The report, presented to parliament by finance minister Nirmala Sitharaman ahead of Tuesday’s annual budget, warns of the dangers of global inflation and pandemic-related disruptions.
Sanjeev Sanyal, the finance ministry’s main economic adviser and the report’s lead author, said, “India does need to be mindful of imported inflation, especially from rising global energy costs.”
As global crude prices remain above a 7-year high of more than $90 a barrel, India, which imports over 80% of its oil, faces the possibility of inflation affecting consumer demand.
“The global climate remains unpredictable,” the report added, citing major central banks’ planned removal of monetary support, notably the Federal Reserve of the United States. Higher rates in other countries could result in capital outflows from India.
The paper stated that the growth predictions were based on normal rainfall and an orderly drawdown of global liquidity by major central banks.
Given rising inflationary pressures and lackluster domestic demand, private economists believe the government and central bank will have to balance their efforts to sustain economic development.
“Policymakers will have difficulties calibrating policy decisions to balance between growth and (price) stability objectives as the demand to tighten the monetary stance grows,” said Rumki Majumdar, an economist at Deloitte India.
According to the report, the government has fiscal room to provide extra support if needed, citing a 67 percent rise in income receipts from a year ago in the April-November period.
After falling 7.3 percent in the previous fiscal year, India’s economy has been on the mend since the government removed mobility restrictions in June to combat the spread of coronavirus.
However, following a jump in Omicron cases earlier this month, many private economists and the International Monetary Fund (IMF) have lowered their growth forecasts to 9% from an initial estimate of 11%.
The yearly report, which gives a grade to India’s economic achievements and includes fresh projections, has a history of missing targets.
Last year, it predicted annual economic growth of 11%, which was ultimately reduced down to 9.2% by the statistics ministry when the Omicron variant wreaked havoc on the economy.
Private spending, which accounts for about 55% of GDP, has remained lackluster in the face of mounting family debt, while retail prices have risen dramatically since the coronavirus outbreak began in early 2020.
Is India’s economy expanding?
According to the first advance projections provided on Friday by the National Statistical Office (NSO), India’s GDP is predicted to grow 9.2 percent this fiscal year, buoyed by the base effect of a 7.3 percent decline last year.
Is India’s GDP expected to expand in 2021?
In its second advance estimates of national accounts released on Monday, the National Statistical Office (NSO) forecasted the country’s growth for 2021-22 at 8.9%, slightly lower than the 9.2% estimated in its first advance estimates released in January.
Furthermore, the National Statistics Office (NSO) reduced its estimates of GDP contraction for the coronavirus pandemic-affected last fiscal year (2020-21) to 6.6 percent. The previous projection was for a 7.3% decrease.
Indian GDP contracted 23.8 per cent in April-June in 2020 and 6.6 per cent in July-September quarter in 2020.
“While an adverse base was expected to flatten growth in Q3 FY2022, the NSO’s initial estimates are far below our expectations (6.2 percent for GDP), with a marginal increase in manufacturing and a contraction in construction that is surprising given the heavy rains in the southern states,” said Aditi Nayar, Chief Economist at ICRA.
“GDP at constant (2011-12) prices is estimated at Rs 38.22 trillion in Q3 of 2021-22, up from Rs 36.26 trillion in Q3 of 2020-21, indicating an increase of 5.4 percent,” according to an official release.
According to the statement, real GDP (GDP) or Gross Domestic Product (GDP) at constant (2011-12) prices is expected to reach Rs 147.72 trillion in 2021-22, up from Rs 135.58 trillion in the first revised estimate released on January 31, 2022.
GDP growth is expected to be 8.9% in 2021-22, compared to a decline of 6.6 percent in 2020-21.
In terms of value, GDP in October-December 2021-22 was Rs 38,22,159 crore, up from Rs 36,22,220 crore in the same period of 2020-21.
According to NSO data, the manufacturing sector’s Gross Value Added (GVA) growth remained nearly steady at 0.2 percent in the third quarter of 2021-22, compared to 8.4 percent a year ago.
GVA growth in the farm sector was weak in the third quarter, at 2.6 percent, compared to 4.1 percent a year before.
GVA in the construction sector decreased by 2.8%, compared to 6.6% rise a year ago.
The electricity, gas, water supply, and other utility services segment grew by 3.7 percent in the third quarter of current fiscal year, compared to 1.5 percent growth the previous year.
Similarly, trade, hotel, transportation, communication, and broadcasting services expanded by 6.1 percent, compared to a decline of 10.1 percent a year ago.
In Q3 FY22, financial, real estate, and professional services growth was 4.6 percent, compared to 10.3 percent in Q3 FY21.
During the quarter under examination, public administration, defense, and other services expanded by 16.8%, compared to a decrease of 2.9 percent a year earlier.
Meanwhile, China’s economy grew by 4% between October and December of 2021.
“India’s GDP growth for Q3FY22 was a touch lower than our forecast of 5.7 percent, as the manufacturing sector grew slowly and the construction industry experienced unanticipated de-growth.” We have, however, decisively emerged from the pandemic slump, with all sectors of the economy showing signs of recovery.
“Going ahead, unlock trade will help growth in Q4FY22, as most governments have eliminated pandemic-related limitations, but weak rural demand and geopolitical shock from the Russia-Ukraine conflict may impair global growth and supply chains.” The impending pass-through of higher oil and gas prices could dampen domestic demand sentiment, according to Elara Capital economist Garima Kapoor.
“Strong growth in the services sector and a pick-up in private final consumption expenditure drove India’s real GDP growth to 5.4 percent in Q3.” While agriculture’s growth slowed in Q3, the construction sector’s growth became negative.
“On the plus side, actual expenditure levels in both the private and public sectors are greater than they were before the pandemic.
“Given the encouraging trends in government revenues and spending until January 2022, as well as the upward revision in the nominal GDP growth rate for FY22, the fiscal deficit to GDP ratio for FY22 may come out better than what the (federal) budget projected,” said Rupa Rege Nitsure, group chief economist, L&T Financial Holdings.
“The growth number is pretty disappointing,” Sujan Hajra, chief economist of Mumbai-based Anand Rathi Securities, said, citing weaker rural consumer demand and investments as reasons.
India, which covers about 80 percent of its oil needs through imports, probably faces a growing trade deficit, a weaker currency and greater inflation as crude prices climbed beyond $100 a barrel, with a damage to GDP considered as the biggest concern.
“We believe the fiscal and monetary policy accommodation will remain, given the geopolitical volatility and crude oil prices,” Hajra added.
According to Nomura, a 10% increase in oil prices would shave 0.2 percentage points off India’s GDP growth while adding 0.3 to 0.4 percentage points to retail inflation.
Widening sanctions against Russia are likely to have a ripple impact on India, according to Sakshi Gupta, senior economist at HDFC Bank.
“We see a 20-30 basis point downside risk to our base predictions,” she said. For the time being, HDFC expects the GDP to rise 8.2% in the coming fiscal year.
What accounts for India’s low GDP?
There are two things that stand out. The Indian economy began to revive in March 2013 more than a year before the current government took office after a period of contraction following the Global Financial Crisis.
But, more importantly, since the third quarter of 2016-17 (October to December), this recovery has transformed into a secular slowing of growth. While the RBI did not declare so, many experts believe the government’s move to demonetise 86 percent of India’s currency overnight on November 8, 2016, was the catalyst that sent the country’s GDP into a tailspin.
The GDP growth rate steadily fell from over 8% in FY17 to around 4% in FY20, just before Covid-19 hit the country, as the ripples of demonetisation and a poorly designed and hastily implemented Goods and Services Tax (GST) spread through an economy already struggling with massive bad loans in the banking system.
PM Modi voiced hope in January 2020, when GDP growth fell to a 42-year low (in terms of nominal GDP), saying: “The Indian economy’s high absorbent capacity demonstrates the strength of the country’s foundations and its ability to recover.”
The foundations of the Indian economy were already weak in January last year well before the outbreak as an examination of key factors shows. For example, in the recent past (Chart 2), India’s GDP growth trend mirrored an exponential development pattern “Even before Covid-19 came the market, there was a “inverted V.”
What will India’s GDP rank be in 2021?
The United States, China, and Japan are the world’s three largest economies in terms of nominal GDP. A variety of factors influence economic growth and prosperity, including workforce education, production output (as indicated by physical capital investment), natural resources, and entrepreneurship. As outlined below, the economies of the United States, China, and Japan each have a unique blend of key elements that have led to economic growth over time.
United States
Since 1871, the United States has been the world’s greatest economy. The United States’ nominal GDP is $21.44 trillion. The GDP of the United States (PPP) is also $21.44 trillion. In addition, the US is rated second in the world in terms of the estimated value of natural resources. The worth of natural resources in the United States was projected to be $45 trillion in 2016.
The powerful economy of the United States is due to a number of causes. The United States is well-known around the world for developing a culture that supports and encourages entrepreneurship, which fosters innovation and, in turn, economic prosperity. The workforce in the United States has become more diverse as a result of the country’s rising population. The United States also has one of the world’s most advanced manufacturing industries, second only to China. In addition, the US dollar is the most extensively utilized currency for international transactions.
China
Between 1989 and 2019, China, the world’s second-largest economy, experienced an average growth rate of 9.52 percent. China has the world’s second-biggest economy in terms of nominal GDP ($14.14 trillion) and the largest in terms of GDP (PPP) ($27.31 trillion). China’s natural resources are estimated to be worth $23 trillion, with rare earth metals and coal accounting for 90% of the total.
China’s 1978 economic reform initiative was a huge success, resulting in an increase in average economic growth from 6% to over 9%. The reform program prioritized the establishment of private and rural enterprises, the relaxation of governmental price rules, and investments in workforce education and industrial output. Worker efficiency is another driving element behind China’s economic success.
Japan
With a GDP of $5.15 trillion, Japan is the world’s third-largest economy. Japan’s Gross Domestic Product (PPP) is $5.75 trillion. Because Japan’s economy is market-driven, businesses, production, and prices change in response to customer demand rather than government intervention. While the Japanese economy was struck hard by the 2008 financial crisis and has been slow to recover since then, the 2020 Olympics are projected to provide it a boost.
The electronic products sector, which is the world’s largest, and the automobile industry, which is the world’s third largest, are the backbones of the Japanese economy. The Japanese economy confronts significant hurdles in the future, including a dwindling population and an ever-increasing debt, which is at 236 percent of GDP as of 2017.
Germany
With a GDP of $4.0 trillion, Germany has the world’s fourth-largest economy. Germany has a GDP (PPP) of $4.44 trillion and a per capita GDP of $46,560, making it the world’s 18th most prosperous country. The highly developed social market economy of Germany is Europe’s largest and strongest, with one of the most trained workforces. Germany accounted for 28 percent of the euro area economy, according to the International Monetary Fund.
Car manufacturing, machinery, home equipment, and chemicals are among Germany’s significant industries. The economy suffered a substantial setback following the 2008 financial crisis due to its reliance on capital goods exports. Due to the Internet and the digital age, the German economy is currently in the midst of its fourth industrial revolution. This change is known as Industry 4.0, and it encompasses solutions, processes, and technologies, as well as the usage of IT and a high degree of system networking in factories.
India
With a GDP of $2.94 trillion, India’s economy is the world’s fifth largest, surpassing the United Kingdom and France in 2019. India’s GDP (PPP) is $10.51 trillion, which is higher than Japan’s and Germany’s combined. India’s GDP per capita is $2,170 (for contrast, the United States’ GDP per capita is $62,794), owing to the country’s large population. However, India’s real GDP growth is forecast to slow for the third year in a row, from 7.5 percent to 5 percent.
From its earlier autarkic practices, India is evolving towards an open-market economy. Industrial deregulation, fewer controls on foreign trade and investment, and privatization of state-owned firms were all part of India’s economic liberalization in the early 1990s. These policies have aided India’s economic development. India’s service sector is the world’s fastest-growing sector, accounting for 60% of the economy and 28% of employment. Manufacturing and agriculture are two more important economic sectors.
United Kingdom
The United Kingdom is the world’s sixth-largest economy, with a GDP of $2.83 trillion. The UK is ranked ninth in terms of GDP purchasing power parity (PPP) with a GDP (PPP) of The United Kingdom is rated 23rd in the world in terms of GDP per capita, with $42,558. By 2023, the UK’s GDP is anticipated to drop to $3.27 trillion, making it the world’s seventh-largest economy. In 2016, the United Kingdom was the world’s tenth-largest exporter of products, sending commodities to 160 countries. The United Kingdom was the first country to industrialize in the 18th century.
The service sector, notably the financial services industry, dominates the UK economy, accounting for over 80% of GDP. London is the world’s second-largest financial center. Manufacturing and agriculture are the UK’s second and third major industries, respectively. Britain has the world’s second-largest aerospace sector and the tenth-largest pharmaceutical business.
France
France is Europe’s third-largest economy (after Germany and the United Kingdom) and the world’s seventh-largest economy. The nominal GDP of France is $2.71 trillion. France has the 19th largest GDP per capita in the world, at $42,877.56, and a GDP (PPP) of $2.96 trillion. According to the World Bank, France has sadly faced high unemployment rates in recent years, with unemployment rates of 10% in 2014, 2015, and 2016, and 9.681 percent in 2017.
The economy of France is a diverse, free-market-oriented economy. Agriculture and tourism, as well as the chemical industry, are important sectors for France. France owns nearly a third of the European Union’s agricultural land and is the world’s sixth-largest agricultural producer and second-largest agricultural exporter, after the United States. France is the most visited country in the planet. With 28 of the 500 largest firms, France is ranked fifth in the Fortune Global 500, behind the United States, China, Japan, and Germany.
Italy
Italy is the eighth-largest economy in the world, with a nominal GDP of $1.99 trillion. Italy’s economy is worth $2.40 trillion in PPP terms, with a per capita GDP of $34,260.34. By 2023, Italy’s economy is predicted to grow to $2.26 trillion. Unfortunately, Italy has a comparatively high unemployment rate of 9.7% and a debt level of 132 percent of GDP.
Italy’s exports, fortunately, are assisting in the recovery of the economy. Italy is the world’s eighth-largest exporter, with 59 percent of its exports going to other European Union members. Italy was predominantly an agrarian economy before World War II, but it has since evolved into one of the world’s most advanced nations. Italy is the European Union’s second-largest exporter, trailing only Germany, and has a huge trade surplus thanks to its exports of machinery, vehicles, food, apparel, luxury products, and other items.
Brazil
With a nominal GDP of $1.85 trillion, Brazil is the ninth largest economy in the world and the largest in Latin America. Brazil is also Latin America’s largest and most populous country. Brazil has a per capita GDP of $8,967 and a GDP (PPP) of $2.40 trillion, ranking 73rd in the world. Natural resources worth an estimated $21.8 trillion in the country include large deposits of timber, uranium, gold, and iron.
Brazil is a free-market economy in the early stages of development. Brazil was one of the world’s fastest-growing major economies from 2000 to 2012. Brazil, on the other hand, has one of the world’s most unequal economies. The economic crisis, corruption, and a lack of governmental policies all contributed to an increase in the poverty rate in 2017, and many people became homeless. Six billionaires in Brazil alone are wealthier than more than 100 million of the country’s poorest citizens.
Canada
With a nominal GDP of $1.73 trillion, Canada is the world’s tenth-largest economy. Canada’s per capita GDP of $46,260.71 places it 20th in the world, while its GDP (PPP) of $1.84 trillion places it 17th. By 2023, Canada’s GDP is predicted to reach $2.13 trillion.
With a $33.2 trillion projected worth of natural resources, Canada ranks fourth in the world. Because of its abundant natural resources, such as petroleum and natural gas, Canada is regarded as an energy superpower. Canada is one of the least corrupt countries in the world and one of the top 10 trading countries, according to the Corruption Perceptions Index. On the Index of Economic Freedom, Canada outperforms the United States and has a low degree of economic inequality.
Is India considered developed?
India is a southern Asian emerging and developing country (EDC). It is the world’s largest democracy as well as one of the fastest growing economies.
Is India’s GDP lower than that of Pakistan?
With a GDP of $2,709 billion dollars in 2020, India’s GDP will be about ten times that of Pakistan’s $263 billion dollars. The disparity is larger in nominal terms (almost ten times) than in ppp terms (8.3 times). In nominal terms, India is the world’s fifth largest economy, while in ppp terms, it is the third largest. Pakistan has a nominal ranking of 48 and a PPP ranking of 24. Maharashtra, India’s most economically powerful state, has a GDP of $398 billion, far exceeding Pakistan’s. Tamil Nadu, India’s second-largest economy ($247 billion), is relatively close. The gap between these two countries was at its narrowest in 1993, when India’s nominal GDP was 5.39 times that of Pakistan, and at its widest in 1973. (13.4x).
In terms of gdp per capita, the two countries have been neck and neck. For only five years between 1960 and 2006, India was wealthier than Pakistan. In 1970, Pakistan’s GDP per capita was 1.54 times that of India. Since 2009, the margin has widened in India’s favor. On an exchange rate basis, India’s per capita income was 1.56 times more than Pakistan’s in 2020, with an all-time high of 1.63x in 2019. The previous year, Pakistan was wealthier than India. Both countries rank near the bottom of the world in terms of GDP per capita. India is ranked 147 (nominal) and 130 (absolute) (PPP). Pakistan is ranked 160 (nominal) and 144 in the world (PPP). There are 28 Indian states/UTs that are wealthier than Pakistan.
In 2020, India’s gdp growth rate (-7.97) will be lower than Pakistan’s (-0.39) after 19 years. India’s GDP growth rate reaches a high of 9.63 percent in 1988 and a low of -5.24 percent in 1979. Pakistan’s inflation rate peaked at 11.35 percent in 1970 and peaked at 0.47 percent in 1971. Pakistan expanded by more than 10% in three years from 1961 to 2017, while India never did. India’s GDP growth rate has been negative for four years, whereas Pakistan’s growth rate has never been negative.
According to the CIA Fackbook, India’s GDP composition in 2017 was as follows: agriculture (15.4%), industry (23%), and services (23%). (61.5 percent ). Agriculture (24.7 percent), Industry (19.1 percent), and Services account for the majority of Pakistan’s GDP in 2017. (56.3 percent ).
Is India more impoverished than Africa?
Acute poverty is prevalent in eight Indian states, including Bihar, Uttar Pradesh, and West Bengal, according to a new UNDP measure termed the Multi-dimensional Poverty Index (MPI). They have more poor people than the 26 poorest African countries put together.
The Oxford Poverty and Human Development Initiative, with UNDP financing, created and used a new measure called the Multidimensional Poverty Index. The indicator reflects the nature and scope of poverty at several levels, ranging from the household to regional, national, and worldwide levels.
According to its designers, there are more poor people in eight Indian states (421 million in Bihar, Chattisgarh, Jharkhand, MP, Orissa, Rajasthan, UP, and West Bengal) than there are in the 26 poorest African countries combined (410 million).
Since 1997, the Human Poverty Index has been included in the Annual Human Development Reports, however the MPI has replaced it.
From education to health outcomes to assets and services, the MPI evaluates a variety of essential characteristics or deprivations at the household level. When these indicators are considered combined, they provide a more complete picture of acute poverty than basic income metrics.
India is home to 1/3 of the world’s poor. It also has a higher percentage of people living on less than $2 per day than even Sub-Saharan Africa.
75.6 percent of the population, or 828 million people, live on less than $2 a day.
42% of the population is poor, according to the new international poverty level.
Indians account for 33% of the world’s poor, or 14 billion people. The situation in Sub-Saharan Africa, the world’s poorest region, is improving.
With a monthly per capita consumer spend of Rs 447, 41.8 percent of the rural population makes ends meet.
They barely spend Rs 447 on basic necessities such as food, gasoline, light, and clothing.
According to current estimates from the Planning Commission, India’s poverty rate fell from 35.97 percent in 1993-94 to 27.54 percent in 2004-05.
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Is Bangladesh a wealthier country than India?
Several indications show that Bangladesh is gaining ground on Pakistan, particularly on the social and economic fronts. Bangladesh’s inspirational target level of development success in the future would most likely be nations like Thailand, Malaysia, and Indonesia, and there is still a lot more work to be done to reach that level of development.
Many notable economic analysts, periodicals, and forums link Bangladesh’s current situation to that of India. India is not only Bangladesh’s closest neighbor and greatest economic partner, but it has also emerged as the country with the most similarities to Bangladesh.
Or perhaps a more appropriate way to put it would be to state that Bangladesh has progressed so quickly and achieved so much that it can now legitimately be compared to India in terms of economics and social development.
Is India, then, Bangladesh’s new rival? Yes, from certain views and economic perspectives, but no, in terms of many other comparisons.
Furthermore, this comparison is not so simple and has a number of subtleties and nuanced elements.
Several articles published in highly reputable Indian origin publications over the last year or so have provided an economic and social comparison between India and Bangladesh, and all of these articles have one thing in common: they conclude that Bangladesh currently outperforms India on many key economic indicators and social objectives.
This was not the case even five years ago, but it appears to be becoming a more common scenario in recent years. However, on a practical and honest basis, India remains far more dominant and strong than Bangladesh, although this is mostly due to India’s massive physical size, population, and natural resources.
Income and GDP
In theory, India has fallen behind Bangladesh in terms of per capita income, since Bangladesh just declared a per capita income of $2,227 for the 2020-2021 fiscal year, up about 10% from $2,064 in the previous fiscal year.
According to the most recent government data, India’s per capita income is $1,947, owing to a drop in India’s economic growth caused by the Covid-19 pandemic.
It is crucial to note that while Bangladesh’s economy has experienced rapid GDP growth since 2004, this rate did not significantly alter the relative status of the two economies between the mid-2000s and the mid-2010s because India’s economy grew faster.
However, India’s growth rate has slowed dramatically in the second part of the decade, while Bangladesh’s has accelerated even faster. Bangladesh’s quicker development rate is due in part to significant improvements in several social and political indicators such as health, sanitation, financial inclusion, and women’s political representation.
Countries are typically compared in economic terms based on their GDP growth rate or absolute GDP. On all measures, India’s economy has done better than Bangladesh’s for the most part since independence.
India’s economy has always been over 10 times the size of Bangladesh’s in terms of GDP growth rates and absolute GDP, and it has risen faster every year. According to recent International Monetary Fund projections, India will likely grow faster again soon, putting it ahead of Bangladesh. However, due to Bangladesh’s slower population growth and comparatively faster economic growth, the two countries are expected to be very close in terms of per capita income comparisons.
Size matters
Would India still be so much more dominant than Bangladesh if it were the same size, geographically, and in terms of people and resources as Bangladesh?
Based on how major financial, social, demographic, and economic variables are currently exhibited, the simple response could be “no.”
If India and Bangladesh were twins in terms of population, size, and resources, it would be clear that Bangladesh is the better-performing twin sister in the 2020s. This is further shown by the fact that, in 2020 and this has gotten everyone’s notice – the average Bangladeshi citizen’s per capita income was higher than the average Indian citizen’s per capita income.
So, the question is whether India and Bangladesh are comparable, and the answer is a complicated yes/no. The fact is that India has significantly more resources, capabilities, and strategic advantages than Bangladesh, owing to its larger geographic expanse and a population that is nowhere near as dense.
As a result, Bangladesh’s exceptionally high population density is continually at odds with its exceedingly limited resources. Bangladesh has no choice but to make the most effective and efficient use of its limited resources and territory.
This is a significant burden that India does not have to bear, giving it a significant competitive edge. For example, if one region of India is harmed by natural disasters or unforeseen events, it has a large pool of ready and available resources and the ability to pool them and manage them quickly and effectively.
Such incidences may or may not have a significant impact on the overall economic balance and standing of the country. Bangladesh, on the other hand, does not have that luxury because it lacks the enormous pool of readily available resources required to properly absorb a catastrophic calamity, and such sad events have befallen Bangladesh numerous times in the past.
Despite such setbacks, Bangladesh always manages to overcome and eventually thrive.
What can be done to mitigate and work with Bangladesh’s comparably tiny geographic size (especially contrasted to its massive population) so that the country may still go forward and become just as economically dominating, if not more so, than India?
Japan, Singapore, and South Korea are all much smaller than India, but despite their small geographic area, they have all had phenomenal economic growth and development. So, how might Bangladesh, like Japan, Singapore, and South Korea, one day completely and utterly overcome India?
For instance, consider India, which rose to prominence as a global economic powerhouse and a force to be reckoned with by upskilling its massive labor population and eventually attempting to become what is known as a knowledge-based economy.
Knowledge-driven economy
- Institutional institutions that encourage entrepreneurship and the application of knowledge
- A thriving innovation ecosystem that encompasses academics, business, and civil society
A knowledge-driven economy is defined by its products and services, which are propelled by knowledge-intensive rather than labor-intensive activities. The premise is that, rather than giving and employing low-skilled manual labor to generate money, such an economy uses knowledge and information to create goods and services.
A knowledge-based economy necessitates a competent labor force and a considerable portion of the population with excellent analytical ability and subject-matter expertise so that data can be manipulated and development can be achieved through research and invention.
In essence, a knowledge economy allows science and academia to be commercialized, which leads to research-based breakthroughs that are protected and backed by strong intellectual property regulations. The world economy has already changed to a knowledge economy in this information age, and if Bangladesh does not follow suit, it will be left far behind.
Because Bangladesh is still an agricultural and manual labor-intensive economy, and the level of skill of its labor force is not yet at the point where truly useful and viable informational analytics or unique technological innovations can be generated, India is far superior to Bangladesh in all of these aspects that define and make a knowledge-based economy.
India, on the other hand, today dominates the global technology industry and has achieved great progress in a variety of other knowledge- and skill-intensive industries, including medical, industrial production, business consulting services, and education.
The harsh reality is that Bangladesh is still a long way behind India in terms of knowledge-based economies. However, Bangladesh has the potential to become a knowledge-driven economy because it possesses the same core underlying elements as other knowledge-driven economies a huge young population ready to study, grow, and progress.
As a result, the concern now is how to promote better knowledge focus, skill acquisition, and technical competency among the young people.
The apparent solution is to place a greater emphasis on education, training, and skill development. The idea would be to encourage and inspire workers to move away from manual labor-intensive jobs and into higher-skilled and knowledge-based jobs.
Since India has reaped significant benefits by training its youth in technology-related fields, Bangladesh should be able to accomplish the same because it has the capability and resources to do so.
However, policymakers, legislators, and those in command must have a strong desire and drive to actively foster and promote a knowledge-based focus when it comes to future vocations, and such goals must then be instilled in the brains of the country’s adolescent population.
Furthermore, fundamental modifications to the country’s educational system would be required to actively enable and incentivize students to acquire the essential skills to update themselves.
Teachers and professors must also be continually trained and educated in order to stay current with the newest advancements in their fields in order to properly pass on that information and expertise to their pupils. Practical skills, rather than academic knowledge, should be emphasized, and originality and invention should be celebrated.
This is so that no one can quickly replicate or steal something that someone else has spent a lot of time and effort developing and creating. If intellectual property rights are not completely safeguarded and guaranteed, firms and individuals would lack the drive to research, develop, and come up with new inventions and technologies, and a knowledge-based economy will never be realized.
Bangladesh’s challenges
The fact that Bangladesh has reached a point in its development cycle where it is being compared to India is surely commendable. Considerable obstacles remain, however, and continue to erect significant barriers to Bangladesh becoming a true competitor to India.
One cause for concern is that Bangladesh’s poverty rate remains much higher than India’s. Poverty is anticipated to rise even more in the short term, according to the World Bank, with daily and self-employed workers in the non-agricultural sector and salaried workers in the manufacturing sector suffering the most.
Furthermore, Bangladesh continues to lag behind India in terms of basic education, resulting in a worse ranking in the Human Development Index.
A truly sustainable developed economy cannot be achieved while still experiencing high rates of poverty and a lack of educational advancement, pointing again to the importance of focusing more on a knowledge-based economy, which has the incredible potential to alleviate poverty while also improving education and literacy.
Bangladesh now falls behind other comparator nations in several measures for “ease of doing business,” and this is due to a lack of reforms and the government’s willingness to take steps to improve the situation.
Furthermore, Bangladesh’s ability to enhance its ease of doing business indices is nearly impossible due to widespread corruption when dealing with any government regulator or authority. Demanding payments from officials has become the norm, even for the tiniest of tasks.
Furthermore, as many important business leaders have often and loudly stated, running a business in Bangladesh remains extremely difficult. For example, some businesses require many licenses and permits from various regulatory organizations, which is incredibly time-consuming and inconvenient.
It’s almost as if the entire system has been designed to make it as difficult as possible for relevant authorities to accept bribes at every level. Bangladesh is unlikely to fall below 100 on the World Bank’s ease of doing business index anytime soon as a result of this.
Despite the fact that the Bangladesh Investment Development Authority was established with the express purpose of making it easier to do business in Bangladesh, it has so far been unable to control, coordinate, and collaborate with other regulatory bodies in order to achieve its goal of becoming a one-stop service center.
If the situation is to be improved, the Bangladesh Investment Development Authority should be given more authority and power to truly make a difference and to be able to override and control the entire process so that aspiring entrepreneurs do not have to spend so much time, money, and effort simply to be regulatory compliant.
If such difficulties are not addressed and resolved in the near future, Bangladesh will continue to fall behind and lose to its competitors, who are also aggressively competing for foreign investment, and who already rank far higher on the ease of doing business index than Bangladesh.
In this ranking, India currently ranks 63rd, whereas Bangladesh ranks 168th, which is extremely shameful.
Bangladesh’s resource
Bangladesh’s most valuable asset and resource is its people, and this is one natural resource that the country has in abundance. Since a result, one of the most essential objectives must be the development of its employees, as it is the ultimate key to future success.
Bangladesh’s continuous progress and expansion must not only be sustainable, but it must also be knowledge-based, as this is the most logical and practical path to becoming a fully developed country.
What accounts for India’s high GDP?
India’s long-term prosperity has been fueled by an increasing share of investment and exports, with consumption playing a significant role. Productivity advances both in labor productivity and total factor productivity have also characterized growth.