. It will also be the steepest decline among developing nations and emerging economies, he added.
Emerging economies other than China will experience a 5.7 percent contraction in 2020, the IMF said in the report. This is worse than the 5.0 percent projected in June.
In particular, the report pointed to the risks emanating from the constant spread of the virus in countries like India and Indonesia. These economies depend much more on the worst affected sectors such as tourism and raw materials, as well as on remittances and other sources of external financing, which, according to the IMF, would make recovery much more difficult for them.
Data accompanying the report says that in 2020, the Indian economy will contract the most since the 1990-91 crisis. India is likely to be the worst hit economy in South Asia after Sri Lanka, it shows.
The IMF report, however, forecasts a strong recovery for India in 2021, which will put India ahead of Bangladesh once again in GDP per capita.
According to the report’s projections, in (calendar year) 2021, GDP per capita in Indian dollar terms is likely to grow by 8.2%. For the same period, the projected figure for Bangladesh is 5.4%. That will take India to $ 2,030 in GDP per capita in 2021 compared to $ 1,990 for Bangladesh.
.
