India, with a GDP of $2.94 trillion, surpassed United Kingdom and France to become the world’s fifth-largest economy.
Crux of the Matter
According to the independent organization World Population Review, India surpassed the United Kingdom and France to become the world’s fifth-largest economy. UK’s GDP stands at $2.83 trillion and France’s at $2.71 trillion. India’s GDP in 2019 was reported to be $2.94 trillion. It also reported that India’s GDP in terms of Purchasing Power Parity (PPP) was $10.51 trillion, surpassing Japan and Germany and making it third largest. However, owing to India’s high population, the GDP per capita was $2,170 as compared to US’s $62,794.
Top 10 countries in terms of GDP (current prices) 2019. Source: IMF
The organization also reported that India’s GDP growth is expected to remain weaker for the third straight year and remain close to 5%. The report attributed India’s growth to the Liberalisation, Privatization, and Globalization Policies adopted in 1991, a move to open its economy from autarkic policies (closed economy). Thereafter, the growth and support of the Services Sector have accounted for the massive growth of India’s GDP. Today, the Services sector contributes nearly 60% to India’s economy.
GDP of UK, France & India after India adopted LPG Policies in 1991
In 1991, India’s GDP was $266.5 billion, whereas UK’s and France’s GDP were $1.14 trillion and $1.27 trillion respectively. As seen in the graph above, GDP of UK and France shows a downward trend after the 2008 Financial Crisis. In recent times, economy of UK seems to have taken a slump as a result of Brexit. India’s GDP as of today stands at $3.2 trillion.
Curiopedia
Real gross domestic product is a macroeconomic measure of the value of economic output adjusted for price changes (i.e. inflation or deflation). This adjustment transforms the money-value measure, nominal GDP, into an index for quantity of total output. Although GDP is total output, it is primarily useful because it closely approximates the total spending: the sum of consumer spending, investment made by industry, excess of exports over imports, and government spending. Due to inflation, GDP increases and does not actually reflect the true growth in an economy. That is why the GDP must be divided by the inflation rate (raised to the power of units of time in which the rate is measured) to get the growth of the real GDP. Different organizations use different types of ‘Real GDP’ measures, for example, the United Nations UNCTAD uses 2005 Constant prices and exchange rates while the FRED uses 2009 constant prices and exchange rates, and recently the World Bank switched from 2005 to 2010 constant prices and exchange rates. More Info
GDP PPP – There are two ways to measure GDP (total income of a country) of different countries and compare them. One way, called GDP at exchange rate, is when the currencies of all countries are converted into USD (United States Dollar). The second way is GDP (PPP) or GDP at purchasing power parity (PPP). Purchasing power parity (PPP) is measured by finding the values (in USD) of a basket of consumer goods that are present in each country (such as pineapple juice, pencils, etc.). If that basket costs $100 in the US and $200 in the United Kingdom, then the purchasing power parity exchange rate is 1:2. More Info
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