Updated World Bank figures for 2017 show that India is now the world’s sixth-biggest economy, having muscled past France, which was pushed to the seventh spot.
Backed by government spending and investment, India’s economy grew at a seven-quarter high of 7.7 percent in the January-March quarter of the financial year 2018. But this did not prevent GDP growth, at 6.7 percent in 2017-18, from falling to its lowest rate in four years of the Narendra Modi government.
The finance ministry said that “India’s economy would clock 7.5 percent growth in 2018-19”, the upper range of growth projected by the Economic Survey.
India, with around 1.3 billion, is poised to become the world’s most populous nation, whereas the French population stands at 67 million. This means that India’s per capita GDP continues to amount to just a fraction of that of France which is still roughly 20 times higher, according to World Bank figures.
Manufacturing and consumer spending were the main drivers of the Indian economy last year, after a slowdown blamed on the demonetization of large banknotes that Modi imposed at the end of 2016, as well as a chaotic implementation of a new harmonized goods and service tax regime. According to the International Monetary Fund, India is projected to generate growth of 7.4% this year and 7.8% in 2019, boosted by household spending and a tax reform. This compares to the world’s expected average growth of 3.9%.
The London-based Centre for Economics and Business Research, a consultancy, said at the end of last year that India would overtake both Britain and France this year in terms of GDP, and had a good chance to become the world’s third-biggest economy by 2032.
“India is reclaiming its place as a growth leader after a short slowdown. And the ASEAN-5 have gained momentum in response to higher investment and increased exports,” IMF First Deputy Managing Director David Lipton had said at the Asian Financial Forum in Hong Kong on January 15.