On 'more appropriate' economic metric, Bangladesh has not surpassed India and is unlikely to be in future, former chief economic adviser Arvind Subramanian said on Saturday, asserting that GDP per capita is an estimate for one indicator of the average standard of welfare in a country.
Congress leader Rahul Gandhi had taken a dig at the government over IMF growth projections showing Bangladesh closing in on India in terms of per capita GDP this year and described it as a "solid achievement" of six years of the BJP's "hate-filled cultural nationalism".
Government sources had emphasised that India's Gross Domestic Product (GDP) in terms of purchasing power parity was 11 times more than that of Bangladesh in 2019. "The India-vs.-Bangladesh GDP per capita comparison (post IMF WEO) has sparked anxiety & acrimony.
But wrong numbers being compared… "NO, on more appropriate metric, India has not been surpassed and, according to IMF, unlikely to be in near future," Subramanian said in a series of tweets.
He said all the focus has been on comparisons based on GDP measured at current, market exchange rates and this yields "conclusion" of Bangladesh eclipsing India. But market exchange rates are not appropriate for welfare comparisons across time and countries, Subramanian said, adding that GDP per capita is an estimate for one indicator of the average standard of living/welfare in a country.
The former CEA said there is need to measure real GDP in local currency after taking out effects of inflation and then, convert all local currency estimates of real GDP into comparable dollars. He noted that more appropriate basis is GDP at constant, purchasing power parity (PPP) exchange rates.
Noting that India has no room for complacency, Subramanian said, "India will return to pre-COVID *LEVEL* of real per capita GDP only in 2022, 3 lost years." According to the IMF, India is set to drop below Bangladesh in terms of per capita Gross Domestic Product (GDP) as the economy is projected to contract by a massive 10.3 per cent this year.
IMF's forecast for India — a huge downward revision from its previous prediction in June — is also the biggest contraction projected among major emerging markets amid the COVID-19 pandemic.
However, India is likely to bounce back with an impressive 8.8 per cent growth rate in 2021, thus regaining the position of the fastest growing emerging economy, surpassing China's projected growth rate of 8.2 per cent, the IMF said in its latest 'World Economic Outlook' report.
Released ahead of the annual meetings of IMF and the World Bank, the report said global growth would contract by 4.4 per cent this year and bounce back to 5.2 per cent in 2021.
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