Earlier data had shown that India had become the sixth largest economy in 2017, pushing France to the seventh place. However, the latest data showed that India had in fact become the fifth-largest economy that year, ahead of even the UK.
In 2017, India’s economic size stood at $2.65 trillion, followed by the UK at $2.64 trillion and France at $2.59 trillion.
However, this status was short lived as the UK’s economy grew to $2.82 trillion and the French economy expanded to $2.78 trillion in 2018, against India’s $2.73 trillion, showed the data.
It means that India’s economy grew a mere 3.01 per cent in dollar terms in 2018 against 15.72 per cent in 2017.
On the other hand, the UK’s economy grew 6.81 per cent against a contraction of 0.75 per cent in this period. The French economy expanded by 7.33 per cent against 4.85 per cent.
Economists attributed this to a movement of the Indian rupee against the dollar.
Devendra Pant, chief economist at India Ratings, said the rupee appreciated 3 per cent in 2017, while it depreciated 5 per cent the following year. “This has resulted in slower growth of India’s economy in dollar terms in 2018 against 2017,” he said.
In rupee terms, India’s economy grew 11.2 per cent in 2018-19, a shade lower than 11.3 per cent in 2017-18. For India’s official statistics, financial years start on April 1 and end at March 31.
The new data has come when there were talks of India overtaking Japan by 2025.
IHS Markit said in a recent report that India will overtake the UK this year to become the world’s fifth-biggest economy, and is poised to surpass Japan to be the third largest in 2025.
According to the World Bank data, Japan’s economic size was $4.97 trillion in 2018, higher than India’s by $2.24 trillion.
India planned to increase its economic size to $5 trillion by 2024-25.
For this, the Economic Survey estimated that India would have to grow by 12 per cent at current prices a year. Assuming the Reserve Bank of India’s inflation growth projections of 4 per cent, the Survey said the economy needed to grow 8 per cent at constant prices a year to make this target possible.
At constant prices, India’s economy expanded by 6.8 per cent in 2018-19 and is projected to grow by 7 per cent in the current fiscal year.