India’s GDP per capita to fall below Bangladesh, IMF predicts

The International Monetary Fund estimated on Tuesday that India’s per capita Gross Domestic Product It will contract by 10.3%, until March 31, 2021, while the figure in Bangladesh is expected to grow by 3.8%.

India faces the largest contraction of any major emerging market in the wake of the coronavirus pandemic.

The Washington-based lender, in its World Economic Outlook report, said “the forecast revisions are particularly important for India, where GDP contracted much more severely than expected in the second quarter.”

With these projections, India will be the third poorest country in South Asia. Pakistan and Nepal will be the only countries with a lower GDP. Bangladesh, Bhutan, Sri Lanka and the Maldives would be ahead of India. The IMF predicted that Sri Lanka will be the second worst hit country after India. Sri Lanka’s GDP per capita is expected to decline 4.6% in the current calendar year.

The number of coronavirus cases continues to rise rapidly in India, the Maldives, and Nepal. The IMF said the infection continues to spread in large countries, especially where economies are much more dependent on the worst-hit sectors, such as tourism and commodities, as well as remittances and other sources of external financing.

“All emerging market and developing economy regions are expected to contract this year, notably including emerging Asia, where large economies, such as India and Indonesia, continue to try to control the pandemic,” the IMF report said.

The lockdowns imposed by the Narendra Modi government on March 25 were the largest in the world, causing the economy to contract by a record 23.9% in the April-June quarter.

Gita Gopinath, the IMF’s chief economist, said the organization has “significantly downgraded” India’s growth for fiscal 2021. “The hit to the economy has been big and quite broad,” he added. “You saw it in the months of April, May and June, so this has been a very hard blow.”

Malhar Shyam Nabar, a division head of the IMF’s research department, said the government can take more steps to support households affected by the pandemic. “We believe there is room to recalibrate and provide more direct relief and spending support, which could have a major impact on preventing even worse outcomes,” Nabar said.

Gopinath also said that the coronavirus is re-emerging with localized lockdowns in place. “Now, if this worsens and the prospects for treatments and vaccines deteriorate, the cost of economic activity would be severe and would likely be compounded by severe financial market turmoil,” he added.

Economists said that Bangladesh’s economic growth has been supported by its fast-growing export sector and a steady increase in the rate of savings and investment in the country. Commercial standard reported. Meanwhile, India’s exports have fallen in recent years, while saving and investment have also decreased simultaneously.

Five years ago, India’s GDP per capita was almost 40% higher than Bangladesh’s, according to the newspaper. Dhaka’s GDP grew at a compound annual growth rate of 9.1%, compared to India’s 3.2% growth in recent years. This has allowed the country to close the economic gap with India.

Congressional Leader Rahul Gandhi, who has been a vocal critic of Prime Minister Narendra Modi’s handling of the economy, tweeted: “Solid 6-year achievement of BJP’s hate-filled cultural nationalism: Bangladesh is ready to overtake India” .