The Indian economy is projected to grow by over 7% this year. A world-beating rebound in domestic equity indices this quarter has seen its weighting 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 relevant quarter, the size of the Indian economy in the quarter through March was $854.7 billion in “nominal” cash terms. On this basis, Britain was worth $ 816 billion.
The IMF’s own forecasts show that India has overtaken the UK in dollar terms this year on a year-on-year basis, leaving only the Asian powerhouses behind the US, China, Japan and Germany. A decade ago, India was ranked 11th among the largest economies, while the UK was at 5th.
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 (IMF) GDP data, the calculation is based in US dollars, and India extended its lead in the first quarter.
Conversely, Britain’s fall in the international rankings is an unwanted backdrop for a new prime minister. Members of the Conservative Party choose Boris Johnson’s successor on Monday, with Foreign Secretary Liz Truss expected to defeat former Chancellor of the Exchequer Rishi Sunak in a run-off.
The winner will tackle a country facing the sharpest inflation in four decades and rising risks of recession, which the Bank of England says could last well into 2024.
The calculations were made using the historical exchange rates at the IMF database and Bloomberg terminal.
Britain is likely to fall further since then. UK GDP grew just 1% in cash terms in the second quarter and, after adjusting for inflation, shrank 0.1%. Sterling has also weakened the dollar against the rupee, with the pound depreciating 8% against the Indian currency this year.