New Delhi: Casting dark shadows over Prime Minister Narendra Modi’s dream of making India a $5 trillion economy by 2024, a new World Bank report has pushed India to the seventh place in global rankings of GDP (gross domestic product) in 2018, from the sixth position earlier. It has been overtaken by France and the United Kingdom.
According to latest World Bank data, in 2018, India’s GDP was $2.72 trillion, while that of the UK was $2.82 trillion and France was $2.77 trillion. The top four economies in the world were the United States, with a GDP of 20.5 trillion in 2018, followed by China ($13.6 trillion), Japan ($4.9 trillion) and Germany ($3.9 trillion).
According to experts cited in media reports, economic slowdown and rupee depreciation may have led to the drop in e GDP rankings.
“In 2017, the rupee appreciated against the dollar, and in 2018 it depreciated against the dollar,” Chief Economist at India Ratings Devendra Pant was quoted as saying in Business Today, adding that “it is largely due to currency fluctuation and the growth slowdown.”
The World Bank data comes at a time when the Modi government has targeted making India a $3 trillion economy this financial year and a $ 5 trillion economy by 2024., as announced by Finance Minister Nirmala Sitharaman her speech while presenting the Union Budget last month.
In fact, when various media reports and experts expressed serious apprehensions over this ‘ambitious’ target, Prime Minister Modi, in a speech had pooh-poohed them as ‘pessimists’.
“It is important to know about the $5 trillion economy because some people were casting doubts over the competency of Indians, saying that achieving the target is very difficult. These people are professional pessimists,” Modi had said in a speech in Varanasi.
There has been a lot of controversy in the country about India’s GDP estimates under the new GDP series. The revision in the methodology happened during the first term of the Modi government.
In June this year, former chief economic advisor to the Modi 1.0 government, Arvind Subramanian, stated in a paper that India's economic growth rate has been overestimated by around 2.5 percentage points between 2011-12 and 2016-17 due to a change in methodology for calculating GDP.
India's gross domestic product (GDP) growth rate between this period should be about 4.5% per instead of the official estimate of close to 7 per cent, he had said in a research paper published at Harvard University.
Earlier in May, India lost its tag of the “fastest growing major economy” to China after the government announced that GDP had declined to 5.8% in the last quarter of the financial year 2018-’19. This was the slowest pace of growth in 17 quarters.
The economic slowdown in India has already started reflecting in various sectors, with consumer demand for goods declining. As per reports, the automobile sector recently indicated a slump, staring at least 10 lakh job losses.