Thread by @bopinion

India’s Covid-19 economic gloom turned into despair this week.

Its per capita GDP may be lower for 2020 than in neighboring Bangladesh, the smaller nation it helped liberate in 1971 by going to war with Pakistan trib.al/hdficHl

“Any emerging economy doing well is good news,” @kaushikcbasu, a former World Bank chief economist, tweeted after the IMF updated its outlook.

“But it's shocking that India, which had a lead of 25% five years ago, is now trailing” trib.al/hdficHl

Ever since it began opening up the economy in the 1990s, India’s dream has been to emulate China’s rapid expansion.

After three decades of persevering with that campaign, slipping behind Bangladesh hurts its global image trib.al/hdficHl

Covid-19 is definitely to blame.

Bangladesh’s new infections peaked in mid-June, while India’s daily case numbers are starting to taper only now, after hitting a record high for any country trib.al/hdficHl

🇧🇩With 165 million people, Bangladesh has recorded fewer than 5,600 Covid-19 deaths.

🇮🇳While India has eight times the population, it has 20 times the fatalities trib.al/hdficHl

The severe economic lockdown India imposed to stop the spread of the disease is set to wipe out 10.3% of real output, according to the IMF.

That’s nearly 2.5 times the loss the global economy is expected to suffer trib.al/hdficHl

Worse, even without the pandemic, India might have eventually lost the race to Bangladesh.

The reason is nested in a new paper by economists @shoumitro_c and @arvindsubraman trib.al/hdficHl

Bangladesh is doing well because it’s taking a leaf out of China’s playbook. Its slice of low-skilled goods exports is in line with its share of poor-country working-age population.

India, however, has gone the other way trib.al/hdficHl

Contrary to popular belief, India has been an exemplar of export-led growth, doing better than all countries except China and Vietnam. The glass is more than half full

Trade has worked for the country. It’s the composition that’s wrong trib.al/hdficHl

India exports a lot of high-skilled manufacturing goods and services, such as computer software.

But as the world’s factory, China is now ceding room to others at the lower end of the spectrum trib.al/hdficHl

That is where India’s opportunity — and the competitive advantage of its cheap and not particularly healthy labor — lies.

Given the challenge of creating at least 8 million jobs year after year, it’s also the country’s biggest post-pandemic headache trib.al/hdficHl