India to slip below Bangladesh in Per Capita GDP in 2020

The International Monetary Fund (IMF) has released the World Economic Outlook (WEO) on October 13, 2020. As per the report, India will to slip below Bangladesh in terms of per capita GDP in 2020. The latest report Highlights that Bangladesh is likely to expand by 4% in 2020. It stated that, Indian Economy is facing contractions because of coronavirus lockdown.

Key Findings of report

  • The report has stated that India’s economy will contract by 10.3% in 2020. The growth rate of India will be the slowest among BRICS nation. It is India’s lowest growth in four years.
  • This has revised the growth projections of the world by 0.8% as compared to June 2020. It states that, after 2021 the Global growth would be at 3.5 %.
  • In 2020, consumer prices in India will grow at 4.9 %  while 3.7% in 2021.
  • The current account balance of India has been projected to grow by 0.3 % in 2020 and will be up to 0.9 % in 2021.
  • India would be the third poorest nation in South Asia as per the report along with Pakistan and Nepal. Bangladesh, Bhutan, Maldives and Sri Lanka have been placed above India.
  • The report highlights that India’s economy has been hardest-hit by the COVID-19 pandemic in South Asia after Sri Lanka.
  • Sri Lanka’s per capita GDP has been projected to contract by 4% in 2020.

Situation in 2021

The report for 2021 forecasts that there will be a sharp economic recovery in the Indian economy. India’s GDP will grow by 8.8 % in 2021. Thus, it will push India ahead of Bangladesh’s per capita GDP of 5.4% in 2021.

World’s projection

The latest report of IMF have projected a deep recession in 2020. It has projeced the global growth to be -4.4 %.  There is an upward revision of 0.8% in the latest projection.

Recommendations

The report have recommended that there is a need of Global fiscal support of 12 trillion USD which can be infused through asset purchases, liquidity injections and the rate cuts by the central bank. It has also suggested the Nations to collaborate on treatments and tests of COVID-19 vaccines. It also suggests, the  policies framed by the government should focus on limiting the economic damage and add workers to transit towards growing sectors.