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.
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.