On 5th September, India’s Prime Minister Narendra Modi announced India’s achievement of eclipsing the United Kingdom to become the fifth largest economy in the world is a pleasure of surpassing those who ruled over India for around 250 years, and which supersedes the "mere statistics of improved ranking".
According to figures from the International Monetary Fund (IMF), India passed the United Kingdom (UK) to become the fifth-largest economy in the world in the last quarter of 2021. India's economy currently ranks just four nations ahead of it in terms of size in dollars. The United States, China, Japan, and Germany are the only nations with economies larger than India's. The UK is currently in sixth place, just behind India.
While India has overtaken the United Kingdom in terms of the size of the economy, the per capita income in India remains very low. When it comes to per capita income, which is a measure of how much money is made per person in a country, India is ranked 122 out of 190 countries.
Asian Voice reached out to experts in Britain, who believe that this is indeed a “moment to savour” but, India’s ascent to fifth has as much to do with Britain’s economy continuing a prolonged period of low economic growth.
British economist and former Labour politician, Lord Meghnad Desai told Asian Voice, “India has gone past its old rulers in terms of national income! It is a moment to savour. But then let us not stop there. India has a lot more yet to achieve between now and its next big anniversary in 2047, the hundredth year of independence. As India's Prime Minister has said India should be a developed country by then. Now with a total income higher than the UK, India has more than fifteen times the UK population. In per capita terms, the average Indian is poor. India ranks near 150th in per capita income stakes. The challenge is there and there is a new generation of young skilled persons who can take India to the skies. Let us hope that will be the limit India will cross.”
Lord Karan Bilimoria CBE DL told the newsweekly, “From the day I founded Cobra Beer in 1990 I knew that India would one day be a global economic superpower. The following year India started its journey of liberalisation and today has overtaken the UK to become the 5th largest economy in the world in absolute terms. Next year in 2023 India is projected to be the fastest growing major economy in the world with a growth rate of 7%. It is only a matter of time before India is one of the top 3 economies in the world. Meanwhile, the United Kingdom with less than 1% of the world’s population punch well above its weight as the 6th largest economy in the world. This year, the 75th anniversary of India’s independence is also the year where we have started, and are targeting to complete, a landmark free trade agreement between the UK and India, two countries with a truly special relationship which will only go from strength to strength.”
Pratik Dattani, Managing Director at The Economic Policy Group told us, “The focus on these arbitrary league tables is misleading. They may help with some nationalistic chest-thumping, but offers no useful insights for economic analysis. India’s ascent to fifth has as much to do with Britain’s economy continuing a prolonged period of low economic growth, as it has to do with India recovering post-Covid. What matters is per-capita income, where India actually slipped behind Bangladesh over the last two years.
“The UK and India are expected to announce a bilateral trade agreement in the coming months, which is ever more important for the UK. The GBP is approaching historically low levels against the USD and has also fallen against INR as a result of poor economic news. The UK will need to significantly grow trade opportunities with countries like India to offset the fall in volume and value of trade with the EU. The fall in the value of the GBP will help make British exports more competitive overseas.”
