India’s economy overtake Britain and France

0
196
India's economy overtake Britain and France

India’s economic growth surges to 8.2 percent in the first quarter of the 2018-19 financial years. It overtakes Britain as the world’s fifth-largest economy. Central Statistics Office figures showed GDP growth for April to June in Asia’s third-biggest economy improved from 7.7 percent in the previous quarter. The latest figures, which mark India’s highest growth rate in eight quarters, shot up from 5.6 percent for the same period last year, reinforcing the nation’s status as one of the world’s fastest growing economies. Exports, infrastructure and industry activity have picked up pace. India became the globe’s sixth-biggest economy in 2017, pushing France into seventh place, according to figures released by the World Bank last month.
India’s gross domestic product (GDP) was $2.597 trillion at the end of 2017, against $2.582 trillion for France. The United States is the world’s top economy, followed by China, Japan and Germany. Britain is currently the world’s fifth-biggest economy with a GDP of $2.622 trillion last year. The Asian giant, with its population of 1.25 billion people, would become one of the world’s top three economies around 2030. Quarterly growth fell as low as 5.6 percent in mid-2017 as the economy reeled from a shock cash ban that scrapped 86 percent of currency notes.
India’s economy is racing ahead, shrugging off global trade tensions and a sharp fall in its currency. “Indian GDP growth beat most expectations in the latest quarter and is likely to continue expanding rapidly over the coming months,” Shilan Shah, India economist at Capital Economics, said in a note. This is not all good news. Inflation has been rising, prompting the country’s central bank to hike interest rates twice in three months, and India’s currency the rupee hit a new record low against the dollar. The weak currency is driving up the price of imported goods. GDP reading could represent a peak if global growth starts to slow as a result of the escalating trade war between the United States and China. Rising oil prices could also act as a brake on India, one of the world’s top energy importers.”The outlook for the remainder of the year is not as optimistic,” Priyanka Kishore, head of India at Oxford Economics, wrote in a recent note. “Elevated oil prices and escalating global trade tensions dampen the outlook going forward.” Further economic reforms are unlikely this year, Kishore said, as Prime Minister Narendra Modi approaches an election in early 2019.Last year’s tax reform was seen as broadly positive for the Indian economy in the long run, but the hurdles to ‘big bang’ reforms on land and labor could prove to be much bigger.
India’s gross domestic product (GDP) was valued at USD 2.597 trillion at the end of 2017 overtaking French economy, which was amounted at USD 2.582 trillion last year. However, in terms of per capita GDP, India still lags far behind France, which is nearly 20 times bigger in comparison. This is because of the huge size of India’s population, which is estimated to be around 134 crore against only 6.7 crore of France. According to the World Bank, Indian economy has benefitted from robust performances in manufacturing sector driven by increased consumer spending. Overall, India has made rapid progress in economy doubling its GDP in less than past 10 years and emerged as the engine of economic growth in Asia at a time when Chinese economy has shown definite signs of lethargy.
The International Monetary Fund (IMF) has predicted India to grow at 7.4 per cent in 2018 and 7.8 percent in 2019. The IMF, on the other hand, predicted that world’s economy would grow at 3.9 percent over the next year. The year 2017 was marked by a number of key structural initiatives to build strength across macro-economic parameters for sustainable growth in the future. The growth in the first half of the year suffered despite global tailwinds. However, the weakness seen at the beginning of 2017 seems to have bottomed out as 2018 set in. Currently, the economy seems to be on the path to recovery, with indicators of industrial production, stock market index, auto sales and exports having shown some uptick. The RBI had hiked the policy rate by 25 basis points in June 2018, for the first time in four and a half years, citing a major upside risk to inflation on the back of high crude oil prices. The RBI had said there was a 12 per cent increase in the price of Indian crude oils basket, which was “sharper, earlier than expected and seems to be durable”. The 8 percent growth rate will not be possible for at least two more years – 2018-19 and 2019-20. The 8 percent growth rate will not be possible for at least two more years – 2018-19 and 2019-20. The cut in India’s growth rates comes even as the IMF maintained the world’s growth rate at 3.9 per cent for 2018 and 2019 respectively. The IMF has scaled down economic growth in Argentina and Brazil, besides India, among emerging market economies. It, however, said much of the disruption caused by demonetization and the goods and services tax (GST) was over.