In a report published in Forbes on December 16, it was revealed that India’s Gross Domestic Product (GDP) is set to surpass that of United Kingdom for the first time in 150 years. The International Monitory Fund (IMF) had, on October 8, predicted the same and said that India will move ahead of Britain by the end of this fiscal.
The Forbes report said the Indian economy was expected to overtake that of UK only by 2020 but “the surpasso has been accelerated by the nearly 20 per cent decline in the value of the pound over the last 12 months.”
The recent vote in favour of leaving the European Union by UK voters, popularly known as Brexit, is expected to further dampen its economic growth. This may work in favour of India and the gap between both the economies may grow further. “UK’s 2016 GDP of GBP 1.87 trillion converts to $2.29 trillion at exchange rate of ~GBP 0.81 per $1, whereas India’s GDP of INR 153 trillion converts to $2.30 trillion at exchange rate of ~INR 66.6 per $1. Furthermore, this gap is expected to widen as India grows at 6 to 8% p.a. compared to UK’s growth of 1 to 2% p.a. until 2020, and likely beyond,” the Forbes report said.
However, there is a catch; India might have surpassed UK in terms of GDP but it still lags way behind when it comes to the per-capita income. This is because India’s population is much larger when compared to the UK. In a tweet on December 18, MoS Kiren Rijiju also highlighted this fact while praising country’s growth. “India overtakes UK & becomes 5th largest GDP after USA, China, Japan & Germany. India may have large population base but this is a big leap,” Rijiji wrote.
The report goes on to mention the reason behind this acceleration and gives credit to the 1991 economic reform brought by then government at the time when Dr Manmohan Singh served as Finance Minister of the country. Prior to 1991, the Indian economy was majorly closed to international competition and it was after the reforms that a free market economy was able to push the country on a path of growth.
Currently, India is entering a phase of demographic dividend where a major chunk of its population will be below 35 years and if this opportunity is used to its optimal level, it can further escalate the country’s growth. It can also learn from neighboring China which has a population size similar to that of India and has been able to maintain a solid growth in the past.