India became the fifth largest economy in the world, overtaking the United Kingdom.
Britain slipped to sixth place, another blow to the government in London as it suffered the shock of a brutal life.
The Indian economy is expected to grow at over 7 percent this year.
Global recovery in domestic stock indices this quarter saw a strong rise in the MSCI Emerging Markets Index, second only to China.
On an adjusted basis and using the dollar exchange rate on the last day of the respective quarter, the Indian economy was $854.7 billion in “normal” monetary terms in the quarter that ended March.
On the same basis, the UK was $816 billion.
IMF predicted that India will overtake the UK
The IMF itself predicts that India will overtake the UK in dollar terms this year on an annual basis, leaving the Asian power behind only the US, China, Japan and Germany.
A decade ago, India was the eleventh largest economy, while Britain was fifth.
The former British colony overtook Britain to become the fifth largest economy in the last three months of 2021.
According to the International Monetary Fund’s GDP data, measured in US dollars, India widened its lead in the first quarter.
UK decline in international rankings
Conversely, Britain’s declining international standing is an unwelcome backdrop for the new prime minister.
Conservative Party members will choose Boris Johnson’s successor on Monday, and Secretary of State Liz Truss is expected to beat former Chancellor of the Exchequer Rishi Sinek in a run-off.
The winner will find a country facing the fastest inflation in four decades and growing risks of recession, which the Bank of England says could persist until 2024.
IMF database and historic exchange rates
Calculated using the International Monetary Fund database and historical exchange rates on Bloomberg Terminal.
Further declines are expected in the UK after that. UK GDP grew by just 1% in monetary terms in the second quarter and, after adjusting for inflation, shrank to 0.1%.
The pound has also underperformed the dollar against the rupee, with the pound depreciating by 8 percent against the Indian currency this year.
The International Monetary Fund itself expects India to outperform the UK in dollar terms this year on an annual basis, leaving Asian power behind only the US, China, Japan and Germany.
A decade ago, India was ranked eleventh in terms of economy, while the United Kingdom was ranked fifth.
However, here are five developments in perspective.
1. Population size
This is one of the main differences between the two countries.
By 2022, India’s population is 1.41 billion while the UK’s population is 68.5 million. In other words, the population of India is 20 times the population of Great Britain.
As the accompanying chart 2 shows, this gap is unlikely to be filled soon.
2. GDP per capita
Because the two countries’ populations differ so much, GDP per capita provides a more realistic comparison of income levels because it divides a country’s GDP by that country’s population.
Not surprisingly, as Chart 3 shows, the average Indian has a very low income.
3. Poverty level
Low per capita income often indicates high poverty levels.
Chart 4 shows the share of India and Great Britain in extreme poverty. It is noteworthy that at the beginning of the 19th century, Britain’s share of extreme poverty was significantly higher than India’s.
However, as things stand today, the relative positions have reversed even though India has made great strides in reducing poverty.
4. Human Development Index
Arguably, the ultimate goal of higher GDP and faster economic growth is better human development parameters.
Human Development Index is a composite of health, education and standard of living parameters.
Chart 5 contrasts India with the UK on HDI. Despite its secular improvements, it may take a decade for India to catch up to where Britain was in 1980.
5. Universal Healthcare Coverage
An important factor in becoming rich as a country is the quality of life available to citizens.
The Universal Health Coverage (UHC) index is measured on a scale of 0 (worst) to 100 (best) based on the average coverage of essential services including reproductive, maternal, newborn and child health, communicable diseases, non-communicable diseases and services.
Chart 6 maps both India and the UK on this figure. Although rapid economic growth and the government’s policy focus on health care schemes since 2005 have marked a marked improvement for India, there is a long way to go.
