India is expected to become the world’s 5th largest economy by 2025, by again overtaking the United Kingdom, as per the annual report published by the Centre for Economics and Business Research (CEBR) on December 26, 2020.
India had overtaken the United Kingdom in 2019 to become the 5th largest economy but was pushed back to sixth place in 2020. India will now be able to overtake the nation by 2025 and is predicted to become the third-largest economy by 2030.
The UK-based think tank, CEBR further forecasted that China will overtake the US by 2028 to become the world's biggest economy, five years earlier than previously estimated due to the contrasting recoveries of the two countries from the COVID-19 pandemic.
On the other hand, Japan will remain the world's third-largest economy until the early 2030s when it would be overtaken by India, pushing Germany down from fourth to fifth place.
Key Highlights
•According to CEBR, India's economy had been losing momentum even ahead of the shock delivered by the COVID-19 crisis.
•The rate of India’s GDP growth fell to a more than the ten-year low of 4.2 per cent in 2019, down from 6.1 per cent in 2018 and around half the 8.3 per cent growth rate recorded in 2016.
•India’s slowing growth has been a consequence of a confluence of factors including fragility in the banking system, adjustment to reforms and deceleration of global trade, as per the CEBR report.
•The think tank further said that the COVID-19 pandemic has been a human and economic catastrophe for India with over 140,000 deaths recorded till the middle of December.
•The death toll is the highest outside of the US but it is equal to around 10 deaths per 100,000, which is a significantly lower figure than what was seen in Europe and the Americas.
•India’s GDP in the second quarter of 2020 (April-June) was 23.9 per cent below its 2019 level, which indicated that almost a quarter of the country's economic activity was wiped out by the drying of global demand and the collapse of domestic demand accompanied the series of strict national lockdowns.
•Though many parts of the economy showed revival when restrictions were lifted, the output remained much below pre-pandemic levels.
Gradual recovery
India’s agricultural sector, however, has shown growth, which is an important driver of India's economic recovery.
India is also better placed than many developing nations when it comes to the COVID-19 vaccination programme, as it is the manufacturer of the majority of the world's vaccines and has a 42-year-old vaccination programme that targets 55 million people each year.
The report further added that the outlook of India’s economy going forward will be much depended on the government’s approach to infrastructure spending as infrastructure bottlenecks exist in India and investment in such areas will have the potential to unlock significant productivity gains.
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