Indian Economy vs UK Economy

According to a think tank, India, which appears to have been pushed back to the world's sixth-largest economy in 2020, will overtake the United Kingdom to become the fifth largest in 2025 and race to third place by 2030. India had surpassed the United Kingdom to become the world's fifth-largest economy in 2019 but was relegated to sixth place in 2020.

"The impact of the pandemic has thrown India off course in some ways. As a result, after passing India in 2019, the UK gives India again in this year's forecasts and maintains its lead until 2024, when India retakes the lead. "In an annual report released on Saturday, the Center for Economics and Business Research (CEBR) stated.

As a result of the rupee's weakness, the UK appears to have overtaken India once more in 2020. According to the CEBR, India's economy will grow at 9% in 2021 and 7% in 2022.

"As India becomes more economically developed, growth will naturally slow, with annual GDP growth expected to fall to 5.8% in 2035." "With this growth trajectory, India will overtake the UK in 2025, Germany in 2027, and Japan in 2030 as the world's third-largest economy," says the report.

Due to the varying and different recoveries of the two countries from the COVID-19 pandemic, the UK-based think tank predicts that China will overtake the US to become the world's largest economy in 2028, five years earlier than previously anticipated.

In dollar terms, Japan would remain the world's third-largest economy until the early 2030s, when India would overtake it, forcing Germany down to fifth place. India's economy had been losing momentum even before the COVID-19 crisis, according to the CEBR.

GDP growth in 2019 fell to a more than the ten-year low of 4.2 percent, down from 6.1 percent the previous year and less than half of the 8.3 percent recorded in 2016.

"A confluence of factors, including banking system fragility, reform adjustment, and a deceleration of global trade, has resulted in slowing growth," says the report. COVID-19 pandemic has been a biological and economic disaster for India, with more than 140,000 deaths recorded in the centre of the month December.

While this is the highest death rate outside of the United States in terms of absolute numbers, it equates to around ten deaths per 100,000, significantly lower than the rates seen in the larger part of Europe and the America.

"GDP in Q2 (April-June) 2020 recorded to be 23.9 percent lower than in Q2 (April-June) 2019, indicating that the drying up of global demand and the collapse of domestic demand that accompanied the series of strict national lockdowns wiped out nearly a quarter of the country's economic activity," it said.

Many areas and sections of the economy were reactivated as restrictions were gradually lifted, though output remains well below pre-pandemic levels. The agriculture sector, which a bumper harvest has buoyed, has been a critical driver of India's economic recovery thus far.

"The development of the COVID-19 pandemic, both nationally and internationally, will be inextricably linked to the pace of economic recovery," says the report. India is better positioned than many other developing countries to roll out the vaccines successfully and efficiently next year because it manufactures most of the world's vaccines and has a 42-year-old vaccination curriculum that targets 55 million people each year.

"In the medium to long term, reforms like demonetization in 2016 and, more recently, the contentious efforts to provide freedom to the agricultural sector can deliver economic benefits," the think tank stated.

However, because agriculture employs most of India's workforce, the reform process must be delicate and gradual, balancing the need for long-term efficiency gains with the need to maintain incomes in the short term.

Although the debt-to-GDP ratio rose to 89 percent in 2020, the government's stimulus spending in response to the COVID-19 crisis was significantly more restrained than most other large economies.

"Because of India's infrastructure bottlenecks, investment in this area has the potential to unlock significant productivity gains. As a result, the economy's prospects will be closely tied to the government's approach to infrastructure spending ".

According to a US-based think tank World Population Review report, India overtook the UK and France as the world's fifth-largest economy in 2019.

"With a gross domestic product (GDP) of $2.94 trillion, India's economy is the world's fifth-largest, surpassing the UK and France in 2019." The UK economy is worth $2.83 trillion, while France's is worth $2.71 trillion.

India's GDP is $10.51 trillion in purchasing power parity (PPP), surpassing Japan and Germany. It stated that India's GDP per capita is $2,170 (for comparison, the US is $62,794) due to its large population. On the other hand, India's real GDP growth is expected to slow for the third year in a row, from 7.5 percent to 5%, according to the report.

According to the think tank's analysis, India is transitioning from closed and inward "autarkic" policies to an open-market economy. According to the report, India's economic liberalization began in the early 1990s with industrial deregulation, reduced foreign trade and investment controls, and the privatization of state-owned enterprises.

"These measures have aided India's economic growth," says the report. According to the report, India's service sector is the world's fastest-growing sector, accounting for 60% of the economy and 28% employment. Manufacturing and agriculture are two other vital sectors of the economy.

"As a result of the pandemic, India has been thrown off course a little." As a result, after overtaking India in 2019, the UK overtakes India again in this year's forecasts and maintains its lead until 2024, when India regains control," the Centre for Economics and Business Research (CEBR) said in a yearly report released on Saturday. As a result of the rupee's weakness, the UK appears to have overtaken India once more in 2020.

According to the CEBR, India's economy will grow at 9% in 2021 and 7% in 2022. As India becomes more economically developed, growth will naturally slow, with annual GDP growth falling to 5.8% in 2035." "With this growth trajectory, India will overtake the UK in 2025, Germany in 2027, and Japan in 2030 to become the world's third-largest economy," it said.

Due to the varying recoveries of the two countries from the Covid-19 pandemic, the UK-based think tank predicts that China will surpass the US to become the world's largest economy in 2028, five years earlier than previously expected.

In dollar terms, Japan would remain the world's third-largest economy until the beginning of the 2030s, when it would be surpassed by India, pushing Germany down to the fifth place.

According to the CEBR, India's economy had been losing momentum even before the shock of the Covid-19 crisis. GDP growth in 2019 fell to a more than the ten-year low of 4.2 percent, down from 6.1 percent the previous year and less than half of the 8.3 percent recorded in 2016.

"A confluence of factors, including banking system fragility, reform adjustment, and a deceleration of global trade, has resulted in slowing growth," says the report.

According to the think tank, the Covid-19 pandemic has been a biological and economic disaster for India, with more than 140,000 deaths recorded as of the middle of December.

While this is the highest death toll outside of the United States in terms of absolute numbers, it equates to around ten deaths per 100,000, significantly lower than the rates seen in much of Europe and the Americas.

"GDP in Q2 (April-June) 2020 was 23.9 percent lower than in Q2 (April-June) 2019, indicating that the drying up of global demand and the collapse of domestic demand that accompanied the series of strict national lockdowns wiped out nearly a quarter of the country's economic activity," it said.

Many areas and sections of the economy were reactivated as restrictions were gradually lifted, though output remains well below pre-pandemic levels. The agriculture sector, which a bumper harvest has buoyed, has been a critical driver of India's economic recovery thus far.

"The development of the Covid-19 pandemic, both nationally and internationally, will be inextricably linked to the pace of economic recovery," says the report.

India is better positioned than many other developing countries to roll out the vaccines successfully and efficiently next year because it manufactures most of the world's vaccines and has a 42-year-old vaccination program that targets 55 million people each year. "In the medium to long term, reforms like demonetization in 2016 and, more recently, the contentious efforts to free the agricultural sector can deliver economic benefits," the think tank stated.

However, because agriculture employs most of India's workforce, the reform process must be delicate and gradual, balancing the need for long-term efficiency gains with the need to maintain incomes in the short term.

Although the debt-to-GDP ratio rose to 89 percent in 2020, the government's stimulus spending in response to the Covid-19 crisis was significantly more restrained than most other large economies. "Because of India's infrastructure bottlenecks, investment in this area has the potential to unlock significant productivity gains." As a result, the economy's prospects will be closely tied to the government's approach to infrastructure spending."

Currently, the Indian economy is on the total rise, racing towards becoming the largest, and has successfully overtaken the economy of the UK even though there is a threat of the economy falling due to the impact from the 3rd wave of covid and decrease in the market prices; likely, it will not be affecting our economic growth rate.