Foreign Policy Watch: India-Bangladesh

Opportunities for India in Bangladesh’s economic success

Note4Students

From UPSC perspective, the following things are important :

Prelims level : BBIN, SAARC

Mains level : Paper 2- Economic progress of Bangladesh and its implications for the subcontinent

Bangladesh is expected to cross India in terms per capita income. This speaks volumes about the achievements of Bangladesh when contrasted with Pakistan. At the same time, it has several implications for the region. The elaborates on such implications.

What other countries can learn from Bangladesh

  • The International Monetary Fund’s latest World Economic Outlook published recently predicts that Bangladesh’s per capita GDP will overtake that of India this year.
  • The projected difference is rather small — $1,888 to $1,877 — and unlikely to last beyond this year.
  • International development institutions are convinced that the rest of the subcontinent and developing countries around the world can learn much from Dhaka’s experience — the so-called “Bangladesh model”.

5 Implications for the region

1) Rising global interest in the subcontinent

  • Rapid and sustained economic growth in Bangladesh has begun to alter the world’s perception of the subcontinent.
  • India and Pakistan dominated the region and other countries were considered small.
  • But Bangladesh was far from being small, demographically it’s  the eighth-largest nation in the world.
  • The economic rise of Bangladesh is changing some of that.

2) Changing economic weights of Bangladesh and Pakistan

  • This year, Bangladesh’s GDP is expected to reach about $320 billion.
  • The IMF did not have the 2020 numbers from Pakistan to report but in 2019, Pakistan’s economy was at $275 billion.
  • The IMF suggests that Pakistan’s economy will contract further this year.
  • Bangladesh has controlled its population growth and Pakistan has not.
  • Dhaka has a grip over its inflation and Islamabad does not.
  • There is no question that Pakistan’s negative geopolitical weight in the world will endure.
  • But Bangladesh’s growing economic muscle will help Dhaka steadily accumulate geopolitical salience in the years ahead.

3) Accelerate regional integration

  • Bangladesh’s economic growth can accelerate regional integration in the eastern subcontinent.
  • The region’s prospects for a collective economic advance are rather dim.
  • Due to Pakistan’s opposition to economic cooperation with India and its support for cross-border terror, the main regional forum for the subcontinent, the South Asian Association for Regional Cooperation (Saarc), is dormant.
  • Instead of merely praying for the revival of Saarc, Delhi could usefully focus on the BBIN.
  • BBIN is sub-regional forum among Bangladesh, Bhutan, India and Nepal, activated in the middle of last decade — has not advanced fast enough.
  • It is time for Delhi and Dhaka to take a fresh look at the forum and find ways to widen the scope and pace of BBIN activity.
  • Meanwhile, there is growing interest in Bhutan and Nepal for economic integration with Bangladesh.

4) Increasing importance of Bangladesh in geopolitics of Indo-Pacific

  • 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.
  • Bangladesh does not want to get into the fight between Beijing and Washington, but the great power wooing of Dhaka is bound to intensify in the new geopolitics of the Indo-Pacific.

5) Development of India’s eastern and north-eastern states could accelerate

  • 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.
  • Also, connectivity between India’s landlocked Northeast and Bangladesh would provide a boost to the development of north-eastern states.
  • Delhi and Dhaka 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.

Way forward

  • Parliamentary approval of the boundary settlement in 2015, despite the opposition, was a step in the right direction from India.
  • So was the acceptance of the 2014 international arbitration award on the maritime boundary dispute between India and Bangladesh.
  • But the positive dynamic surrounding the bilateral relationship acquired a negative tone in the second amidst the poisonous rhetoric in India around the Citizenship Amendment Act.
  • There is much room for course correction in Delhi and to shift the focus from legacy issues to future possibilities.

Conclusion

Both the countries need to jointly develop and pursue with Dhaka an ambitious framework for shared prosperity.

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