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Bangladesh is better off than India, not a poor, backward neighbour anymore

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Bangladesh has come a long way since its independence in 1971, registering impressive performance on economic and social indicators.

New Delhi: India, the fastest growing major economy, is seen as the powerhouse of South Asia, but this may soon change.

Having already stolen a march over India on key social indices, small neighbour Bangladesh is now on the verge of establishing a lead on the economic front too.

According to the Asian Development Bank (ADB), Bangladesh is expected to post a growth rate of 7.5 per cent in 2018-19 against the 7.3 per cent projected for India.

India’s eastern neighbour saw a GDP growth of 7.28 per cent in the last financial year, according to the Bangladesh Bureau of Statistics (BBS), while India grew at 7.1 per cent.

The country’s per capita income is also growing at a pace three times India’s: According to United Nations Conference on Trade and Development figures cited in a Dhaka Tribune report, while India’s per capita income rose by 13.8 per cent between 2013 and 2016, Bangladesh’s grew by 39 per cent.

According to some estimates, if the country continues to keep up its gross national income (GNI) and GDP growth at the same pace for the next two years, it will overtake India’s per capita income by 2020.

Also read: Behind Rupee meltdown: India’s exports disaster under Modi Govt

A long journey

Formed from the poorest regions of Pakistan, Bangladesh has come a long way since its independence in 1971.

The country’s GDP growth rate in 1972 was recorded at negative 14 per cent. Two years later, Bangladesh was steaming ahead with a growth rate of 9.6 per cent when a catastrophic famine, which killed an estimated 1.5 million people, brought the country on its knees again. The ensuing economic crash saw the GDP growth rate slip to a negative 4 per cent.

Inforgraphic by Arindam Mukherjee/ ThePrint

After the famine, the government started redeveloping the country with the help of international relief funds. NGOs also stepped up, and the introduction of high-yielding rice and wheat in the 1970s started to boost agricultural growth.

The country’s robust position today can partly be attributed to its stellar micro-credit system, which began to take root in the 1980s and stands as a model for developing economies. And then there is the fact that the government has been known to focus on women empowerment and prioritise health and education.

Talking to ThePrint, Jayshree Sengupta, economist and senior fellow at Observer Research Foundation (ORF), said the economic surge could be traced to growth in private sector investment and remittances from Bangladeshis abroad.

Exports, especially from Bangladesh’s burgeoning readymade garment industry, have played a massive role too.

Bangladesh is a labour-intensive country like India. However, it does not have strict labour laws like India does.

In 1947, before Independence, India passed the Industrial Disputes Act, which put in place a mechanism for the resolution of conflict that recognises the rights of employers as well as workers.

This law was inherited by Pakistan as well, but the country’s military regime repealed the law from what was then East Pakistan in 1958 following differences with trade unions.

Thus, when Bangladesh separated from Pakistan, it did not have the law.

This helped Bangladesh establish itself as a hub for cheap labour, and a base for its booming manufacturing industry.

The garment industry in Bangladesh is one of the strongest drivers of the economy, having given employment to almost 2.7 per cent (44 lakh) of the country’s 16.3 crore people. Nearly 70 per cent (30 lakh) of these are women.

China’s retreat from low-end manufacturing has helped cement Bangladesh’s position in the sector, and the country has been wooing global investors with its cheap work force.

India today

In India, high oil prices, weak exports and depreciation of the rupee due to a slowdown in capital flows have impacted the economy. Just this week, the rupee, Asia’s worst performing currency this year, fell to a historic low of 74/$ Monday.

“We saw an 8.2 per cent economic growth rate in the first quarter of this fiscal and that was largely due to the base effect of the previous year,” Abhijit Sen Gupta, a senior economics officer at ADB, told The Print. “In the next quarters, we are likely to see a sort of slowing down of growth.”

According to Sen Gupta, if India wants to keep up with its neighbour, it should focus on reducing bottlenecks in sectors such as infrastructure, manufacturing, services and exports, which are critical to quality job creation.

“The export engine, along with investment, needs to be fired to sustain high growth rate,” he said.

Social strides

Bangladesh has also made significant strides vis-à-vis social development indicators such as life expectancy, infant mortality and gender parity.

In a study on ‘human capital’ published in the medical journal The Lancet, India ranked a notch below Bangladesh.

The study aimed to measure the strength of human capital — described as the level of education and health in a population — in the world’s 195 nations between 1990 and 2016. The parameters included years lived, functional health status and educational leaning.

According to the World Bank, in 2017, Bangladesh recorded an infant mortality rate of 27, which means that these many children died on average within the first year for every 1,000 live births. For India, the rate was 32.

The average life expectancy for an individual in Bangladesh is 72.58 years, against 68.8 years in India.

What’s helped Bangladesh

Experts say that Bangladesh owes much of this progress to efforts made by non-government organisations like Grameen Bank and BRAC.

Grameen Bank, for one, is a globally renowned microfinance initiative that earned its founder Muhammad Yunus a Nobel Peace Prize and inspired replicas in more than 100 countries.

The initiative aims at poverty alleviation by giving loans to small-scale entrepreneurs who do not qualify to receive traditional bank loans. According to the bank’s website, it has “grown to provide collateral-free loans to 7.5 million clients…97 per cent of whom are women”.

This has helped boost financial inclusion in the country. According to World Bank data, 34.1 per cent of Bangladeshi adults with bank accounts made digital transactions in 2017, against the average of 28.8 per cent for South Asia.

Also read: India is the 12th worst country for gender disparity in labour force

Although Bangladesh’s health expenditure as a share of GDP is still lower than India’s, several initiatives taken by the government have helped boost education and women empowerment.

The government has made primary education free and compulsory, giving girl students stipends and scholarships for their entire school education. The government has a strong social safety net for women with initiatives such as four to six months of paid maternity leave, and allowances for divorced and destitute women.

Women now make up nearly 70 per cent of Bangladesh’s garment industry and over 60 per cent of fish farmers.

Bangladesh has set an example for developing economies with its women empowerment initiatives, with the World Economic Forum (WEF) ranking the country number one in gender equality among south Asian nations in 2017 as well as 2016.

It has also registered an impressive performance on reducing poverty, a parameter on which India has made significant advances as well.

Bangladesh was ranked seventh, a good eight slots ahead of India (15), in the political representation of women on the WEF gender gap index.

This is because 50 of the 350 seats in the Bangladesh parliament, roughly 14 per cent, are reserved for women. Meanwhile, in India, 62 of 543 MPs elected in 2014, or 11 per cent, are women, with a law on reservation yet to see the light of day.

Don’t forget the NGOs

“Bangladesh’s high economic growth can be attributed to the sustained investments that Bangladesh has made in enhancing people’s productive capacities, especially by way of promoting basic health and education,” said development economist Dr A.K. Shivakumar.

“That life expectancy at birth is higher and child mortality lower in Bangladesh today than in India, when it was not so during the early 1990s, is testimony to the better access that Bangladeshis have to basic social services,” he said.

“To an extent,” he added, “the high growth has also been fuelled by the social transformation brought about by the greater freedoms young girls and women enjoy in Bangladesh today.

“The growing employment opportunities for young women in the garment industry, as well as the collectivisation and empowerment of women brought about by the spread of the microfinance movement, has contributed to it as well,” he said.

Also read: India’s software exports are not the answer to the rising oil bill

Experts are also unanimous in crediting NGOs for the turnaround in Bangladesh’s fortunes.

“Non-government organisations have played a critical and complementary role to the state in reducing poverty and in expanding social and economic opportunities for a vast majority of Bangladeshis,” said Shivakumar.

ORF’s Sengupta agreed, even as she expressed scepticism about the government’s role.

“It is not a very nice picture in Bangladesh,” she said. “They have a very authoritarian government which has completely suppressed dissent. Women are working without wages.”

By 2017, Bangladesh was being lauded for becoming almost open-defecation free, a journey India is striving to complete. Between 2003 and 2015, Bangladesh’s open-defecation rates have fallen from 42 per cent to 1 per cent.

Meanwhile, the Indian government’s sustained fight to make the country open-defecation free with Narendra Modi’s pet ‘Swachh Bharat mission’ began only in 2014.

Under this mission, 76 per cent of India’s villages have been declared open-defecation free as of October 2018. India has taken a leaf out of Bangladesh’s Community-Led Total Sanitation (CLTS) model, introduced in 1999, which focuses more on generating demand for basic indoor toilets than releasing subsidies.

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  2. Richest region of Bengal, not the poorest region in Pakistan. Bangladesh came into existence BECAUSE of our regional, cultural, and religious differences.

  3. Ground reality is far different.Competition among Mercedes & Rickshaw can be seen in Dhaka itself w/c reflects modern day slavery.Lack of humanism can be seen.Wealthy Bdeshis including doctors still prefer being treated by Indian/Singaporian doctors due to unhuman and rude behaviour of local doctors whereas low income & poor families have compulsion to be harassed & maltreated.If there population gets controlled,no doubt they will obviously do good but the problem is there uncontrollable birth rates due to radical religious beliefs among extremists .

  4. Haha Indians will always be Indians, looks like the Brits could not teach you slaves, bunch of moaners just like their cricket team. Go fix your country first. We don’t care about you.

  5. It was nice to read a well worded article on a country which we can take pride in giving birth to! I read through all the criticism contained therein. Also, one of the noteworthy point already raised by one of the observers here is that Bangladesh ‘exported their overpopulation’ into India. All this notwithstanding, kudos to Priyamvada Grover to put forth a point that a country as small or as big as one of India’s state is contending to compete with India. Yes, it is a matter of pride for them to be competing with India and come out better. Having said, we have to observe that they had so many hurdles to cross. In its magnanimity, India has bigger and mightier contries to compete with, but we can open discussions on how each of our states are fairing vis-a-vis Bangladesh, or for that matter any country of that size. Many years back, I had given this as a food for thought that the states ought to be run like independent entities encompassing their strengths (and weaknesses as well), winning over them to come out with their own set of winning goals and securing their development plans through direct fundings from domestic or internationalinvestors. Finally it boiled down to the local Startups with international reach. Still we are not too late … as against looking at centre to bail each state out of any of the problems, the states should run themselves as independent international entities. In fact, those states which worked on this model are already doingat par or better than most of their counterparts & countries internationally. Thanks to the writer to bring forth the point here, onec again.

  6. The author missed an important point: Bangladesh exported it’s most poors to India and got rid of its poverty. A very smart move by Bangladesh.They are doing it still with the help of Indian libtards and pseudo seculars. Yet it’s very good for us and we can expect that the infiltrators will start going back to Bangladesh because of its improved economic performance.

    • Who don’t you export India’s poor to some other country and make a smart move too. Also just to let you know : “Yet it’s very good for us….” – No it’s not good for us because the so called infiltrators never agreed they were such and Bangladesh won’t take them anyway even if they agree. So will you try to fight for something where there’s no tangible result in sight or do something else to inprove your country’s condition by focusing elsewhere ?

      • Abhishek you can be a proud patriot as much as you want by reality will dawn nevertheless. Stop trying to find fault with the author or the article and start searching what can be done to keep India at the top table. There will be many such articles by many other writers and you will get bogged down refuting them on the comments section. Do your original research and send an article to any of the many newspapers in india. You might have a chance then if refuting this article and proving your point.

  7. India needs to liberalise labor laws. A flexible and less restrictive labor market will enable companies to hire more workers.

  8. I see not many people like the fact that Bangladesh is doing better in many different sections than India or Pakistan. Bangladesh made strides in healthcare and social index many many years ago, not a recent phenomenon.

  9. Quite obviously 70years of congress rule not done any good. Even the present bjp govt has had limited success…. Something fundamentally wrong with the manner in which India is governed

  10. inspiring to know consistent growth of bangladesh in last few decades both in economic and social sectors. I always had a cramped up image of bangladesh society of highest population density , population being 16 crore plus for the size of the country.
    India should seriously consider providing better connectivity to our north east passing through bangladesh so that our most backward and disconnected part of north eastern states also improves , taking a leaf from Bangla story

  11. Grameen Bank borrowers are killing themselves because they cant pay back their loans. What happened to the first Grameen borrower that he likes to talk about so much? She died in poverty. BRAC with bKash has done more for the country since its inception than Yunus ever has or will.

  12. There’re massive BLUNDERs in the above article, for instance –

    Bangladesh PPP GDP/capita is 3524 USD
    India PPP GDP/capita is 6426.67 USD

    6427/3524 =~ 1.827; there is no way Bangladesh is “catching up” with India in GDP/capita in a couple of years.

    This also holds for nominal GDP – Bangladesh’s normal GDP/capita growth in last 3 years has NOT been 39 percent. It has been closer to 17%, virtually same growth as India. Nominal GDP/capita is unhelpful, since most goods/services in both countries are produced internally.

    As regards infant mortality, Indian IMR of 32 in 1,300 million is way more credible achievement than Bangladesh’s IMR of 27 in a much smaller population of 150 million.

    • No it doesn’t. It says Bangladesh’s per capita is increasing at 3X that of India. Doesn’t mean Bangladesh’s per capita income is more than India’s.

      • I addressed this point. Their per capita is NOT increasing at 3X India – for that, they’d have to be growing at 10%+ per annum in the last 3 years. That is NOT the case, either nominally or in PPP.

        “Bangladesh’s normal GDP/capita growth in last 3 years has NOT been 39 percent. It has been closer to 17%, virtually same growth as India. Nominal GDP/capita is unhelpful, since most goods/services in both countries are produced internally.”

        Innumerate, statistically ignorant people like this Priyamvada person are only running pointless deception campaigns.

    • I stopped reading the article after that ” 2 year catching up” thingy. The IMF WEO October update just came out, and theres not a whimsical chance of B’desh catching India in next 5 years. At best, they MAY catch Pakistan.

      • The problem with India is it cant help it self and don’t like the fact others are doing lot better. Not just Bangladesh..Vietnam Indonesia Philippines not to mention china all were poorer then India but now suppress the Indian economy in every category. Indian export 2012 was 300 Billion and 2018 still it’s same. Instead of being butt hurt invest in competitiveness and infrastructures. Otherwise Indians and south Asia in general will continue to be poor and lose out to south east and Asian manufacturing powerhouse economies. Just look Vietnam country of mere 80 million export as much as India country of 1.3 Billion.

      • India needs to do the following for totally massive and economic economic growth :-

        1. Create communities of engineering and consumer/market knowledge (leveraging India’s massive public and private sector infrastructure), on civic infrastructure, addressing social problems like caste-ism using historical precedents,
        3.scientifically model India’s economy and demography on natural rejuvenation – invest in forests and rain-fed water-sources.

        First step is rubbishing fallacious and innumerate trash like this article.

        • Unfortunately India is all talk no action. In 1990 china and India per capita income was same NOW it is 5 times bigger. Most of the outsource and BPO is going to Philippines, low value manufacturing is shifting to Vietnam Bangladesh and Indonesia. India in last 70 year suffered from policy misleads hence its now facing widening current account deficit…huge public debt. If India need to survive they have to do some thing like China did and now Vietnam consider the next economic tiger. But first we need butt hurt people to accept reality. Indian rupee just lost 14 percent of its value and now worst performing currency in Asia. Only comparing with Pakistan to feel good will not save the day.

      • See the graph of GNI PPP per capita of India and Bangladesh (with Pakistan thrown in for good measure). Clearly, India is *accelerating away* from Bangladesh.

        Bangladesh is not even going to catch up to Pakistan. And whoever said Bangladesh has 39% real growth rate in the last 3 years ?? That means a real growth rate of (1.39)^(1/3) = 1.11 i.e. 11% growth for each of the last 3 years.!ctype=l&strail=false&bcs=d&nselm=h&met_y=ny_gnp_pcap_pp_cd&scale_y=lin&ind_y=false&rdim=country&idim=country:IND:BGD:PAK&ifdim=country&tstart=655756200000&tend=1507833000000&hl=en_US&dl=en&ind=false

        • All i can say India has failed it’s people with wrong policy and lack of reforms. Its 2018 our country even failed to create toilet for our own citizens. We are a laughing matter around the world, we are still regarding as a third world country with per capita income of 2100 lower then Nigeria. Why Indian politicians keep lying corruption bureaucracy incompetence list goes on. Unless we learn from mistakes nothing will change. Now we compare our self with Bangladesh Pakistan or Nepal because rest of Asia move forward and left behind India long time ago. Just pathetic.

      • KID u do not have any financial knowledge.
        It would take 100 years to Pakistan like if they want at least to economy of BD level
        U clearly can google it.

  13. Very inspiring. All of South Asia can see high growth for decades. It requires deeper integration, for SAARC to become a vibrant organisation, India and Pakistan to live peaceably together. Intuition suggests large scale illegal migration from Bangladesh is a thing of the past. We have a lot to learn from them.

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