Despite the Indian Finance Ministry’s ambitious target of turning the country into a $5-trillion economy in the next few years, the World Bank in its latest ranking has pushed India down to the 7th slot from 6th a year earlier.
The US has retained the top position, with a GDP of $20.5 trillion, followed by China at $13.6 trillion, Germany at $4 trillion, the UK and France at $2.8 trillion and India at $2.7 trillion.
India was in the 6th position in 2017, with its GDP at $2.65 trillion ahead of UK and France.
Economists however, commented that the situation is not that alarming, but the main reason for the slip is the volatility of the Indian rupee on the international market, while the rate of GDP growth is positive.
“The GDP growth rate (of India) is faster than China, UK or France but the simple thing is that India’s GDP is marked in rupees, whereas the UK’s is marked in pounds, which has a better conversion ratio with the dollar. If you do the same calculation, you would find the British economy has slipped because the dollar-pound ratio has done very badly and it is plummeting very fast”, said Subhomoy Bhattacharjee, Economist and Consulting Editor of the daily Business Standard.
“The Indian economy, however, is not growing at the expected rate; it should grow faster to achieve the targets set by the government. On any given date, given the current world situation, a growth rate above 5% is a massive growth rate and the Indian economy is growing faster that way. We should try to grow at a faster pace +8 or +9 to achieve the target, which is still possible. For this the government should ensure the growth of exports, create better conditions for export growth and reduce the problems in terms of allowing more labour intensive manufacturing”, Bhattacharjee added.
Indian Finance Minister Nirmala Sitharaman in her budget speech on 5 July laid down the roadmap for the economy that “will grow to become a 3 trillion dollar economy in the current year”.
“Our economy was at approximately $1.85 trillion when we formed the Government in 2014. Within 5 years, it has reached US $2.7 trillion. Hence, it is well within our capacity to reach US $5 trillion in the next few years”, Sitharaman said.