In a remarkable turn of events, India has recently emerged as the world’s fifth largest economy, surpassing the United Kingdom. Currently, only the United States, China, Japan, and Germany boast larger economies than India’s. Fueled by a robust real Gross Domestic Product (GDP) growth rate of between 6-6.5% in an unpredictable global environment, India is projected to climb to the third position by 2029.
Key Highlights of India’s Economic Achievement
This transition is significant, marking a significant milestone for India as it moves ahead of a nation that colonized it for over two centuries. The nominal size of the Indian economy in the quarter ending March 2022 was valued at USD 854.7 billion, positioning it ahead of the UK’s economy, which was worth USD 816 billion.
India, with a population of 1.41 billion, towers over the UK’s population of 68.5 million as of 2022. However, despite this achievement, India’s GDP per capita remains low due to its large population, ranking 122nd out of 190 countries in 2021.
Poverty and Health Parameters: A Comparison
The low per capita income in India signifies high poverty levels. Although India has made significant strides in reducing poverty, it still lags behind the UK. At the start of the 19th century, the UK had more people living in extreme poverty than India, but the situation has since reversed.
In terms of health metrics, India’s Universal Health Coverage (UHC) Index score reveals a need for improvement despite noticeable progress due to the government’s focus on healthcare schemes since 2005.
Human Development Index and Current Economic Outlook
The ultimate objective of a higher GDP and faster economic growth is to enhance human development parameters. According to the Human Development Index (HDI) 2019 data, the UK’s score is 0.932, significantly ahead of India’s score of 0.645.
The recent evolution in rankings has been spurred by India’s quick economic growth over the past 25 years, coupled with a decrease in the value of the pound over the last year. With the right policies and global geopolitical realignment, India stands a chance for further economic advancement.
Concerns Pertaining to the Indian Economy
Despite these achievements, the Indian economy faces several challenges. The sluggish growth of the manufacturing sector at 4.8% is a cause for concern. Additionally, import rates exceeding exports pose an issue for the economy.
India’s agricultural growth and rural demand are likely to be hampered by unpredictable weather patterns leading to uneven monsoons. Plus, a continuous rise in inflation, reaching 6% for seven consecutive months, adds to the economic woes.
Investment plans and consumer demand may also be affected by rising energy and commodity prices, offering headwinds to the Indian economy.
Understanding Gross Domestic Product (GDP)
GDP represents the total market or monetary value of all finished goods and services produced within a country’s borders during a specific time period. As a comprehensive measure of domestic production, it serves as a key indicator of a country’s economic health.
In the context of the Indian economy, the GDP at market prices has continually increased over the last decade, while the growth rate of Real Gross Domestic Product has fluctuated due to various domestic and international economic pressures.
