India has dropped a place to rank as the seventh-largest economy in the world in 2018. The United Kingdom and France have gone ahead of India. As per 2017 data, India was ranked sixth with a GDP of USD 2.65 trillion. India dropped a place in 2018 despite increasing its GDP to USD 2.72 trillion.
The increase in India’s GDP was not enough to stay at sixth as the British and French economies grew at a much faster rate. The United States of America has retained its pole position with a GDP of USD 20.5 trillion followed by China (USD 13.6 trillion), Japan (USD 4.9 trillion), Germany (USD 3.9 trillion), UK (USD 2.82 trillion), and France (USD 2.77 trillion).
The variation in the Indian rupee against the US Dollar might be one of the significant reasons behind India’s slump. The rupee had appreciated by 3% against USD in 2017, it depreciated by 5% in 2018, resulting in a much slower rate of growth in terms of USD in 2018.
Also Read: Highlights of Economic Survey 2018-19
India’s GDP was marginally higher than that of the European superpowers UK and France in 2017. But, in 2018, the European pair have fared better to push India down to number seven.
Apart from the variations in rupee, a slowdown in the economic growth, liquidity crunch, and non-banking financial companies (NBFC) crisis have impacted India’s overall GDP. The Indian economy is still recovering from the effects of demonetisation. Indian economy is seeing lower credit consumption due to the liquidity crunch. Also, the lending ability of various NBFC has taken a beating.
CRISIL, a global analytical company, has predicted India’s GDP to grow at a rate of 6.9% in FY 2019-20. The agency has factored deficit in the monsoon, global economic slowdown, and slower growth of GDP before estimating India’s growth.