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Prelims Capsule

International Relations

Economic growth and development journey of Bangladesh and how it has outpaced India on many counts?

Economic growth and development journey of Bangladesh and how it has outpaced India on many counts?


  • GS 2 || International Relations || India & its Neighbours || Bangladesh


  • Over the past decade, Bangladesh has gained increasing recognition as the stellar economic performer in South Asia. With a per capita income that is now higher than India’s, superior economic growth rates, less inequality, and in some instances better social indicators, Bangladesh has reason to celebrate its golden jubilee as an independent nation. 
  • The magnanimous statesmanship of Bangladesh Prime Minister Sheikh Hasina has not only transformed an under-developed country into a rising star in Asia but has also helped the nation in gradually emerging as a regional power.

Historical Journey of Bangladesh

  • The decades-long oppression, suppression, injustice, and severe discrimination against East Pakistan by West Pakistan made the people of East Pakistan poor and illiterate.
  • During the fifties, the per capita income of Bangladesh declined at an annual rate of 0.3 percent. Per capita consumption of milk, fats, oil, fish, and other protein items were extremely low in Bangladesh.In 1971, when Bangladesh won the victory in its war of independence against Pakistani occupation forces, a newly born country was mocked by the US Secretary of State Henry Kissinger as a “basket case”.
  • Between 1960 and 1970, per capita, annual income was Bangladeshi Taka 450 (US$ 5.30, based on 2020 value), nearly half of the population had a deficiency in calories intake, and the literacy rate was 17 percent only.Between 1949-50 and 1969-70, the per capita income of Bangladesh could increase at an annual rate of hardly 0.7 percent.
  • Just after fifty years of its independence, Bangladesh is a confident country of 160 million people with a booming economy, mostly dependent on export earnings.
  • Bangladesh’s economy has grown at an annual average of 6 percent for decades. The economic growth of the country had slowed to 5.2 percent in 2020 due to the pandemic, while according to Asian Development Bank (ADP), it will bounce back to 6.8 percent in 2021 and 7.2 in 2022.
  • Bangladesh’s GDP per capita now stands at US$ 2,227, higher than India’s US$ 1,947 and much higher than Pakistan’s US$ 1,543.

How it outpaced India on many counts & justified break-away from Pakistan?

  • Economy-Bangladesh now has better numbers than India on its fiscal deficit, merchandise trade balance, and employment (especially of women). It also has better public debt/GDP and investment/GDP ratios. It has a much larger share of GDP accounted for by manufacturing. And its merchandise exports grew in 2011-19 at an annual rate of 8.6 percent; India’s grew at 0.9 percent.
    • The structure of Bangladesh’s economy is such that its GDP is led by the industrial sector,followed by the services sector. Both these sectors create a lot of jobs and are more remunerative than agriculture.
  • On financial inclusion, according to the World Bank’s Global Findex database, while a smaller proportion of its population has bank accounts, the proportion of dormant bank accounts is quite small when compared to India.
  • Attracting Investments- the economic success of Bangladesh is drawing attention from a range of countries in East Asia, including China, Japan, South Korea, and Singapore. The US, which traditionally focused on India and Pakistan, has woken up to the possibilities in Bangladesh.
  • The impetus to India’s Act East Policy- The economic rise of Bangladesh could boost India’s national plans to accelerate the development of its eastern and north-eastern states. Bangladesh’s economy is now one-and-a-half times as large as that of West Bengal; better integration between the two would provide a huge boost for eastern India. So would connectivity between India’s landlocked Northeast and Bangladesh.
  • Social Indicators- In many social indicators, including health, life expectancy, birthrates, and employment of women, Bangladesh scores well in comparison to those of India and other South Asian neighbors. These efforts have translated into improvements in children’s health and education, such that Bangladeshis’ average life expectancy is now 72 years, compared to 68 for Indians and 66 for Pakistanis.
    • On the human development indicators, it is fair to point out that while Bangladesh has outdone India on important metrics. continues to do marginally better on years of schooling, while on health indicators, Bangladesh is well ahead. Although India’s inequality indicators compare poorly, it continues to score marginally better on the overall Human Development Index (HDI).
  • Women empowerment:Bangladesh has made significant strides towards educating girls and giving women a greater voice, both in the household and the public sphere.
  • Digitization: Only 21 % of Bangladeshi bank accounts are “dormant”, compared to 50% of Indian bank accounts.
  • Successful manufacturing industry:Another partial explanation for Bangladesh’s progress is the success of its garment manufacturing industry. That is itself driven by several factors.One notable point is that the main garment firms in Bangladesh are large especially compared to those in India, owing largely to different labour laws.
  • A balance between China and India– while Bangladesh has been maintaining cordial relations with India, it also  puts equal emphasis in maintaining and further deepening relations with countries such as China.

Implications of Bangladesh’s economic success on India and other regions of the Subcontinent

  • Rise of Bangladesh: Over the last five decades, South Asia, for most purposes, has meant India and Pakistan. Now, the economic rise of Bangladesh is changing the world’s South Asian perspective.
  • Fall of Pakistan as a power in South Asia: With the rise of Bangladesh GDP over Pakistan’s GDP, Bangladesh will gain geopolitical importance steadily in coming years whereas the Geopolitical weight of Pakistan will continue to fall negatively.
  • Promotion of regional integration: Bangladesh’s economic growth can accelerate regional integration in the eastern subcontinent. The BBIN (Bangladesh, Bhutan, India, and Nepal) sub-regional forum will have more significance for India.
  • Enhanced opportunities for Eastern India: The economic rise of Bangladesh could boost India’s national plans to accelerate the development of its eastern and north-eastern states through connectivity and Integration.
    • Bangladesh’s economy is now one-and-a-half times as large as that of West Bengal; better integration between the two would provide a huge boost for eastern India.
  • Development of Northeast region- Connectivity between India’s landlocked Northeast and Bangladesh would provide a boost to the development of north-eastern states.
  • India and Bangladesh are eager to promote greater cooperation, but there has been little political enthusiasm in Kolkata.
  • In Assam, the issue of migration continues to impose major political constraints.


  • The economic boom has given the country the confidence to surge ahead. Bangladesh, seen as a bridge between South and south-east Asia, may not be making a big splash with its development story but is certainly proving to be the proverbial “tortoise” that may eventually overtake many “hares” with its perseverance.

Mains model Question

  • Discuss the significance of Bangladesh’s Rise and its implications on Indian Subcontinent.