It seems twenty-twenty is no longer India’s favourite. Oops, this is certainly not true about cricket by any means. A total of 269 million people watched the IPL in the opening week. The number does not seem to come down as the game progresses. The IPL would have helped a few organisations to earn some revenue but not the economy, at least.
If a recent report by the International Monetary Fund (IMF) is anything to go by, India’s gross domestic product (GDP) for this fiscal is likely to fall below the neighbouring Bangladesh’s. Sounds unbelievable! Isn't it?
It is akin to the Indian cricket team losing a crucial world cup match to Bangladesh. After the 2007 blow, the Indian cricket team never took the Bangladesh team lightly. Another blow came when we lost a match in the junior world cup recently. Forget cricket, now this country is all set to take over India in economic growth as well.
Not only this, countries like Sri Lanka, Bhutan and the Maldives will also be in a better position than India. The report suggests that India would be the third poorest country in South Asia by the end of 2020. Something that may give a little solace, at least to the government, is that Pakistan and Nepal will still be below India. While our growth rate is estimated to be in the negative, Nepal and Bhutan are set to grow in the right direction.
Even in 2021, the report shows that India would be only slightly above Bangladesh, despite an estimated growth of 8.2 per cent. Comparatively, Bangladesh is expected to grow by 5.4 per cent. Now you all might be wondering, how is it possible, that the former may still give us a tight competition despite the huge difference in growth rate.
Until five years ago, India’s per capita GDP (total GDP divided by total population) was around 40 per cent higher than that of Bangladesh. During the last five years, Bangladesh’s GDP grew by a compounded annual growth rate of 9.1 per cent while India grew by only 3.2 per cent.
In other words, the economy grew manifold so much so that it could come a notch closer to crossing India. The year 2020 has put India on backstage. The negative growth rate only means that India is becoming a poorer nation.
Now what has put India in such a precarious condition? The script for this story was written in the year the government introduced certain quick-fix measures without weighing the pros and cons. Be it demonetisation, Goods and Service Tax (GST), Citizenship Amendment Act (CAA) or the recent amendments in FCRA, the government was more focused on its political agenda than economic growth.
The main emphasis has been on scuttling dissent, grabbing power by all means or controlling the voices of the marginalised from being heard. Institutions like the Reserve Bank were virtually being controlled by the government.
Our growth trajectory had a topsy-turvy drive. Unemployment was already at an all-time high. GDP could never bounce back. And then came corona. We were already ill-equipped, unprepared with little bandwidth to handle the crisis and virtually no money, either to revamp the poor health infrastructure or for relief measures. Worst, the man with the highest authority thought, we will be able to get over it in 21 days, the time the Pandavas took to defeat their cousins!
Instead of asking the public to light diyas or beat plates or ring bells, the prime minister should have anticipated what it meant to put the country in lockdown. What could have been the consequences? He should have spent his time chalking out a strategy to revive the economy.
Instead, we saw a slew of stimulus packages being announced by the finance minister for close to 10 days. As if a new series is being run on Netflix! Unfortunately, none of them was capable enough to gain either public trust or to trigger the economy.
True, some people got some money in their bank accounts. But now the government has itself realised that the money is lying idle in most of the Jan Dhan Accounts! This has disenchanted the FM.
So much so that the finance minister is in no mood to come up with any stimulus package as of now. Instead, she came up with another announcement in the name of Festival allowance for the government officials. This allowance of Rs. 10,000 will be given to all government employees, gazetted or non-gazetted officers. This will be in the form of a pre-paid card, which has to be used only for purchasing commodities during the festival season. This will be interest-free and will have to be repaid in EMIs.
The scheme also allows the state governments to take a loan of Rs. 12,000 crore for infrastructure development, which seems like a drop in the ocean. So is the case with the decision of spending Rs. 25,000 crore on infrastructure including defence infrastructure, from the Centre’s budget. In other words, this stimulus is as unexciting as the much-touted Aatamanirbhar Bharat scheme.
Instead of turning outwards, producing more for meeting global demand and focusing on exports, the scheme emphasises on inward growth. This scheme would have been more successful before liberalisation. In a scenario, where the world is considered a small village, India should focus on meeting domestic as well as international demand. Another reason why India failed to bounce back quickly is largely because the government depended more on the Reserve Bank for reduction of interest rates and other fiscal measures.
So, what can help India in bouncing back? Bangladesh shows the way. But are we really ready to follow? The government is still on denial mode. In fact, when the opposition attacked the government, it came up with a lot of excuses to justify and project a new hypothesis. The fact is that if Bangladesh keeps on growing at a faster rate than India, we will be losing on foreign investment.
Despite having a huge potential, ours may be termed as a lost case. Over these years, Bangladesh has focused on controlling its population. In fact, during the last five years, our population grew at 21 per cent as compared to around 17 per cent in the case of Bangladesh.
While the country has been growing at a faster rate since 2004, India’s growth suffered a setback since 2017. So, the per capita GDP dropped considerably in India’s case (reduced GDP with increased population) while in the case of Bangladesh it increased consistently (increasing GDP with comparatively lesser growth in population). In other words, we certainly have to take steps to control the population growth. Not just to improve CAGR but to distribute resources equitably.
Another factor that has helped Bangladesh in marching faster than India is increased production followed by a boost in the services sector and a higher female participation in the labour force. The major turnaround happened because of the garment industry in Bangladesh, while we could never boost industrial production. In Bangladesh, manufacturing and the services sector create a majority of the jobs. There is little dependence on agriculture. In India, it is the other way around. Most of our population is dependent on agriculture for livelihood, though it is no longer remunerative.
Also, Bangladesh has invested in building infrastructure for health, sanitisation etc. and has focused on financial inclusion and women’s political representation. Its progress is visible from many other indexes such as the global hunger index, human development index and even the Global Findex database, which focuses on financial inclusion.
In fact, Bangladesh has a much smaller proportion of dormant bank accounts as compared to India. It is far ahead on gender parity index, which focuses on providing equal opportunities for both men and women as far as education and health are concerned. In other words, Bangladesh is a real case study for Indian government.
(The writer, a company secretary, can be reached at firstname.lastname@example.org)