The UK and France have grown faster (in dollar terms) to move ahead of a sluggish Indian economy in 2018. According to the World Bank ranking of gross domestic product (GDP) of 205 countries, in 2018, India is no longer the world’s sixth-largest economy. It has dropped to the seventh-largest economy.
The earlier data showed that India had overtaken France to become the sixth-largest economy with a GDP of $2.65 trillion. Now, it has dropped to the seventh-largest economy with a GDP of $2.72 trillion.
The World Bank ranking report comes at a time when India has set itself a target of becoming a $3-trillion economy in the current financial year and a $5-trillion economy by 2024.
Some economists attribute the drop in GDP rankings to currency fluctuations and a slowdown in growth.
On the other hand, the US becomes the top fastest-growing economy with a GDP of $20.5 trillion in 2018 while China secured second place with a GDP of $13.6 trillion. Japan has taken third place with a GDP of $4.9 trillion and Germany at fourth place with a GDP of $3.9 trillion.
Meanwhile, the UK and France became the fifth and sixth largest economy with a GDP of $2.8 trillion, respectively.
Meanwhile, rating agency Crisil on Thursday lowered India’s gross domestic product (GDP) growth forecast by 20 basis points to 6.9 per cent for 2019-20, citing weak monsoon and slowing global growth. This is marginally higher than the 6.8 per cent GDP growth last fiscal, but lower than the 14-year average of 7 per cent.
An excessive monetary policy focus on inflation targeting since 2016-17, ensured interest rates remained hard, even as the combined fiscal deficit of the centre and the states remained high. With the government committed to lowering its fiscal deficit, there is little wiggle room left for government to increase spending to pump-prime the economy.
Added to this, a firming up of crude prices, falling exports and a worsening of non-performing assets in the banking system have combined to retard economic growth in India.