India Replaces Britain As the World’s Sixth Largest Economy
In an economic milestone, India, the world’s largest democracy has overtaken Britain to become the world’s sixth largest economy now. The country has achieved this lead over the UK for the first time in 150 years. Its Gross Domestic Product (GDP) is only behind that of the US, China, Japan, Germany and France.
A key reason for this development has been the slump in the English economy owing to Brexit. In June, this year, Britain voted to exit the European Union in a referendum. Following which, the pound saw a steep 30-year fall and UK’s economy that was projected to be at $2.76 trillion in 2016 diminished to $2.34 trillion. The uncertainty the Brexit vote brought meant apprehensions in Foreign Direct Investments in Britain, negative effect on jobs and a slowdown of immediate growth.
The International Monetary Fund (IMF) in October already predicted that India which was the world’s 7th largest economy at $2.29 trillion would overtake the UK by the end of the fiscal year. A projection that has come true.
Another factor that added to India’s rise is the booming growth it is experiencing as opposed to the UK. In terms of growth predictions, India is likely to see a 7.6 % growth adding $174 billion to its GDP, while the economic future for the UK looks grim. The IMF foresees just 1.1% growth rate for the UK that translates to $26 billion in the coming year. UK’s growth rate is likely to stay under 2% until at least 2020.
A few months ago France overtook Britain to become the fifth largest economy in the wake of the Brexit vote and to recover a position it lost in 2014. According to the IMF, India will overtake France by 2018 to become the fifth largest economy in the world. It predicts that India’s GDP will be around $2.72 trillion in 2017, higher than France’s predicted $2.6 trillion. By 2030 however, India is likely to surpass all European countries to become the world’s third-largest economy.
While India’s GDP is rising, it’s per capita income continues to be lower than its European counterparts owing to its teeming population. It's per capita income is still less than one-fifth of that of the UK. Nonetheless, this can’t take away from the undeniable growth that the country has seen.
India gained Independence from British colonisation in 1947 since then the country witnessed a stagnation in its economy. It was only in 1991 after economic reforms that it opened its economy to foreign investments and began to see rapid growth that still going strong.
Elizabeth Raj | Blogger – Arsha Consulting