India to knock UK down in World’s largest economy rankings

Expected to beat the UK as one of the world’s largest economy, will India emerge stronger than it? The statement is undeniably true according to a Global consultancy firm, PwC.

UK, and France have often switched seats at the world rankings due to similar patterns of development, and almost equal population ratio. India’s ascending on the list will be based on the following factors:

• Realization of efficiency gains from the newly adopted GST policy
• Policy impetus
• A steady growth pace of 7.6 per cent

Emerging economies v/s advanced economies

In another report by PwC, it was stated that the emerging markets (E7) could grow around twice as fast as advanced economies (G7) on average, which is an indicator that India is moving up the ladder.

Emerging economies in 2050 were projected in the report, led by China (1st), India (2nd) and Indonesia (4th). According to the World Bank data, India outdid France in emerging as the world’s sixth largest economy in 2017.

But emerging economies need to develop their institutions, and infrastructure if they aspire to realize their long-term growth potential.

PwC stated that the pick-up in growth of most major economies is likely to be in between 2016-2018. It also expects India’s growth in 2019.

Britain’s stalled economy

Britain’s stalled economy, partly due to Brexit blues, and depreciating pound, has made it suffer in the world rankings, leaving it behind India, and France.

Speaking on India’s growth, Ranen Banerjee, Partner and Leader – Public Finance and Economics, PwC India said, “India should return to a healthy growth rate of 7.6 per cent in 2019-20, if there are no major headwinds in the global economy such as enhanced trade tensions or supply side shocks in oil. The growth will be supported through further realization of efficiency gains from the newly adopted GST and policy impetus expected in the first year of a new government.”

Mike Jakeman, senior economist at PwC, stated that India is the fastest growing large economy, with its gigantic population, favorable demographics, and high catch-up potential (for its Innovation and Structural Change) due to low initial GDP per head.

“The UK and France have regularly alternated in having the larger economy, but subdued growth in the UK in 2018 and again in 2019 is likely to tip the balance in France’s favor. The relative strength of the euro against the pound is an important factor here,” Jakeman said.

With the emerging status of Indian economy in terms of world rankings, it is expected to gain a dominant position by 2050.