Tuesday, 17 Feb, 2026
Photo courtesy: Pixabay
India is growing on the back of government spending and domestic demand. Bangladesh, hit by weak exports and tight finances, is slowing with less room to respond
For six consecutive years, from 2019 to 2024, Bangladesh held a distinction that carried both economic and symbolic weight: its per capita income was higher than India’s. That gap has now closed and reversed. According to IMF estimates, India moves ahead in 2025 and is projected to retain the lead in 2026. The shift comes just as the Bangladesh Nationalist Party is poised to form the next government under Tarique Rahman, inheriting slower growth and sticky inflation.
The income trajectory explains the turning point. In 2019, Bangladesh’s per capita income stood at $2,154.23, compared to India’s $2,041.43. In 2020, the figures were $2,270.35 and $1,970.04 respectively. Dhaka remained ahead in 2021 at $2,497.74 versus New Delhi’s $2,239.61, and in 2022 at $2,730.85 against $2,347.45. The margin narrowed in 2023, with Bangladesh at $2,651.74 and India at $2,530.12, and again in 2024, at $2,618.68 compared to $2,594.74.
The crossover appears in 2025. Bangladesh is estimated at $2,734.10, while India stands higher at $2,818.03. For 2026, projections place Bangladesh at $2,960.20 and India at $3,051.03. The numerical gap is modest, but the direction matters. For several years, Bangladesh’s edge was cited as evidence of faster structural progress. The new data suggest that momentum has weakened while India’s has strengthened.
Growth conditions have shifted. India’s expansion has been supported by public investment and domestic demand. Bangladesh has faced softer exports, tighter financial conditions and internal strains. The result is deceleration at a time when policy buffers are thinner.
Inflation has added pressure. Retail price inflation in Bangladesh reached 10.03 per cent in 2025, the first double-digit reading in at least nine years. Price increases had already climbed to around 9 per cent in 2023 and edged higher in 2024. The latest projection indicates moderation to 8.75 per cent in 2026, but that would still leave households dealing with elevated costs.
Persistent inflation complicates economic management. It reduces purchasing power, discourages savings and forces difficult trade-offs between monetary tightening and growth support. Food and essential goods weigh heavily in public sentiment, and price spikes quickly become political concerns.
The sources of inflation are mixed: supply bottlenecks, exchange rate pressures and global commodity volatility. Addressing them requires improving domestic production capacity and logistics while maintaining macroeconomic discipline. Reviving growth could ease supply constraints over time, but doing so without reigniting price pressures will test policy coordination.
Trade data underline another reality. Despite proximity and regular political engagement, Bangladesh remains a small trade partner for India. In the first eight months of the current financial year, Bangladesh’s share in India’s exports fell to 2.48 per cent, the lowest in at least nine years. Its share in India’s imports was just 0.23 per cent, the lowest in seven years. Bilateral commerce is important symbolically and strategically, but limited in aggregate economic weight.
The broader challenge for the incoming administration is clear. It must restore growth credibility while containing inflation in an unsettled global environment. External demand is uneven, financial markets are cautious and commodity prices remain unpredictable. Domestic reform and execution therefore assume greater importance.
The earlier income comparison with India became shorthand for Bangladesh’s economic ascent. Losing that lead does not erase past gains, but it signals the need for renewed dynamism. Economic performance is not judged by relative pride alone; it rests on sustained expansion and stable prices.
For the new government, the arithmetic is straightforward even if the path is not. Output must rise faster than prices. Confidence must be rebuilt among investors and consumers. Delivery, rather than declaration, will determine whether the next set of numbers restores the narrative of resilience that Bangladesh once enjoyed.
