The former British colony overtook the UK in the last three months of 2021 to become the fifth-largest economy. The calculation is based on the US dollar, and India strengthened its lead in the first quarter, according to GDP figures from the International Monetary Fund.
The UK’s decline in international rankings is an unwelcome backdrop for the new prime minister. Conservative Party members choose Boris Johnson’s successor on Monday, with Foreign Secretary Liz Truss set to beat former Chancellor of the Exchequer Rishi Sunak in the second round.
Whoever wins will take control of a country facing the fastest inflation in four decades and growing risks of a recession that the Bank of England says could last until 2024.
By contrast, India’s economy is expected to grow by more than 7% this year. A global rebound in Indian stocks this quarter has just seen their weighting climb to second place in the MSCI Emerging Markets Index, behind only China.
On an adjusted basis and using the dollar exchange rate on the last day of the relevant quarter, the size of the Indian economy in terms of ‘nominal’ cash in the quarter to March was $854.7 billion. . On the same basis, the UK was $816 billion.
Calculations were made using the IMF database and historical exchange rates on the Bloomberg terminal.
The UK has probably fallen further since. UK GDP grew by only 1% in terms of cash in the second quarter and, after adjusting for inflation, fell by 0.1%. The British pound has also underperformed the dollar against the rupee, with the pound falling 8% against the Indian currency this year.
The IMF’s own forecasts show India overtaking the UK in dollar terms on an annual basis this year, putting the Asian powerhouse behind the US, China, Japan and Germany. Ten years ago, India ranked as the 11th largest economy, while the UK ranked 5th.