Bangladesh's per capita GDP now higher than eastern and northeastern India

Its per capita GDP was $1,905 in 2019, against $1,566 in West Bengal and $1,185 in Assam

Bangladesh’s per capita gross domestic product (GDP) is now higher than most Indian states in eastern and northeastern India, with the exception of small hill states such as Mizoram and Sikkim.

According to the data from the International Monetary Fund (IMF), Bangladesh’s per capita GDP was $1,905 in 2019, against West Bengal’s $1,566 in 2018-19 (FY19) — economically the most developed state in eastern India.

Bangladesh’s lead over other states in eastern India is even bigger. For example, Bangladesh’s per capita GDP is now nearly 50 per cent higher than Assam’s, nearly three times Bihar’s, and twice of Jharkhand’s.

Assam’s per capita GDP was estimated to be $1,185 in FY19, while Bihar is the poorest — its per capita GDP was $627 during the year ended March 2019.  

Bangladesh is surrounded on three sides by the Indian territory; it shares its border with four Indian states — Tripura, Assam, Meghalaya, and West Bengal.

The figure for Indian states has been sourced from the Reserve Bank of India and the average dollar-rupee exchange rate for FY19 has been used to get numbers in dollars. The exchange rate was Rs 69.9 to a dollar in FY19.

The IMF pegged India’s per capita GDP at $2,177 in 2019 — 14 per cent higher than its eastern neighbour. Income growth in India (in dollar terms) is, however, on the lower side, raising the possibility of Bangladesh outgrowing its bigger neighbour in the next few years.

In the past five years, per capita GDP at current prices in India has grown at 6.2 per cent in dollar terms.  At this rate of growth differential, Bangladesh may soon overtake India in terms of per capita GDP by 2023.

Note: Per capita GDP at current prices in US dollar in FY19; data for Indian states based on net domestic product, growth in FY18 projected in the FY for states with data gap | Sources: International Monetary Fund, Reserve Bank of India

The numbers also suggest Bangladesh’s national GDP will soon surpass the combined economic might of India’s 10 eastern states, including West Bengal, Bihar, Jharkhand, and Assam.

In 2017-18, the combined GDP of 10 eastern states was worth $290 billion, against Bangladesh’s GDP of $288 billion in 2018, according to the IMF’s latest World Economic Outlook.

In the past five years, Bangladesh’s per capita GDP grew at a compound annual growth rate (CAGR) of 10.4 per cent. In the same period, West Bengal’s per capita GDP expanded at an annualised rate of 7.5 per cent, while it was 7.6 per cent in Assam, 7.1 per cent in Bihar, and 5.6 per cent in Jharkhand.

Tripura, which is surrounded on three sides by Bangladesh, however, grew a much faster clip. In the past five years, Tripura’s per capita GDP has grown at a CAGR of 11.2 per cent, allowing the state to close the income gap with its neigbour.

Bangladesh’s economic success is attributed to its textile and garment sector. “The rapid expansion of the readymade garment sector helped the economy transform into a more manufacturing-based one and large inflows of remittances helped strengthen its external position and supported private consumption,” said the IMF in its recent consultation paper on the country.

Bangladesh is now the largest apparel exporter after China, with total apparel exports worth around $33 billion during 2018, according to the data from the World Trade Organization. This was more than twice India’s apparel exports worth $16 billion that year.

It is expected to continue its growth momentum in the near- to mid-term, allowing it to further increase its lead over eastern India.

The Asian Development Bank (ADB) expects Bangladesh to be the fastest-growing economy in Asia in 2019 and 2020, with GDP growth rate of 8 per cent at constant prices.

In contrast, ADB pegs the Indian economy to grow by 6.5 per cent in 2020.