Amidst the ongoing global trends of declining economies and increasing energy crises, a rather peculiar development recently occurred when it was proclaimed India surpassed the United Kingdom to become the world’s fifth largest economy. India’s economic rise has more to do with the private sector since the country has produced a favourable environment that has facilitated the ease of doing business. Some government officials have attributed this achievement to the Modi government’s economic policies against the free-money policy during the Covid-19 pandemic, which made India one of the fastest growing economies in the world. Despite the euphoria that the news has brought to Indian people, particularly the political and economic elite, the ordinary people in India are still in misery and economic deprivation due to growing poverty in the country.
India is most likely to become the third largest economy in the world while surpassing Germany and Japan by 2027 and 2029, respectively, owing to its GDP growth rate. Indian Union Finance Minister Nirmala Sitharaman gave the credit for this growth to “people belonging to all levels of income and the leadership”. It is a somewhat superficial assessment since the access to development, and the opportunities in India are uneven, which means that the fruits of this economic milestone will also be distributed unevenly, unlike India’s fellow economic competitors that it surpassed and is expecting to surpass in the future, i.e., the United Kingdom, Japan and Germany. India has the fastest growing unemployment rate within this group, i.e., 8.3%, while the United Kingdom, Japan and Germany have unemployment rates of 3.6%, 2.6% and 5.5%, respectively. Moreover, the top 10% of India’s population clenches 77% of the total national wealth, which means that the poorest majority of the country merely gets affected by whether India stands as the tenth largest economy in the world or the fifth largest economy.
The basis of India’s economic comparison with the United Kingdom is the latest GDP figures which are themselves questionable indicators. A country’s GDP is a credible indicator if the subject under assessment is a country’s overall economic wealth rather than its people’s economic well-being.
When anyone thinks of the world’s fifth largest economy, the images that might come to mind are of flawless social indicators, i.e., equity, self-sufficiency, et cetera., and faultless development indicators, i.e., roads, infrastructure, sanitation system, income per capita, among other markers. Unfortunately, India does not present any such picture despite being the world’s fifth largest economy. In fact, the assertion seems more of a sellable narrative aimed at enhancing India’s regional and global standing. The basis of India’s economic comparison with the United Kingdom is the latest GDP figures which are themselves questionable indicators. A country’s GDP is a credible indicator if the subject under assessment is a country’s overall economic wealth rather than its people’s economic well-being. Instead, a better indicator to measure the economic well-being of people is GDP per capita, which presents a striking alternate reality in the case of India because its GDP per capita is $2,500 while the United Kingdom’s per capita figure is $47,000. As of 2021, India stood at 144th position in the world in terms of GDP per capita income. This striking gap, along with the poverty and unemployment statistics, signifies that India’s economy, although the fifth largest in the world, is not based on equitable redistribution of wealth.
Moreover, India has the highest poverty rate compared to the United Kingdom, Japan and Germany. As of the latest data, the percentage of the population living below the poverty line in India is 21.9%. In comparison, the same indicator shows the figures of 15%, 16.1% and 16.7% for the United Kingdom, Japan and Germany, respectively. The reason India stands at fifth place in economic growth with such a poverty indicator can be assessed by the fact that between 2018 and 2022, India has produced 70 new millionaires every day, and their wealth could sometimes be higher than India’s total union budget. This implies that for as long as the richest 1% of India keeps getting wealthier, the GDP figures can continue to climb, with India potentially surpassing Japan and Germany soon.
Still, the global spotlight that India attracted after being named the world’s fifth largest economy will produce many productive results. For example, one of the Indian ministers pointed out that global firms might prefer India as an alternative to China in the region to gain more conducive grounds for investment and to set up manufacturing bases. But this requires stability of internal infrastructure, labour force flexibility and policy predictability – all three fields in which India is still relatively weaker than China. The fact that economic inequality is on the rise in India is not undeniable in the face of India’s GDP surpassing that of the United Kingdom. The fact that the top 1% of India’s population gains thrice as much as its bottom 10% shows that irrespective of GDP statistics, the general population faces poverty, inflation, unemployment and below-average living standards – a questionable image in the backdrop of the discourse and euphoria created by the news of India surpassing the United Kingdom to become the fifth largest economy in the world.
