A news item that has dominated the business media in India recently is that India has pipped France to become the sixth-largest economy in the world. Not surprisingly, the government of Prime Minister Narendra Modi has made a big song and dance about it, as it does for almost everything. At the same time, those against the Modi government have been asking, What’s the big deal?
The truth, as usual, is somewhere in between. Let’s take a look at a graph that basically plots the gross domestic products of the world’s 10 biggest economies.
- The GDP of the global top 10 economies. Image: Vivek Kaul
What does the graph tell us? The French GDP in 2017 was US$2.582 trillion. The Indian GDP was $2.597 trillion. As India has grown over the years, it has become bigger than many economies. This is par for the course. It’s not the first time something like this has happened.
Let’s take the case of Canada. As we can see from the graph, Canada is the 10th-largest economy in the world. In 2009, the Canadian GDP was $1.371 trillion. The Indian GDP was slightly lower at $1.324 trillion. In 2010, the Canadian GDP was $1.613 trillion. The Indian GDP was $1.657 trillion. Thus, in 2010, India became a bigger economy than Canada.
Let’s go back a few years more and take the case of South Korea, which is currently the 12th-largest economy in the world. In 2006, it had a GDP of $1.012 trillion. The Indian GDP was $920.317 billion. In 2007, the Korean GDP was $1.123 trillion. The Indian GDP was $1.201 trillion. Thus India became a bigger economy than South Korea.
The point here is that the Indian economy has become bigger than other major economies even in the past, during the era when Dr Manmohan Singh was the prime minister.
As the pivot of global growth moves from Europe and North America to Asia (ex-Japan), the Indian economy will keep becoming bigger than other major economies in the years to come. It is more or less certain that the Indian economy will become bigger than the British economy this year. Getting back to France, that country has not grown in the last 10 years. In 2007, the French GDP was $2.657 trillion. In 2017, 10 years later, it was slightly lower at $2.582 trillion.
What about the UK? In 2007, the British GDP was $3.074 trillion. In 2017, it was significantly lower at $2.622 trillion.
The larger point here is that the Indian economy in terms of size has been competing against economies that have contracted or barely grown over the years. Even Germany, which is currently the fourth-largest economy in the world, barely grew between 2007 and 2017. In 2007, the German GDP was $3.44 trillion. In 2017, it was $3.677 trillion.
On the other side, as India has grown, it has pulled a multitude of its people out of poverty. A recent study by the Brookings Institution notes:
“According to our projections, Nigeria has already overtaken India as the country with the largest number of extreme poor in early 2018, and the Democratic Republic of the Congo could soon take over the No 2 spot. At the end of May 2018, our trajectories suggest that Nigeria had about 87 million people in extreme poverty, compared with India’s 73 million. What is more, extreme poverty in Nigeria is growing by six people every minute, while poverty in India continues to fall.”
Indeed, this couldn’t have been achieved without economic growth and the fact that the Indian economy has pipped many others to become a bigger economy over the decades.
If anything, this tells our politicians all over again that economic growth is the best antidote to poverty, which is something some of them refuse to believe. Having said that, there are other points that need to be made here:
- In 2017, India’s population was around 1.34 billion. It took 1.34 billion Indians to generate a GDP of $2.597 trillion. On the other hand, the population of France in 2017 was just 67 million, or around 5% of the population of India. They generated a GDP more or less similar to that of India. What that basically means is that an average Frenchman is much more productive than an average Indian. The per capita income of France in 2017 was $38,476.70 and that of India was $1,939.60. The French per capita income is nearly 20 times India’s. The poverty of India can also be gleaned from what it takes to be a part of India’s richest 1%. As James Crabtree writes in his new book The Billionaire Raj: A Journey through India’s New Gilded Age: “In North America it required $4.5 million in assets; in an average European country $1.4 million. In India the same figure was just $32,892.” The point is that the Indian economy still has a long way to go before it reaches anywhere near the French economy. GDP is just one measure.
- As India has grown over the years, the rich have captured the bulk of the gain. The World Inequality Report of 2018 points out that the top 10% of the Indian population earned around 55% of the national income. In 1980, this was close to 32%. While some inequality will always be a part of society, nevertheless, a rapid increase creates its own set of problems.
- Close to 10 million Indians enter the workforce every year and there are very few jobs available for them.
- Many Indian public-sector banks are technically bankrupt. A country that has ambitions of becoming a global economic power cannot have a large number of its banks not being in a position to carry out fresh lending.
- India’s health and education sectors continue to be in a mess and suffer from huge government apathy.
Yes, India has grown and become bigger than many of the world’s largest economies over the years, and that is a good thing, but there are many other things about the Indian economy that are holding it back. And from the way things currently are, it doesn’t look like the current government has much interest in correcting these things.
Loved the realitistic and eye opening article. Thank you!
Loved the realitistic and eye opening article. Thank you!
This author is completely idiot.
Don’t read whole article, just read the last line, that is what he want to say at all.
Anybody can write such a article, here he praise fance even when their economy is gowing down, and here in India the GDP is growing with 7 to 7.5%, but still this idiot is not happy. This is not china that, it will grow above 10%, because India is democraty country, even to pass triple talaq bann govt have to suffer many problem. The chamcha are oppossing on every moment. While in china everything is smooth, because of communism(But still I prefer democracy). Whole world praise Modi reform like GST but still the opposition leader RaGa a.k.a pappu blame on GST. And when good results come he just turn around and will say that it is first introduced by our govt, lol.
Recently even some congi supporter said during manmohan era, the grow was 10% GDP, but that is pure BS, they just don’t count infliation(8%), don’t count diflicit or anything.
Anybody can write such a article, I thought someone will pointout in right directiong and will crticize govt in right way, but this author is completely mirror of pappu
A vaguely presented facts with no deep insights.
These days, you can know the contents of the article by seeing who has published it. It’s either praising Modi or belittling him. Nobody looks for logic these days
Why should we compare India vs France. We should be doing it with China as both India and China missed Industrial revolution. For a long period of time both had colonialism, similar in many aspects except the political system. 30 Years ago India was slightly ahead of China. Now China is way ahead of us. We need to talk both at both micro and macro scale.
The article is sheer jugglery of statistics to belittle the achievements made by PM Modi govt. Also this govt is paying minute attention and is taking several measures for poor ,for education and for health. This is a biased view of India’s growth story.
Modi is responsible only for everything wrong in this country. Isn’t it? For anything and everything in this country Modi is responsible. Looks like he is the most responsible pm till date. 🙂
Everything aspect is correct except french people are more productive, french had colonies as same as England and they looted counties, that’s why they have that much of money and india did from scratch
Indian banks went bankrupt NCOs of corruption of UPA government.
NDA government is bringing back life in to them.
Statistical analysis of the world countries to say rich and poor don’t serve any purpose. Comparison of a 1220 million people nation with 60 million country and say this is big and the other is low looks a strange one and a childish outlook. Also this is nothing but Ridiculous. A long time poor country is trying to pickup with all kind difficulties of inherited bottlenecks. There were so many historical negative impacts on India. Colonial rule after the long time rule of looters, thieves, and bugllers. Continuous looting of then Bharat by Afghan invaders no doubt made the country to suffer. There after the Moghul and colonial exploiters. After giving away two big portion of land in the West and East country continued to suffer with the terrorist menace and religion based extremism by the neighbours.
Whereas the French who had there warfare else where in the world and protected their mother land safe and rich. It is only during the world war they had the pinch of war. May be e the kings of that country went for wars with their neighbours during ancient and middle ages.
But the case of India is different and trying to point out that the growth is not because of the present leader is something unwarranted. No country in the world became rich overnight and only by a person within 4 years especially a land with 1200 million people. Also the comparison sounds bit silly. Let us point out any way out for positive changes if possible . If not better keep quiet rather than exposing any ignorance and personal prejudices.
It’s that article is for stupid or illiterate one? Atleast go for gdp per capita, and compare it of 2013 as of to 2018. Then all can get that who is doing better.
The talk of size of the Indian economy is not so simple, to base it on GDP or PPP or per capita income, the value of Indian currency can be increased by just changing the trade style, why we have trade deficit with China, do we really need to import trash,? Why people and companies are allowed to take money out of the country? Why make in India is not picking up, if only the flight of money is controlled the value of Indian currency will be doubled and the size of economy will be double, the price of a news paper is 20 times in the west, that does not mean our economy is 20 times bigger, on the whole I consider the size of Indian economy and military as the 3rd largest, and we are poverty world power, thanks the people that the economy of scams is over…
Stupid are people who fight without logic.
Indirectly author is crediting UPA regime for Growth and defaming NDA for not doing anything.
In analysis the data is used as it suits the author… the reality is that we are growing…per capita income was low previously but the gap has narrowed…
Credit goes to KEJRIWAL
Very informative analysis of our status in world ranking.
How dare you say stupid,if you can write opposite to it.
I am neutral. neither BJP nor congress supporter. But this i do know – Asia Times is owned by Chinese owners. It is a well oiled propaganda machine that downplays India intentiinally. we are playing into their hands.