Bangladesh overtakes India in per capita gross domestic product (GDP) though it trails behind the giant neighbour in other counts such as lower purchasing power, reveals the latest outlook of the International Monetary Fund (IMF).
Per capita GDP in Bangladesh is expected to grow 4% in FY20 and to reach $1,888, while it is projected to plunge by 10.5% to $1,877 this year, says the IMF in its World Economic Outlook released on Tuesday.
The global lender also projected that Bangladesh's economy would grow at 4.4% and rebound in 2021.
Bangladeshis appear to be the fourth richest citizens in South Asia in terms of per capita GDP while the Maldives has the highest $12,464 in the region. Sri Lanka and Bhutan also have more per capita GDP than Bangladesh.
Nepal, Afghanistan and Pakistan are following India regarding per capita GDP. Pakistan has the lowest per capita GDP in the region.
Dr Shamsul Alam, member of the General Economic Division at the Planning Commission, said Bangladesh fared well as almost all major drivers of the growth such as agriculture, export and remittance have performed better in recent times.
That helped Bangladesh achieve better growth than many others even in Covid-19 period, he told The Business Standard when asked to comment on the per capita GDP.
Economists, however, expressed concerns over the sustainability of the per capita GDP position given the low revenue-GDP ratio, government revenue expenditure, and purchasing power in Bangladesh.
The IMF outlook says India will exceed Bangladesh in per capita GDP in 2021, when the country's growth is projected 8.8% compared to 4.4 of Bangladesh.
In 2020, Bangladesh is projected to see 3.8% GDP growth while India will see a negative 10.3%.
Despite a higher per capita GDP, Bangladesh lags far behind India regarding purchasing power parity (PPP). Per capita PPP of Bangladesh this year is projected at $5139, while it is projected $6284 for India.
Bangladesh has the third lowest purchasing power parity in the region just above Afghanistan and Nepal.
Towfiqul Islam Khan, Senior Research Fellow of the Centre for Policy Dialogue (CPD) told TBS people of India have 22.28% higher purchasing power than the people of Bangladesh, that why it should not be said that the economy of Bangladesh is far better than India.
He also said Bangladesh is projected to have higher per capita GDP for only one fiscal year. India will beat Bangladesh again when they will recover from the effect of Covid-19.
The report said, Bangladesh invested only 27.73% of GDP in 2020 which is lower than 49% of Nepal, 48% of Bhutan and 27.77% of India.
Bangladesh is projected to have only 8.173 revenue compared to the GDP which is lowest in South Asia.
Afghanistan has the highest 29.87% revenue GDP ratio in the region followed by 27.62% of Bhutan. The rate is 18.08% for India.
Government's total expenditure in Bangladesh is also the lowest at 14.97% in the fiscal 2020, which is 38.71% in Maldives. The ratio is 31.16% in India.