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India will overtake UK this year as the world's fifth biggest economy

GDP growth
In 2019, when Prime Minister Narendra Modi seeks the mandate of over a billion Indians for his party's bid to return to power, the World Bank will release 2018 Gross Domestic Product (GDP) figures for all nations of the world. If the growth trends of the past are anything to go by, the World Bank will declare that India has overtaken its erstwhile colonial master United Kingdom (UK) to become the world's fifth biggest economy. While India's politicians may have little control over such coincidences, there is little doubt that the party or alliance that forms the government in 2019 won't miss the opportunity to go to town with this particular coincidence.

According to the World Bank's latest estimates, the Indian economy was $15 billion bigger than the French economy in 2017. India is now behind United States of America (USA), China, Japan, Germany and United Kingdom (UK) in terms of economy size. Both the US and China are multi-trillion dollar economies whereas India is now a $2.6 trillion economy. The UK's economy as of date is just about $25 billion bigger than India's. In the post-financial crisis years from 2010 to 2017, UK's economy has grown by a little under 2 per cent on average. India's economy has grown by 7.3 per cent on an average during the same period. If both economies continue growing at the same pace, India will overtake UK this year. And even though politicians on the winning side in 2019 might be inclined to push a narrative around this, the fact remains that the standard of living of Indians will take decades to reach British levels. According to World Bank, in 2017, UK’s per capita income was $42,515. Indians meanwhile earned $1,964. So it may well take another century for Indians to reach anywhere close to what an average Brit earns and spends.

While the Indian economy may grow bigger than the UK economy this year, it will take a few years before it can overtake Germany as the world's fourth largest economy. Juxtaposing the growth rates of India and Germany with the projected growth of their economies in the near future shows interesting trends. Germany grew by almost 2 per cent between 2010 and 2017. As of date, World Bank pegged Germany’s GDP at $3.7 trillion. If Germany and India were to continue growing at the same rate, India will overtake Germany by 2024. The Indian economy at $4.2 trillion will be just about $4 billion bigger than Germany’s that year. But Germans being richer than both British and French and Germany being less populous than India, Germans will continue having a higher per capita income and standard of life than Indians for a long time to come. So if the winner of 2019 lasts a full five-year term, 2024 which would be a Parliamentary election year in India, could see a new Politisches Lied being sung by India’s politicians.

 


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