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India slips to 7th position in Global GDP Rankings

What’s in News
As per the data released by The World Bank on global GDP rankings, India slipped two spots to 7th position in 2018.

The UK and France again moved ahead of India to regain 5th and 6th spots respectively in the World GDP rankings in 2018.

According to the 2017 report of the World Bank, India had displaced the UK ($2.64 trillion) and France ($2.58 trillion) to gain the 5th spot, with a $2.65 trillion economy, in the GDP rankings compiled by The World Bank.

Top ten Economies according to the World Bank Report

India slips to 7th position in Global GDP Rankings

Gross Domestic Product
Gross domestic product (GDP) is a monetary measure of the market value of all the final goods and services produced in a specific period, often annually.

GDP can be determined in three ways, all of which should, in principle, give the same result. They are the production (or output or value-added) approach, the income approach, or the speculated expenditure approach.

The World Bank Report on GDP Rankings, 2018
The United States with a GDP of $20.5 trillion, China with a GDP of $13.6 trillion and Japan with a GDP of nearly $5 trillion secured the first three positions.

Germany ($4 trillion), the UK ($2.8 trillion) and France ($2.77 trillion) took the fourth, the fifth and the sixth spots, respectively.

India slipped marginally behind the UK and France to 7th spot with $2.73 trillion of GDP in 2018, an increase from previous year data of $2.65 trillion.

Depreciation of INR
The reason for such low performance has been attributed to the movement of the Indian rupee against the dollar by the experts.

The rupee appreciated 3 percent in 2017, on the contrary, it depreciated 5 percent in 2018 which resulted in slower growth of the economy in terms of the dollar in 2018 against 2017.

Reasons for Economic Slowdown
•According to an E&Y expert, the GDP growth slowed down as exports fell and remained negative coupled with domestic demand being subdued.

•The Indian economy grew by 11.2 percent in 2018-19 in rupee terms, while it grew by 11.3 percent in 2017-18.

•India's GDP in terms of dollar grew by a mere 3.01 percent in 2018 as against 15.72 percent in 2017. The GDP of two European economies UK and France, on the other hand, grew by 6.81 percent and 7.33 percent respectively and became the major reason for India slipping behind the two countries.

Other Facts and Analysis
•Despite such a setback, India remains the fastest-growing major economy in the world.

•The credit rating agency CRISIL has cut India's GDP growth forecast to 6.9 percent for the financial year 2019-20 taking into account weak monsoon, slowing global growth and slower GDP growth in the first quarter before lowering India's growth estimates.

Targets and Projections
In the first budget after returning to power the government has set an ambitious target to make India a $5 trillion economy by 2025. The Economy Survey for 2018-19 had prescribed that the Indian economy needs to grow at a rate of 8 percent to reach this goal.

A research firm, IHS Markit, is of the view that India will overtake the UK as the fifth-largest economy in the world in 2019 and is likely to displace Japan by 2025 and become the third-largest economy.

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