NEW DELHI: India, which appears to have returned to being the world’s sixth-largest economy in 2020, will once again overtake the UK to become the fifth-largest in 2025 and rush to third place in 2030, an expert group said Saturday.
India had overtaken the UK in 2019 to become the world’s fifth-largest economy, but has been relegated to sixth in 2020.
“India has drifted a bit off course due to the impact of the pandemic. As a result, after overtaking the UK in 2019, the UK again overtakes India in this year’s forecast and remains ahead until 2024. before India takes over again, “the Center for Economics and Business Research (CEBR) said in an annual report released Saturday.
The UK appears to have outperformed India again during 2020 as a result of the rupee’s weakness, it said.
The CEBR predicts that the Indian economy it will expand by 9% in 2021 and 7% in 2022.
“Growth will naturally slow down as India develops economically, with the annual GDP growth expected to fall to 5.8% in 2035. ”
“This growth trajectory will see India become the world’s third-largest economy by 2030, surpassing the UK in 2025, Germany in 2027 and Japan in 2030,” he said.
The UK-based think tank predicted that China will overtake the US in 2028 to become the world’s largest economy, five years earlier than previously estimated due to the two countries’ contrasting recoveries from the Covid pandemic. -19.
Japan would remain the world’s third-largest economy, in dollar terms, until the early 2030s, when it would be overtaken by India, pushing Germany from fourth to fifth.
The CEBR said that India’s economy had been losing momentum even before the shock of the Covid-19 crisis.
The GDP growth rate sank to a more than ten-year low of 4.2% in 2019, down from 6.1% the previous year and around half the 8.3% growth rate recorded in 2016.
“The slowdown in growth has been the consequence of a confluence of factors including the fragility of the banking system, adjustment to reforms and a slowdown in world trade,” he said.
The Covid-19 pandemic, the think tank said, has been a human and economic catastrophe for India, with more than 140,000 deaths recorded in mid-December.
While this is the highest number of deaths outside of the US In absolute terms, it equates to around 10 deaths per 100,000, which is significantly lower than what has been seen in much of Europe and America.
“GDP for the second quarter (April-June) of 2020 was 23.9% below its 2019 level, indicating that almost a quarter of the country’s economic activity was wiped out by the depletion of global demand and the collapse in domestic demand that accompanied the series of strict national closures, “he said.
As restrictions were gradually lifted, many parts of the economy were able to return to action, although production remains well below pre-pandemic levels.
So far, a major driver of India’s economic recovery has been the agricultural sector, which has been boosted by a bumper crop.
“The pace of economic recovery will be inextricably linked to the development of the Covid-19 pandemic, both nationally and internationally,” he said.
As the manufacturer of most of the world’s vaccines and with a 42-year vaccination program that targets 55 million people each year, India is in a better position than many other developing countries to successfully implement vaccines and efficient next year.
“In the medium and long term, reforms such as the demonetization of 2016 and more recently the controversial efforts to liberalize the agricultural sector can generate economic benefits,” said the expert group.
However, with the majority of the Indian workforce employed in the agricultural sector, the reform process requires a delicate and gradual approach that balances the need for long-term efficiency gains with the need for short-term income support.
Government stimulus spending in response to the Covid-19 crisis has been significantly tighter than most other large economies, although the debt-to-GDP ratio increased to 89% in 2020.
“The infrastructure bottlenecks that exist in India mean that investment in this area has the potential to unlock significant productivity gains. Therefore, the future outlook for the economy will be closely related to the government’s focus on infrastructure spending, “he added.
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