Written by Staff Writer
21 Dec, 2016 | 3:37 pm
For the first time in over 100 years, India has overtaken Britain to become the world’s 6th largest economy in terms of GDP. The list of countries ahead of India are as follows: United States, China, Japan, Germany, and France. This is quite an achievement for the South Asian nation and is a remark on both India’s rapid economic development as well as Britain’s post Brexit slump.
In February of this year, India surpassed China as the world’s fastest-growing economy , while the International Monetary Fund had projected the country’s GDP will increase by 7.6 percent in 2017. Meanwhile, Britain was projected to grow by only 1.8 percent in 2016 and 1.1 percent in 2017. Since it voted to leave the European Union, which could entail leaving the EU’s lucrative common market, Britain’s economy and currency have struggled.
This momentous milestone has three important implications:
First, it highlights India’s arrival on the global stage and a significant change in power dynamics between India and the west.
Second it enables India as well as other developing nations to have a more open mindset and look at alternative nations to emulate. For example, we could look to China as an example instead of our somewhat over-idealized view of western nations.
Lastly, it should redouble India’s efforts towards furthering market reform given that India’s per capita GDP is still less than one-fifth that of the UK, highlighting the tremendous scope for further convergence.
Since being elected in 2014, Indian Prime Minister Narendra Modi has driven sweeping market reforms to spur economic growth. For example, in an effort to root out corruption and tax dodging, Modi announced in November that high denomination currency rupee notes (which comprise 86 percent of India’s currency in circulation) would be taken out of circulation immediately. While this reform caused a drastic decline in business transactions and massive lines at banks and ATMs, Modi asserts that this will be beneficial in the long run.
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