NEW DELHI – Once a mere colony of a European power, India has now reportedly overtaken the United Kingdom for the first time in over 100 years as the world’s sixth largest economy by GDP after the United States, China, Japan, Germany, and France.
Following Brexit – Britain’s choice of getting out of the European Union – and India’s rapid economic growth over the last 25 years, India’s economy has surpassed that of the United Kingdom for the first time in the last 150 years!
This development means that India now has the fifth largest GDP in the world.
The milestone is a symbol of India’s rapid economic growth and, conversely, the U.K.’s post-Brexit slump.
Economically, it’s been a banner year for India. In February, it surpassed China as the world’s fastest growing economy. In October, the International Monetary Fund predicted India would retain that title for the foreseeable future; its GDP is projected to increase by 7.6 percent through 2017.
India was expected to overtake the GDP of the UK in 2020. However, due to a decline of nearly 20% in the value of the British Pound over the last 12 months, the UK experienced a faster rate of decline than expected, allowing India to achieve the target much sooner. While UK’s GDP now stands at 1.87 trillion Great Britain Pounds (GBP) or $2.29 trillion, India is at ₹153 trillion or $2.30 trillion.
Moreover, this gap in GDP is expected to grow even bigger as India’s GDP is growing at 6%-8% annually while the UK’s GDP is only growing at 1%-2% annually.
The United Kingdom is projected to grow by only 1.8 percent in 2016 and 1.1 percent in 2017. Since it voted to leave the European Union in June, which could entail leaving the EU’s lucrative common market, Britain’s economy and currency has struggled.
Hence, even if the currencies fluctuate a little and the GDPs of the two nations become roughly equal, India would still be ahead of the UK in terms of future growth prospects.
India’s economy benefitted from a global commodities price slump through large trade gains and lower-than-expected inflation, according to the IMF. In addition, after being elected in 2014, Indian Prime Minister Narendra Modi has driven sweeping market reforms to spur economic growth.
Although this economic success for India is a monumental achievement, the country is still far behind UK when it comes to per capita income. India’s per capita income is about one-fifth of that of UK which shows India has a lot more to do in this field.
Source: Foreign Policy, TOI
