India's status as the world's fastest growing economy seems to be paying off, as the country surpassed its colonial masters, the United Kingdom, to become the world's sixth-largest economy in GDP terms. The result is a symbol of India’s rapid economic growth and, conversely, the UK’s post-Brexit slump, which propelled it to the sixth position.
Following the change in the rankings, India's economy stands behind the United States, China, Japan, Germany and France.
During the year, India surpassed China as the world's fastest-growing in February, while the International Monetary Fund in October had projected the country's GDP will increase by 7.6 percent in 2017.
“India may have a large population base but this is a big leap,” a Foreign Policy report said quoting Kiren Rijiju, India’s minister of state for home affairs, said of the news earlier this week.
As per the report, the UK's economy is expected to grow by 1.8 percent this year and slow down to 1.1 percent in 2017. Since it voted to leave the European Union in June, which could entail leaving the EU’s lucrative common market, Britain’s economy and currency have struggled.
India's economy maintained its growth around 7 percent primarily due to price slump in global commodities, good rainfall and lower-than-expected inflation, besides slew of reforms undertaken by the Modi government to spur growth.
However, analysts and economists are doubtfull whether India could hold on to its strong growth prospects in the medium term, especially, after the government announced demonetisation of high value currencies to flush out black money and fake currencies from the system.
In the process, the bold reform step by the government has increased the risk of slowing growth and likely job losses due to the lingering cash crunch in the system, warn economists.
Updated Date: Dec 21, 2016 11:58 AM