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India becomes the fifth-largest Economy inthe world

  • Category
    Economy
  • Published
    9th Sep, 2022

Context

India leaped past the UK in the final three months of 2021 to become the fifth-biggest economy.

About

  • This calculation is based on US dollars.
  • India now trails behind the United States, China, Japan and Germany in terms of economy.
    • A decade ago, India’s rank was 11th among the world’s largest economies, while UK used to stand firm at Number 5.
  • As per the IMF’s forecast, India is set to take over the UK in dollar terms on an annual basis this year. The pound has fallen 8 per cent against the Indian rupee this year.
  • The report comes two days after government datashowed that India’s gross domestic product (GDP) rose 13.5 per cent in the June 2022 quarter (Q1FY23) as compared with the 20.1 per cent growth registered in Q1 2021-22.
  • According to the latest data released by the National Statistical Office (NSO),during April-June 2022, the country’s gross value added (GVA), which is GDP minus net product taxes and reflects supply growth, grew 12.7 per cent.

Important Sectors:

  • Trade, hotels, transportation, and communication; finance, insurance, real estate, etc. account for more than 60% of GDP.
  • ·         Agriculture, forestry, and fisheries account for around 12% of total output.
  • Manufacturing contributes to about 15% of GDP
  • Construction around 8%
  • Mining, quarrying, power, gas, and water delivery for the remaining 5%. 

The difference: 

UK

India

Sixth largest economy in the world

Fifth largest economy in the world

The size of the UK economy with regards to ‘nominal’ cash was $814 billion during the quarter through March.

The same for India was $854.7 billion

UK is currently seeing its inflation grow by the fastest pace in four decades, and also faces a threat of a recession that may last well into 2024 as per the Bank of England.

On the contrary, the Indian economy is forecast to grow more than 7 per cent this year.

Reasons behind India’s growth

  • an enormous population
  • favourable demographics
  • high catch-up potential due to low initial GDP per head
  • shift in economic power and focus to the growing economies of the BRIC countries: Brazil, Russia, India, and China
  • boom in the Investment Business

The remaining concerning area

  • Population Growth:India’s population growth is higher than that in the countries (UK) it has overtaken.
  • Higher inequality: India’s growth since liberalisation has been highly inequitable.
  • Higher Inflation

According to the World Inequality Report 2022, India stands out as a “poor and very unequal country, with an affluent elite”, where the top 10% holds 57% of the total national income while the bottom 50%’s share is just 13%.

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