India is now the world’s fifth-largest economy after overtaking Britain.
The Indian economy managed to topple the UK from its standing over the last three months of 2021.
For perspective, nearly a decade ago in 2010 India was at the 9th spot, trailing countries like Brazil and Italy, dramatically rising in the past two decades.
The size of the Indian economy in ‘nominal’ cash terms in the March quarter was $854.7 billion.
In comparison, the UK stood at $816 billion.
This was on an adjusted basis, using the dollar exchange rate on the last day of the relevant quarter.
The report came just two days after the government made public the GDP data for the first quarter.
As per the latest numbers, India’s nominal GDP or GDP at the current price in the April-June quarter was Rs 64.95 lakh crore, which at the June rupee-dollar exchange rate comes to around $823 billion.
It stated that the Indian economy grew at a rate of 13.5 per cent on a year-on-year basis.
Although this number was a little lower than RBI’s forecast, the growth rate was the highest among developing countries.
By end of 2022
In this fiscal, India is projected to grow at about 7 per cent.
The International Monetary Fund (IMF) in its April world GDP outlook report had put India’s GDP in 2021 at $3.18 trillion just below the UK’s GDP of $3.19 trillion.
However, the same report stated that the IMF had predicted India surpassing the UK in 2022.
According to its estimates, India would be a $3.54 trillion economy at the end of 2022 compared to the UK’s $3.38 trillion.
Reaching $5 trillion before UK
This comes as no surprise, since India’s economy has been growing at a much faster rate in both real and nominal rates than that of the UK over a long period of time.
And as it is likely to maintain a similar gap in GDP growth rate over the UK, the gap would only widen with India becoming a $5 trillion economy much before the UK.
IMF’s projections say that India is likely to become a $5 trillion economy by 2026 whereas the UK would be lagging behind at $4.35 trillion.
Compared to Germany
India is now behind only the US, China, Japan and Germany and is Asia’s third-largest economy
Germany’s economy was $4.2 trillion at the end of 2021 which the Indian economy is likely to surpass and become the fourth largest economy in 2027, according to IMF projections.
The gap between projected output between India and Germany for 2027 is a good $20 billion-plus.
This means that despite taking into account a downward revision in both first and second estimates, chances are that India’s spot in the top five is more or less confirmed.
US vs China
Of course, these numbers are subject to revision, but the fact remains that the Indian economy is closing the gap faster.
Meanwhile the contest between the US and China would intensify, given that projections suggest China’s economy to be at an estimated $29.13 trillion by 2027.
It could overtake the US ($30.97 trillion) as the world’s largest economy.