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India becomes sixth-largest economy
Why in the news ?
- As per the World Bank's updated data for 2017, India has edged past France and snatched the tag of the world's sixth-largest economy from it.
More on news
- India's gross domestic product (GDP) stood at $2.597 trillion at the end of last year while the French economy was valued at $2.582 trillion.
- The US remains the world's largest economy with a GDP of $19.39 trillion, followed by China ($12.23 trillion), Japan ($4.87 trillion), Germany ($3.67 trillion) and the United Kingdom ($2.62 trillion).
- India's growth accelerated to 7.7 per cent in the quarter ended March, up from 7 per cent in the previous quarter.
- Better still, last month, the World Bank forecast a growth rate of 7.3 per cent for India this year and 7.5 per cent for the next two years, making it the fastest growing country among major emerging economies.
How much it mean to India ?
- Not much, if one looks at the per capita income graph of major economies and where India stands among them.
- To understand this, just look at the per capita income at PPP (purchasing power parity) in both India and France.
- Going by the latest available figures on World Bank's website, India has an estimated per capita income of $7,060 while France has $43,720, some six times more than that of India.
- India ranks at the 123th position when it comes to per capita income at PPP while France ranks at the 25th position.
- An average Indian is far poorer than the average Frenchman if one uses this yardstick.
Brief Analysis
The size of the economy is linked to the size of geography, its population, and workforce.
India has a population of 1.34 billion while France has 67 million. If one talks about the prosperity of the people in an economy, PPP is the right metric to look at.
One reason why India has a much lower PPP compared with France is the difference in population (per capita is the total size of the economy divided by the total number of people in that country).
But that isn’t necessarily the dominant factor though. China, which has a population of 1.4 billion has a per capita income of $16,760 (ranked 77th in the world).
The obvious inference here is that India should have grown at a much faster pace and in much greater size to level some of the inequality in per capita income levels.
Source
Firstpost, Business Today