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India has become world’s 5th largest economy: IMF

India has overtaken France and the UK to become the world’s fifth largest economy.

Feb 29, 2020 15:24 IST
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India has overtaken France and the UK to become the world’s fifth-largest economy, as per IMF’s October World Economic Outlook.

The IMF data from last year shows that when ranked by nominal GDP, India has jumped past both France and the UK to regain its fifth-largest economy spot. On the other hand, India's real GDP is predicted to witness slow growth in the year ahead due to credit weakness. 

India had previously slipped down the seventh position following a major slowdown in economic growth.  However, despite the current jump, India is battling with challenges concerning sustainability and infrastructure. 

Also read: India slips to 7th spot in Global GDP Rankings of 2018: World Bank

India’s GDP growth: Key Highlights

• In 2010, India was placed 9th among the world’s largest economies, behind countries including Italy and Brazil. The United States was ranked first then, followed by China, Japan, Germany, France, the United Kingdom, Brazil, Italy, India and Russia.

• As per the 2017 World Bank report, India had become the fifth largest economy, overtaking France and the UK for the first time. But the 2018 data showed that the two nations had once again moved ahead of India to reclaim their spots, while India was pushed to the 7th spot. 

• In 2019, however, India’s fortunes changed and it jumped to the 5th spot, again surpassing the UK and France. While the UK remained at its 6th spot, France slipped to the 7th position.

• India’s rise, when seen across the past 25 years, is even more dramatic, as its nominal GDP has risen by more than 700 percent since 1995. 

Significance

India’s GDP growth has been the most phenomenal in the past decade, regularly achieving an annual growth of between 6-7 percent. The rise in GDP is largely credited to factors including urbanization and improvement in the efficiency and productivity of technologies. This was revealed by the 2016 McKinsey Global Institute report.

Following is the list of the world’s largest economies in 2010 vs 2019:

Rank

2010

2019

1

United States

United States

2

China

China

3

Japan

Japan

4

Germany

Germany

5

France

India

6

United Kingdom

United Kingdom

7

Brazil

France

8

Italy

Italy

9

India

Brazil

10

Russian Federation

Canada

Key Challenges

Despite India’s rise in the nominal GDP ranking, the nation still faces the issue of uneven access to development and new opportunities, as per the World Bank. India also continues to struggle with the issue of poverty, as it is home to almost 1/4th of the world’s poor.

At the same time, India’s poverty reduction rates are among the highest in the world. India is also looking to adopt ways to ensure its future economic growth is sustainable and more inclusive and its policies are aimed at enabling the development of both rural and urban areas. The Digital India programme has played a significant role in providing equal access to technology and other opportunities to the rural population.

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