The International Monetary Fund (IMF) estimated this week that India’s economy will overtake Britain’s this year in dollar terms, placing it in fifth place behind the US, China, Japan and Germany. A decade ago, India was ranked 11th among major economies, while Britain was in fifth place.
According to IMF data, in nominal terms and based on the dollar exchange rate on the last day of the quarter that ended in March, the Indian economy stood at 854.7 billion dollars – about 39 billion more than Great Britain, whose economy stood at 816 billion dollars. This is not the first time that the two countries have switched places between them. The two have been swinging between them for the 5th and 6th place in recent years.
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Thus, for example, according to StatisticsTimes, in 2019 India was already in fifth place with a GDP of 2.87 trillion dollars, while the GDP of Great Britain was 2.82 trillion. For the sake of comparison, Israel’s nominal GDP is “only” 500 billion dollars (15th place in the world, despite its size). According to the same ranking, India’s purchasing power parity (PPP) was even higher – and it is placed in third place, Just below China and the US. Last year, India which was brutally hit by the Corona epidemic, again slipped to the sixth place. Now, as mentioned, she climbed up again. This time the gap may be maintained for a longer time.
India’s economy has been growing at a much faster rate in both real and nominal rates than Britain’s for a long time. In the last 10 years, India’s economy has shown a nominal compound annual growth rate (CAGR) of 5.71% while over the same period the UK’s GDP has grown at a much smaller average annual rate of 1.76%.
India is expected to overtake Germany in 2027
According to the forecasts of the IMF, India is expected to maintain a similar gap in the rate of GDP growth over the UK, so the gap between the economies will continue to grow. According to the forecasts of the International Monetary Fund, India is expected to become a 5 trillion dollar economy by 2026, while the UK ” “Wobbling” then at about 4.35 trillion dollars. According to the same forecasts, Germany, which is placed in fourth place, is also expected to see India overtake it in 2027.
Only about forty years ago, in 1980, India was only in 13th place among the world’s economies. Since then it has grown rapidly, surpassing other economies in the world. By 2018, for example, both the UK and France were above it. One of the main reasons for India’s rise to the top of the list is that India’s service sector in recent years has been considered one of the fastest growing in the world. This sector is largely to be thanked for India’s fifth place.
India is often referred to as “the bright spot of the international economy”, and despite a sharp fall in the Corona epidemic to a negative growth of 6.6% in 2020, India jumped in 2021 to a GDP growth of 8.9%, according to World Bank data. More than China (8.1% ), Great Britain (7.4%), USA (5.7%) and Germany (2.9%).
However, next year the Indian government expects the economy to grow less, between 7% and 7.5%. “We stand by our and the International Monetary Fund’s estimate of growth of around 7.4%,” India’s Finance Minister Nirmala Sirthman said on Wednesday. “I don’t intend to give a more accurate forecast than the Central Bank of India, but I am saying that today’s figure (according to which India overtook Great Britain; R.B.), in no way diverts us from the course that is in line with the annual assessments of international organizations.”
Definitions like “growth” can be misleading
However, it should be remembered that macro data and economic definitions such as “growth” can often be misleading, or leave a false impression about the economic situation as seen with the eyes. The Indian case and the timing of the publication of the IMF’s list of major economies prove this well: while at the beginning of the week it was announced that India’s economy had overtaken Britain again, the Indian event that stars in the media is completely different. In Tuesday’s Times of India, for example, the headline on the front page and the following pages reported how India’s high-tech capital, Bangalore, is drowning in the rains that have been lashing it for the past few weeks. The harsh descriptions, accompanied by almost imaginary images, of the multitudes of houses that were flooded with water and the power outage in large parts of the city that sound, and not without reason, like descriptions from a third world country are inversely proportional to the impression left by the figure according to which India’s economy climbed to fifth place in the table of world economies. This, while leaving Britain behind.
This gap between the “growth” and the “pocket-sized economy” of the 1.4 billion inhabitants of India, becomes clearer when you dive deeper into the daily data. While India as a country has enjoyed steady economic growth and has also achieved independence in grain production in recent years, it has almost unimaginable levels of poverty, food insecurity, hunger and malnutrition. More than a fifth of the population lives on less than 1.9 dollars a day, and the levels of inequality are among the highest in the world. Also, India is home to a quarter of all the people living in malnutrition worldwide. All this despite the fact that in the last two decades, the income per capita more than tripled, and the GDP increased 4.5 times and with it the per capita consumption also increased threefold.
189.2 million Indians suffer from malnutrition
Despite this phenomenal industrial-economic growth, India is still unable to provide access to food for large numbers of people, especially women and children. According to a report by the Food and Agriculture Organization of the United Nations from 2020, 189.2 million Indians (14% at the same time) suffer from malnutrition. At the same time, 51.4% of women of reproductive age between 15 and 49 years in India are anemic.
Also according to the same report, 34.7% of children under the age of five in India suffer from problems resulting from poor nutrition, such as for example being short in comparison to the rest of their age. 20% of those children are underweight. The World Hunger Index for 2020 ranks India in 101st place out of 116 countries based on three leading indicators – prevalence of wastage and disorders in children under the age of 5.