In 2014, India was a $2trn economy and ranked 10th in the world. A year later, it jumped to seventh place. By 2017, it was No. 6, and finished 2021 at No. 5. Now, International Monetary Fund (IMF) projections show that by 2027 it will be the world’s third-largest economy behind the US and China. There are some caveats though.
To reach the third position, India will have to grow at more than 8% per year in dollar terms between 2024 and 2027. However, continuous growth at such high rates has not happened in recent years.
Secondly, for India to jump two places, fourth-placed Germany should remain sluggish and third-placed Japan should recover slowly. The Japanese economy had shrunk to less than $5trn in 2022 and is expected to remain below that mark till 2027.
Per capita front needs attention
India’s rise in the gross domestic product (GDP) rankings is inevitable, but its low per capita GDP — a better indicator of prosperity — is an area of concern. It has the lowest GDP per person among the 10 largest economies.
In dollar terms, the average Indian earned $1,560 in 2014, when the average American earned $55,084, or 35 times more. Germans earned 31 times, Britons 30 times, and the French, Japanese and Italians at least 20 times more than the average Indian.
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In the neighbourhood, the average Chinese person earns five times more than the average Indian.
These gaps will no doubt decrease by 2027, but India should focus on catching up with its peers at the top of the table in per capita income terms.
Rich country, poor people
India’s GDP is more than those of France and the UK, but in per capita GDP terms it ranks with struggling economies like Yemen, Zimbabwe and Pakistan.
In 2014, when it was the world’s 10th-largest economy, it ranked 157 out of the 195 countries for which the IMF provides per capita GDP data.
In 2027, it is projected to climb to 138th place among 189 countries. The average Bangladeshi will earn $282 more than the average Indian in 2027.
