Picture This: Has Bangladesh left India behind?

Figure 2

“India has slipped below Bangladesh in terms of per capita income,” said some news reports recently. According to the report, while Bangladesh’s per capita income had grown to $2,227 in 2020-21, India’s had reached $1,947, thanks to the economic contraction in the previous financial year.

In April 2021, International Monetary Fund’s World Economic Outlook data release also suggested that Bangladesh left India behind in per capita Gross Domestic Product (GDP) terms (at current prices, in US$) in 2020.

Figure 1 above, compares the evolution of India and Bangladesh’s per capita GDP at current prices. Bangladesh had a per capita GDP of $1,998 in 2020, which was slightly above India’s per capita GDP of $1,965. While Bangladesh’s per capita GDP grew by 7.8% in 2020 (year-on-year basis), India’s saw its per capita GDP decline by 6.4% in the pandemic year.

While Bangladesh is ahead of India at current prices, the picture is different when we look at IMF’s per capita GDP figures at constant prices. The differences in inflation in the two countries, therefore, are partly responsible for Bangladesh moving ahead of India at current prices.

Figure 2 above compares India and Bangladesh’s per capita GDP at constant prices (Purchasing Power Parity, 2017 International $) using the same WEO Database from IMF. The chart covers the period 1990 to 2020 and uses 2017 as the base year.

According to this database, Bangladesh had a per capita GDP of $1,544 in 1990, while India had a per capita GDP of $1,664. Bangladesh’s per capita GDP was therefore 93 percent of India’s figures. We find that this ratio steadily declined between 1990 and 2016. In 2016, Bangladesh’s per capita GDP was $4,181 which was 71.5 percent of India’s per capita GDP in the same year ($5,851).

According to the IMF database, Bangladesh’s per capita GDP in 2020 was $5,030, which was 82 percent of India’s per capita GDP of $6,125 in the same year.

This shows that while at current prices, Bangladesh’s per capita GDP may have surpassed India, at constant prices, India is still ahead.