NEW DELHI: It was only a matter of time before India surpassed the UK as the fifth largest economy in the world. And it has happened now. The UK’s nominal GDP in the April-June quarter was $763 billion well below India’s GDP in the same quarter at $823 billion.
India recently announced the April-June quarter GDP numbers. As per the latest numbers, India's nominal GDP or GDP at the current price in the April-June quarter was Rs 64.95 lakh crore, which at the June rupee-dollar exchange rate comes to around $823 billion.
In fact, India had surpassed the UK's GDP in the January-March quarter itself. During that quarter India’s GDP was $864 billion compared to $813 billion of the UK.
Since March, the Indian rupee and the UK pound have weakened against the US dollar, a reason why both India's and the UK's GDP have shrunken in dollar terms.
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The International Monetary Fund (IMF) in its April world GDP outlook report had put India's GDP in 2021 at $3.18 trillion just below the UK’s GDP of $3.19 trillion. In the same report, the IMF had predicted India surpassing the UK in 2022. As per its estimates, India would be a $3.54 trillion economy at the end of 2022 compared to the UK’s $3.38 trillion.
India's economy has been growing at a much faster rate in both real and nominal rates than that of the UK over a long period of time. India’s economy in dollar terms has grown at a nominal rate of 5.71% CAGR over the past 10 years, while during the same period the UK’s GDP has grown at a paltry 1.76%.
And as India is likely to maintain a similar gap in GDP growth rate over the UK, the gap between the size of the two countries would only become bigger with India becoming a $5 trillion economy much before the UK.
According to IMF's projections, India is likely to become a $5 trillion economy by 2026 whereas the UK would be languishing at $4.35 trillion.
Now only the US, China, Japan and Germany are ahead of India in terms of the size of the economy. Germany’s economy was $4.2 trillion at the end of 2021. India is likely to surpass Germany and become the fourth largest economy in 2027, according to IMF projections.