India overtakes UK to become world’s fifth largest economy, IMF data shows

India is now the fifth largest economy in the world after overtaking the UK, according to the latest data from the International Monetary Fund (IMF). India’s former chief economic advisor expects the country to become the third largest economy in the world by 2028-30.

India becomes the world’s fifth largest economy

India has overtaken the United Kingdom to become the fifth-largest economy, Bloomberg reported Friday, citing IMF GDP data and historical exchange rates. According to the estimate, the former British colony overtook the U.K. in the last quarter of 2021 and is now only ahead of the U.S., China, Japan and Germany in terms of the size of its economy. Ten years ago, India was the 11th largest economy in the world.

On an adjusted basis and using the dollar exchange rate on the last day of the relevant quarter, the size of the Indian economy in terms of liquidity “nominal“in the quarter through March was $854.7 billion. On the same basis, the UK’s was $816 billion,” the publication explains.

Many people in India are rejoicing at the news that the Indian economy is outpacing the British economy. Kartik Sharma, a member of the Indian parliament, tweeted, “India is emerging as the 5th largest economy in the world, dethroning the UK from its position. Under the development oriented leadership of Hon’ble PM Narendra Modi Ji, we have made India the 5th largest economy in the world.“

Dr. Arvind Virmani, former chief economic advisor to the Indian government, expects India to become the third largest economy in the world within this decade, based on current numbers. Virmani was appointed India’s representative to the IMF in 2009. Commenting on the news, he told news agency ANI:

Last year we were 6th by about 40 billion & amp; it was expected to happen in 2022. India is moving up the power ladder in terms of forecast value, we will become the 3rd largest country by 2028-30.

The IMF’s World Economic Outlook database shows that India has surpassed the UK in dollar terms on an annual basis this year, with a GDP of $3.53 trillion, compared to the UK’s $3.38 trillion.

Kotak Mahindra Bank CEO Uday Kotak, however, explained on Twitter that India has 20 times the population of the UK and therefore has a lower GDP per capita. “It is a proud moment for India to dethrone the UK, our colonial ruler, as the 5th largest economy“he wrote, adding that “a reality check of the population denominator“: India: 1.4 billion versus 0.068 billion for the UK. Therefore, GDP per capita is $2,500 versus $47,000. “We have miles to go“.

According to government data, India’s economy grew 13.5 percent in the second quarter of this fiscal year – the fastest in the last four quarters, according to the country’s Office for National Statistics (ONS). Meanwhile, the U.K.’s GDP grew by only 1 percent on a cash basis in the second quarter, but fell by 0.1 percent after adjusting for inflation. The British pound also underperformed the U.S. dollar against the rupee, with the pound down 8 percent against the Indian rupee this year.

Last month, Morgan Stanley said India could become Asia’s strongest economy by 2022-23. The global investment bank expects India’s growth to average 7 percent in 2022-23. “The economy is poised for its best run in more than a decade as pent-up demand is unleashed“, said the brokerage firm. “Lower corporate taxes, the production-linked incentive scheme (PLI), and India as a potential beneficiary of supply chain diversification will catalyze and support domestic demand, especially for investment.“