NEW DELHI: India has become the world’s fifth-largest economy after it overtook the United Kingdom in endMarch 2022, according to the latest calculations by Bloomberg, the world’s leading financial data and media company. While this was anticipated for a while, Bloomberg reached this conclusion by using the International Monetary Fund (IMF) database and historic exchange rates.
“On an adjusted basis and using the dollar exchange rate on the last day of the relevant quarter, the size of the Indian economy in ‘nominal’ cash terms in the quarter through March was $854.7 billion. On the same basis, UK was $816 billion,” the company’s latest report said.
After overtaking the UK, India today ranks behind the US, China, Japan and Germany in terms of the size of its economy in ‘nominal’ cash terms – around $854 billion. A decade ago India was 11th and the UK was fifth.
This is the second time India has beaten the UK in terms of economy, with the first one being in 2019. The trend has prompted world’s leading economists forecast that by 2030 India will become the third largest economy globally. “India is moving up the power scale and according to my earlier forecast by 2028 – 2030, we will become the third largest economy in the world,” said Arvind Virmani, former Chief Economic Advisor.
Sachin Chaturvedi, Drector General of Research and Information System for Developing Countries (RISDC), supported Virmani. “It has not happened for the first time. We are focusing on capital expenditure. We are making efforts to bring down the revenue expenditures and RBIs strategy of inflation targeting has also helped economy grow in a very balanced manner and that has given the results as well.”
Similar forecasts have been made by others. A report from the State Bank of India (SBI) said. “The path taken by India since 2014 reveals the country is likely to get the tag of third-largest economy by 2029.”
Since 2014, when Prime Minister Narendra Modi formed the Government at the Centre, the Indian economy is up seven places since 2014, when the country was ranked 10th. According to a research paper from SBI’s Economic Research Department, the Gross Domestic Product (GDP) growth rate for FY23 is predicted to be between 6.7 and 7.7 per cent, although given the current state of the world economy, 6-6.5 per cent growth is to be expected.
While the Bloomberg report said that India had surpassed Britain to take over as the fifth-largest economy in the world when it increased its lead during the first quarter, the SBI analysis states that as of December 2021, India had overtaken the UK as the world’s fifth-largest economy. “The share of India’s GDP is now at 3.5 per cent, as against 2.6 per cent in 2014, and is likely to cross 4 per cent in 2027, which is the current share of Germany in global GDP,” the report added.
The SBI research also discussed how China’s economy is expected to slow down in terms of new investment aspirations, which will benefit India’s economy. “Global tech major Apple’s decision to shift part of its production of its flagship iPhone 14 for worldwide shipping from India, with a negligible time lag of a few weeks post its launch on September 7, bears testimony to such an optimism,” it added.
India, however, continues to trail behind the majority of global economies in terms of GDP per capita. According to data from the World Bank, its GDP per capita was $2,277 in 2021, whereas the UK’s was $47,334. At $12,556 in 2021, China’s per capita income was nearly six times more than India’s.
GDP numbers released by the National Statistical Office, on August 31 for the first quarter of FY23 showed that the Indian economy grew 13.5 per cent. As Finance Minister Nirmala Sitharaman pointed out, the nation is on a strong wicket when compared to others, and is responsive in terms of extending hand-holding to the required sections.