Amidst the economic slump caused due to the outbreak of the Wuhan Coronavirus, India is projected to overtake the United Kingdom to become the fifth-largest economy in the world by 2025. The projections were published by UK-based think tank the Centre for Economics and Business Research (CEBR) on Saturday.
It must be mentioned that India had earlier taken over the United Kingdom in 2019 to secure the 5th spot in the list of world economies but then got pushed back to the 6th spot again in 2020. As per reports, it is projected that India is likely to grow by 9% and 7% in 2021 and 2022 respectively and will become the 5th largest economy in 2025 and the 3rd largest by 2030.
“Growth will naturally slow as India becomes more economically developed, with the annual GDP growth expected to sink to 5.8 per cent in 2035. This growth trajectory will see India become the world’s third-largest economy by 2030, overtaking the UK in 2025, Germany in 2027 and Japan in 2030,” the think tank noted.
Indian economy lost momentum prior to Coronavirus outbreak
CEBR, however, noted that the Indian economy has been suffering a slowdown prior to the slump caused by the Coronavirus pandemic. “Slowing growth has been a consequence of a confluence of factors including fragility in the banking system, adjustment to reforms and a deceleration of global trade,” it said. Indian economy grew at a mere 4.2% in 2019, as compared to 6.1% in 2018 and 8.3% in 2016.
The UK think tank observed, “GDP in Q2 (April-June) 2020 was 23.9 percent below its 2019 level, indicating that nearly a quarter of the country’s economic activity was wiped out by the drying up of global demand and the collapse of domestic demand that accompanied the series of strict national lockdowns.”
India better equipped to deal with Coronavirus outbreak
“The pace of the economic recovery will be inextricably linked to the development of the COVID-19 pandemic, both domestically and internationally,” CEBR noted. It is important to note that a key factor in India’s recovery has been the agricultural sector so far due to high productivity. “In the medium to long term, reforms such as the 2016 demonetisation and more recently the controversial efforts to liberalise the agricultural sector can deliver economic benefits,” it added.
India is better equipped than other developing nations to produce vaccines for the Wuhan Coronavirus in 2021 as the country had been successfully running a 42-year-old vaccination programme, targetting 5.5 crore people each year. Although the government stimulus package has been lower than major world economies, CEBR said that investment in infrastructure can lead to significant productivity gains. Therefore, the outlook for the economy going forwards will be closely related to the government’s approach to infrastructure spending,” it added.