Has Bangladesh Really Left India and Pakistan Behind in Per Capita Income?

[hydrabadi_arab]

This is a good question and requires looking at various socio-cultural aspects. Indians have a lot of misconceptions about Punjab, both in a positive and negative way. Bollywood has played its role in pushing the Punjabi stereotype.

For someone like me who has lived all over India, I have encountered different kinds of Punjabis:

1. Post partition refugees from Pakistan
2. Punjabis who have never lived in Punjab (typical Bombay Punjabis, some of whom could be refugees too)
3. Punjabis whose parents lived in Punjab but children grew up elsewhere
4. Punjabis who live in Punjab

They all differ in their temperament. But I don't want to get into that.

It's the category 4 Punjabis who are relevant to the answer here. For me who is not very well versed with economic data, it is difficult to say if the Green Revolution caused the prosperity in Indian Punjab or is it Punjab which was the ideal setting for the Green Revolution to start with. Perhaps it is a bit of both. Punjab has had a decent canal system since British times. The hard working stereotype applies more to category 1 and 2 Punjabis. Farmers in all states in India are hard working, so that part was not unique to Punjab.

I think despite the differences in the 4 categories I described above, there is a common thread that runs through all Punjabis, and that is their willingness to spend on things they like. This pushes them to work hard for it and generally creates a consumer culture that is good for the economy. More importantly this mindset applies in rural areas as well, so we see similar spending patterns there. However the image of Punjab as a happy agrarian role model is partly due the absence of large scale industries (except some food processing), due to which it is the farmer and not the businessman which dominates the cultural references. Having said that, Indian Punjab does not lack urban areas. Patiala, Ludhiana, Jalandhar, Bathinda are decently sized cities. Indian Punjab is after all not that big geographically.

Barring the cow belt (also called the BIMARU states), the conditions in rural India are not that bad actually and Punjab is not significantly better. Punjab is certainly not better than rural South India in living standards. I think where Punjab fares better in is how the poorest live, at least as far as diet goes. North Indians in general love their milk and milk products, and would rather spend a larger portion of their income on food, as compared to other things.

Today's Indian Punjab is actually not a role model in any sense as far as policy making is concerned. When examples of progressive states are given, it is almost always the southern states and Maharashtra / Goa, or at best Rajasthan from North India. Punjab is actually considered a state resting on past laurels where the youth are struggling with drug addiction and forever dreaming of migrating to gora lands.

Indian punjab is significantly better according to India own poverty rates. This is despite obvious drawbacks which I will list below.

1. Land locked, 80% of Indian exports are from just 6 coastal states. With Indian punjab hardly having any share in it because why bother investing in punjab when you can setup industry closer to port.
2. No IT revolution in Indian Punjab. Because of central government must of investment goes to greater Delhi region which now include parts of Haryana and UP.

This have made Indian punjabis to migrate outside to maintain low level of poverty.

 

[blain2]

While not wishing ill on BD in any way, I am absolutely confident that Pakistan will outperform BD in the medium to long term insha'Allah (by outperform it does not mean that BD will not be doing well, but right now there is a lot of media spin around metrics that are very time specific, essentially representing the here and now). Pakistan's budget deficit crunch is exacerbated on account of historically high oil prices and COVID which will require some relief which won't be coming in the short term.

My optimism is based on a lot of reasons, some of them are based on what I see happening in Pakistan now and the scale of it. Yes, there are a ton of problems as well but that is universal for South Asia.

 

[Surya 1]

Has Bangladesh Really Left India and Pakistan Behind in Per Capita Income?

Is Bangladesh's officially reported GDP figure credible? Do consumption figures support Bangladesh's claim of higher per capita income tha...

www.southasiainvestor.com

Is Bangladesh's officially reported GDP figure credible? Do consumption figures support Bangladesh's claim of higher per capita income than India and Pakistan? If Bangladesh has higher GDP per capita, why is its per capita consumption of energy, cement and steel so much lower than India's and Pakistan's? Does Pakistan really have a much larger informal economy than Bangladesh or India? Is there a lot more currency in circulation in Pakistan than in Bangladesh and India? Let us try and answer these questions!

Energy consumption:

Life in modern times is heavily dependent on energy. Per capita energy consumption, a key barometer of economic activity, is significantly lower in Bangladesh than in India and Pakistan. Use of electricity per capita in Bangladesh is significantly less than in India and Pakistan.

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​ Energy Consumption Comparison in Bangladesh, India and Pakistan. Source: NationMaster

Commercial energy use (kg of oil equivalent per capita) above refers to apparent consumption, which is equal to indigenous production plus imports and stock changes, minus exports and fuels supplied to ships and aircraft engaged in international transport. It's only 142 Kg of oil per capita in Bangladesh, much lower than 463 Kg in Pakistan and 494 Kg in India.

Cement Consumption:

Use of cement is another important indicator of economic and development activities, particularly in the infrastructure and housing construction sector. China and the United States, the world's biggest economies, also have the highest consumption of cement.

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Cement Consumption. Source: International Cement Review

Steel Consumption:

Per capita steel consumption is another important indicator of economic activity in both construction and manufacturing sectors. It goes into building housing and infrastructure as well manufacturing vehicles and home appliances. The United States and China, the world's biggest economies, are the largest consumers of steel.

Bangladesh is among the lowest consumers of steel products in the world. Per capita consumption of finished steel in Bangladesh (41 Kg) is lower than the regional peer Myanmar (40.5), India (75.3), Pakistan (45.7), Sri Lanka (53.5), according to the World Steel Association (WSA).


Pakistan's Informal Economy:
Dr. Lalarukh Ejaz, an assistant professor at the Institute of Business Administration in Karachi, has estimated that the size of Pakistan’s informal economy at 56% of the country’s GDP (as of 2019). This means that it’s worth around $180 billion a year, and that is a massive amount by any yardstick.
Vehicles and home appliance ownership data analyzed by Dr. Jawaid Abdul Ghani of Karachi School of Business Leadership suggests that the officially reported GDP significantly understates Pakistan's actual GDP. Indeed, many economists believe that Pakistan’s economy is at least double the size that is officially reported in the government's Economic Surveys. Pakistan's GDP has not been rebased in more than a decade. It was last rebased in 2005-6 while India’s was rebased in 2011 and Bangladesh’s in 2013. Just rebasing the Pakistani economy will result in at least 50% increase in official GDP.

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Estimates of Informal Economies in Asia in 2012. Source: IMF

A research paper by economists Ali Kemal and Ahmad Waqar Qasim of PIDE (Pakistan Institute of Development Economics) estimated in 2012 that the Pakistani economy’s size then was around $400 billion. All they did was look at the consumption data to reach their conclusion. They used the data reported in regular PSLM (Pakistan Social and Living Standard Measurements) surveys on actual living standards. They found that a huge chunk of the country's economy is undocumented.

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Currency in Circulation to M2 Ratio Trends. Source: Business Recorder

Pakistan's Service Sector:
Pakistan's service sector which contributes more than 50% of the country's GDP is mostly cash-based and least documented. Compared to Bangladesh and India, there is a lot of currency in circulation in Pakistan. According to the State Bank of Pakistan (SBP), the currency in circulation has increased to Rs. 7.4 trillion by the end of the financial year 2020-21, up from Rs 6.7 trillion in the last financial year, a double-digit growth of 10.4% year-on-year. Currency in circulation (CIC), as percent of M2 money supply and currency-to-deposit ratio, has been increasing over the last few years. The CIC/M2 ratio is now close to 30%, according to the State Bank of Pakistan. The average CIC/M2 ratio in FY18-21 was measured at 28%, up from 22% in FY10-15. This 1.2 trillion rupee increase could have generated undocumented GDP of Rs 3.1 trillion at the historic velocity of 2.6, according to a report in The Business Recorder. In comparison to Bangladesh (CIC/M2 at 13%), Pakistan’s cash economy is double the size. Even a casual observer can see that the living standards in Pakistan are higher than those in Bangladesh and India.
Summary:
Based on published data on energy, cement and steel consumption, Bangladesh's claim of having a per capita GDP than India and Pakistan does not seem credible. In this age of growing energy-intensive industrialization, it does not make sense to have significantly lower use of key inputs like energy to produce higher gross domestic product. For Pakistan, it is important for policymakers to promote ways of documenting more of the economy. It's also important for finance officials to rebase the country's to a more recent year than the year 2006 when it was last done.
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Has Bangladesh Really Left India and Pakistan Behind in Per Capita Income?

Is Bangladesh's officially reported GDP figure credible? Do consumption figures support Bangladesh's claim of higher per capita income tha...

www.southasiainvestor.com

I wish BD best of luck for its progress. I do not want to indulge into those figures such as only one company of India exports more than total export of BD etc. BD is on right path and has bright future.

 

[Kyusuibu Honbu]

Gold is useless wealth as it doesnt provide financing for the economy.

So why do nations maintain gold reserves then?

 

[Indos]

So why do nations maintain gold reserves then?
View attachment 804727

I dont have problem with that bro, Indonesian is one of the producer of gold and we will add more value with more gold refinery being built. Industry does consume Gold as well and country like USA who dont have difficulty to get funding from all over the world, including by printing their own money do stock pile Gold as well, but I just criticizes civilian who hold it

Biggest gold miner in Indonesia

Freeport Indonesia (51 % owned by Indonesia state owned enterprise (SOE), PT Inalum)

Second biggest Gold and chopper mining in Indonesia is also owned by Indonesian citizen, Arifin Panigoro family, PT Amman who also owned PT Newmont Nusa Tenggara

Third biggest Gold miner is still SOE, PT Antam