Special ReportsPublished on Jul 22, 2023
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India, Bangladesh and Nepal:Learning Lessons, Facing Challenges

India, Bangladesh and Nepal: Learning Lessons, Facing Challenges

Whether it is in geography or demographics, infrastructure or economic issues, or poverty and human development, India, Bangladesh and Nepal find themselves in highly similar situations. At the same time, the three are facing challenges that are varied. This Paper is based on a talk given by Jayshree Sengupta, Senior Fellow, at ORF's Kolkata Chapter on October 5, 2013.

India, Bangladesh, and Nepal, are all considered ‘economies in transition’ and have common economic, political, and social problems that prove to be difficult stumbling blocks in their path towards achieving high GDP growth. All three are contiguous neighbours and form a sub-region, comprising of northern and eastern India, Nepal, and Bangladesh. In language, culture, and religion, they have many things in common. Bangladesh and India share borders that measure 4,093 km.-long; with Nepal, the border is
1,580 km. long. Bangladesh and Nepal are located in a fertile terrain full of rivers, and the northern and eastern parts of India that are adjacent to these countries form the Gangetic basin which has a population of 400 million people.
All three countries have high population growth rates and experience the problems attendant to the
huge pressure exerted on land and other resources. India’s population is 1.29 billion, Bangladesh’s is 140 million, and Nepal’s is 30 million. The majority of the population in all three is primarily dependent on agriculture: around 65 percent of the population in India; 62 percent in Bangladesh; and 85 percent in Nepal.
The three countries, moreover, are all facing problems of insufficient power, water, and infrastructure; all are wooing foreign capital and technology. All three are highly dependent on western markets for their exports and have a growing, vibrant service sector. India’s service sector has posted the highest double-digit growth rate in the past few years, while Nepal and Bangladesh’s has grown at 6 percent. All three countries are set to get a new government in 2014, with elections due in the coming few months. In Nepal and Bangladesh, political upheavals are serious problems that disincentivise potential investors. All three countries have had high levels of poverty but all are experiencing a decline in poverty in recent years. India’s poverty rate declined to 22 percent in 2012 from 26 percent in 2010, Nepal’s to 25 percent in 2012 from 30.9 percent in 2003 and Bangladesh’s from 31.5 percent in 2009 to 26 percent in 2012-13. Thus there is a comparable level of poverty although Nepal is a much smaller country and very different in many ways from India and Bangladesh, especially in topography. The bulk of the population in all three countries is young and job creation for the productive age groups has proven to
be one of the biggest problems of all.
At the same time, despite these similarities, the three are facing challenges that are varied. How do these similarities and differences play out in the economic relations between the three nations? What lies ahead for these neighbours?

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