Aakar Patel | India must work hard to catch up; world is changing faster than ever
The average GDP per person worldwide is $12,200 per year. This is about Rs 9.6 lakhs per year or Rs 80,000 per person per month. If we take the entire world’s GDP, all goods and services and divide it by the world’s population, we get these numbers.
In 2013, Bangladesh’s GDP per person was $981 and India’s was $1,449. This lead was always present and India was always ahead of Bangladesh. When after the 1971 war Bangladesh was born, it was seen by many as an unviable state, that it would never be economically productive enough to sustain itself. The legendary Henry Kissinger, then US secretary of state, had famously referred to Bangladesh as a “basket case”.
After 2014, Bangladesh began to catch up with India. In 2016 the numbers were almost even (Bangladesh $1,679, India $1,732). Then we were even and then Bangladesh went ahead. In 2021, the World Bank’s data shows Bangladesh was at $2,503 while India is at $2,277.
Today the average person in Bangladesh makes about Rs 2 lakhs annually (Rs 16,000 per month) while the average Indian makes Rs 1.8 lakh a year. The International Monetary Fund says that for the foreseeable future Bangladesh is expected to be ahead of India.
Now, a few things must be addressed. First, while all of us here must be disappointed with our own performance, we should acknowledge and applaud what Bangladesh has achieved. From being seen as a basket case to becoming a global champion in garment exports can’t have been easy, but they achieved it.
The next thing is to ask where we have gone wrong. This isn’t easy to do. India doesn’t acknowledge it is doing badly when it comes to economic growth. If one listens to the Prime Minister’s speeches or looks at the media’s narrative, it’s not one that is reflective of the numbers we have seen here.
India is the “fastest-growing major economy”, and that’s it. We have no problems and therefore nothing to reflect on and certainly there is no cause to see what needs to be corrected.
If we don’t talk about the fact that Bangladesh has overtaken us, then the problem doesn’t exist. And yet it does. A short time ago the Society of Indian Automobile Manufacturers put out some numbers on domestic sales of their goods for the five years upto March 2020. The society said their sector was in a “structural, long-term, deep slowdown” and more research was needed to find out what was going on. More research by whom? That wasn’t said, but we can assume they meant the government or its think tank Niti Aayog. Automobiles comprise half of India’s total manufacturing sector. In 2014 manufacturing was 16 per cent of GDP, meaning that the automobile sector contributed to eight per cent of GDP.
Due to the slowdown in automobile sales, manufacturing’s share in GDP slipped to 13 per cent in 2021 and is probably lower today.
Manufacturing is the place where most developing nations compete for jobs. India’s inability to offer meaningful jobs to its people can in many ways be explained by its inability to boost manufacturing. Not just not boost it, as the numbers tell us, but not even hold on to what we had.
We refer to ourselves as “Vishwa Guru”, and there’s no doubt India has many things to teach the world, just as it has many things to learn from the world. However, the average Indian produces less than a fifth of what the average global citizen produces. China ($12,556) is today even with the world, meaning the average Chinese person produces what the average world person produces. This means that today we have one-fifth the economic power of China. It will interest readers to know India and China were even in 1991, when we launched what is called the economic reforms. Both nations were at about $300 per person in that year. Today the world doesn’t see us as peers. China is a Great Power which in international relations means it can effectively project its power outside its borders. It’s the primary strategic threat to America’s dominance or influence over the world. It is expected to catch up with the US in terms of overall GDP (though not per person) in the next few years. It has, say some experts, almost caught up with the US in military power.
When our Prime Minister attends Brics or G-20 or some other forum, the assumption is that he goes there in a group of peers. Of course, this is true insofar as we accept all nations are equal. But in a room where those gathered are aware of their power and of the power of others, the dynamics will not be the same as that of the group photo.
India needs to do a lot of hard work to be able to influence the world, to be able to lift its people out of poverty and into prosperity. In fact, we will need to do a lot of work even to catch up with Bangladesh. Can this happen in a nation where the daily news cycle is filled with glee at activists being locked up because of their tweets? In my opinion, it’s not possible, but we don’t have to wait a long time to find out. The world is changing at a faster rate than it has in history, and our place in the world and our future will be obvious to all before the current decade is over.
