Economics Prelims cum Mains

World Bank: India emerges as World’s 6th largest economy

The News

  • India emerged as the world’s sixth largest economy in 2017, surpassing France and is likely to go past the United Kingdom, which is at the fifth position, according to World Bank.

 

Important Facts

  • In 2017, India became the sixth largest economy with a gross domestic product of $2.59 trillion, relegating France to the seventh position. As per the data, GDP of France stood at $2.58 trillion.
  • India has doubled its GDP within a decade and is expected to power ahead as a key economic engine in Asia, even as China slows down.
  • The United Kingdom, which is facing Brexit blues, had a GDP of $2.62 trillion, which is about $25 billion more than that of India, the data showed.
  • The U.S. is the world’s largest economy with a size of $19.4 trillion, followed by China ($12.2 trillion), Japan ($4.87 trillion) and Germany ($3.67 trillion), respectively.

 

 

Some Economic Forecasts

  • According to the International Monetary Fund (IMF), India is projected to generate growth of 7.4 per cent this year and 7.8 per cent in 2019, boosted by household spending and a tax reform whereas world’s expected average growth is 3.9 per cent.
  • The London-based Centre for Economics and Business Research, a consultancy, said at the end of last year that India would overtake both Britain and France this year in terms of GDP, and had a good chance to become the world’s third-biggest economy by 2032.

 

What were the main drivers of GDP growth in India in 2017 ?

  • Manufacturing sector
  • Consumer spending
  • Also the currency appreciation by 4% in 2017also helped India grow bigger than France.

 

Is India’s per capita GDP also higher than France?

  • Per Capita GDP= GDP

Total Population

  • India, with a population of around 1.34 billion, is poised to become the world’s most populous nation, whereas the French population stands at 67 million.
  • This means that India’s per capita GDP continues to amount to just a fraction of that of France which is still roughly 20 times higher, according to World Bank figures.

 

Way ahead

  • India’s gross domestic product (GDP) is expected to reach US$ 6 trillion by FY27 and achieve upper-middle income status on the back of digitisation, globalisation, favourable demographics, and reforms.
  • India is also focusing on renewable sources to generate energy. It is planning to achieve 40 per cent of its energy from non-fossil sources by 2030 which is currently 30 per cent and also have plans to increase its renewable energy capacity from 57 GW to 175 GW by 2022.
  • India is expected to be the third largest consumer economy as its consumption may triple to US$ 4 trillion by 2025, owing to shift in consumer behaviour and expenditure pattern, according to a Boston Consulting Group (BCG) report.
  • It is estimated to surpass USA to become the second largest economy in terms of purchasing power parity (PPP) by the year 2040, according to a report by Price water house Coopers.

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