A viral post, claiming that India will become poorer than Bangladesh in 2025, is false. It further states that the data conveying this observation is from the International Monetary Fund's (IMF) World Economic Outlook (WEO) research report.
BOOM was able to ascertain that the post misinterprets the said data, which is from October 2020.
The claim made by the post is false since it conflates two metrics. While the data show estimates that Bangladesh briefly overtook India in gross domestic product (GDP) per capita in 2020, only for it to reverse in 2021, and predicted to reverse once again in 2025; it certainly won't be larger than India in 2025. The size of an economy is measured in GDP, by which the data show India will be predicted to exceed Bangladesh by 7.4 times in 2025.
The post also says that India is no longer a developing country. This is false, since the IMF report does not say so as it reports classifications based on income status as 'Advanced Economies' and 'Emerging Market and Developing Economies'. There is no "lower" designation by the IMF.
Further, as far as reclassifications are concerned, India was reclassified as a 'lower middle income' economy by the World Bank from a 'developing economy' in 2016 as part of a larger reclassification of the countries based on income status.
The posts can be seen below. Two variants of the post exist, one in English and one in Hindi. BOOM recieved the Hindi version of the post on its WhatsApp tipline (7700906588).
It is also viral on social media.
FactCheck
Claim 1: The latest WEO published by the IMF reveals that "India will become poorer than Bangladesh by 2025".
This claim is false as the post misinterprets IMF data. It conflates GDP (that is a way to determine how rich or poor a country is at a national level) with GDP per capita, which measures the income of the average person. An economy's GDP per capita is a metric to measure what each person in an economy earns on average and is obtained by dividing the annual or periodic GDP by the population. (read)
Therefore, contrary to what the claim says, India is richer than Bangladesh in terms of its economic size regardless of the year. The October 2020 WEO shows that India's GDP would be $3.9 trillion in 2025, while Bangladesh would only be $488.42 billion. The latest WEO (October 2022) puts India's GDP for 2025 at $4.54 trillion, while that of Bangladesh at just $603.74 billion, making India's economy nearly 7.4 times larger. All of these estimates are based on prices that are current (which takes inflation into accounts) and are converted from their respective currencies into US dollars by the IMF.
But by 2025, as this section explains, the average Indian would be marginally poorer than the average Bangladeshi according to the data.
The IMF had estimated that Bangladeshi GDP per capita GDP to exceed that of India marginally in 2020, but which would reverse the following year. India's per capita income in 2020 was expected to be $1,876.53, while that of Bangladesh will be approximately $1,888.
In 2020, during the COVID-19 pandemic, at the time of this report's release, India's economy was expected to contract due to the first set of lockdowns and health measures to control the spread of the coronavirus, but Bangladesh's economy was expected to grow.
Therefore, if India's economy would contract in FY21, so would its GDP per capita. In US dollars, a person in India earned $2097.78 in 2019 (FY20), but the overall expected contraction in GDP that year reduced that income to $1876.53, according to the IMF database.
Meanwhile, Bangladesh's economy was expected to grow 3.2% at the time of this report's release in its FY21 (which runs from July to June). While Bangladesh's per capita income in US dollar was $1816.04 in 2019 (FY20), it was expected to surpass India's per capita income by $11.44 at $1887.97 (FY21).
India ended up contracting 6.6% in FY21 and Bangladesh grew 6.9% in their respective FY21.
The report also estimated that in FY22, the IMF expected India to grow at 8.8%, to outgrow Bangladesh at 4.4%. India's per capita income would reach FY20 levels north of $2030, and it would marginally exceed that of Bangladesh, at $1990.
However, in 2025, this would again reverse, as the average Indian would only be earning $2,729.24 which the average Bangladeshi would be earning almost $27 more at $2,756.11.
Also Read: India's Per Capita GDP To Fall Below Bangladesh, Reverse Next Year
Claim 2: India would no longer be a "developing country"
The latest WEO makes no mention of this. Further, the IMF makes only two classifications on the basis of income: advanced economies and emerging and developing economies.
India continues to remain as an 'emerging and developing economy'. These categorisations can be downloaded from here (triggers spreadsheet download).
But what is a 'developing country' in the first place? In a 2015 blog, the World Bank stated, "While we can’t find the first instance of “developing world” being used, what it colloquially refers to - the group of countries that fare relatively and similarly poorly in social and economic measures - hasn’t been consistently or precisely defined, and this “definition” hasn’t been updated. The World Bank has for many years referred to “low and middle income countries” as “developing countries” for convenience in publications, but even if this definition was reasonable in the past, it’s worth asking if it has remained so and if a more granular definition is warranted".
The next year, the World Bank changed its classifications based on income levels, introducing four levels.
- Low-income countries, with a gross national income (GNI) per capita of $1,085 or less in 2021
- Lower-middle-income economies, with a GNI per capita of more than $1,085 but less than $4,255
- Upper-middle-income economies, with a GNI per capita of more than $4,255 but less than $13,205
- High-income economies with a GNI per capita of more than $13,205
India is a lower-middle income economy, with a GNI of $2,150 in 2021, according to the World Bank.
These categorisations done by the World Bank can be seen here.
Nothing officially relegates India's status as a "developing economy" in any report.
Also Read: Did NYT Report Saying 30 Countries Are Trading In Indian Rupee? A FactCheck
