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INDIA BECAME THE WORLD’S FIFTH-LARGEST ECONOMY

INDIA BECAME THE WORLD’S FIFTH-LARGEST ECONOMY

Why in News?

Recently, India became the world’s fifth largest economy by overtaking the United Kingdom.

The real Gross Domestic product (GDP) growth of 6-6.5% in a world full of uncertainties is the new normal and India is set to be the third largest economy by 2029.

Highlights of this Achievement

• New Milestone: Moving past one of the biggest economies in the world, especially one that ruled over the Indian sub-continent for two centuries, is a major milestone.
• Size of Economy: The size of the Indian economy in ‘nominal’ cash terms in the quarter through March, 2022 was USD 854.7 billion while for UK was USD 816 billion.
• Population Size: As of 2022, India has a population of 1.41 billion while the UK’s population is 68.5 million.
• GDP Per capita: GDP per capita provides a more realistic comparison of income levels because it divides a country’s GDP by the population of that country. The per capita income in India remains very low, India is ranked 122 out of 190 countries in terms of per capita income in 2021.
• Poverty: The low per capita incomes often point to high levels of poverty. At the start of the 19th century, the UK’s share in extreme poverty was considerably higher than India’s. However, the relative positions have reversed even though India has made giant strides in curbing poverty.
• Health: The Universal Health Coverage (UHC) Index is measured on a scale from 0 (worst) to 100 (best) based on the average coverage of essential services including reproductive, maternal, newborn and child health, infectious diseases, non-communicable diseases and service capacity and access. While faster economic growth and the government’s policy focus on healthcare schemes since 2005 have made a distinct improvement for India, there is still a long way to go.

Issues Related to Indian Economy

• Slowing Exports and Rising Imports: The slowing growth of the manufacturing sector at 4.8% is an area of worry. Also, imports being higher than exports is a matter of concern.
• Unpredictable Weather: There is an uneven monsoon that is likely to weigh upon agriculture growth and rural demand.
• Rising Inflation: There has been continuous rise in inflation about 6% for seven straight months. The Indian economy faces headwinds from higher energy and commodity prices that are likely to weigh on consumer demand and companies' investment plans.