India jumps UK in world economic rankings

Yasmine Raso

Senior Journalist, Financial Newswire

16 September 2022

The strong performance of the Indian share market has contributed to its recent rise in the world economic rankings, surprising commentators by jumping to fifth place and overtaking the United Kingdom.

ETF Securities’ Head of Distribution, Kanish Chugh, said India has been “held back” by an old and irrelevant outlook that the nation is riddled with poor infrastructure, higher levels of poverty than other emerging market (EM) economies and complex government processes.

He said this view does not consider the progress that has been made to strengthen India’s economy, including labour reforms, tax changes, bankruptcy reforms and the “demonetisation” program that limited the shadow economy and use of counterfeit cash.

“The implementation of these reforms had some adverse impact in the short term but now the Indian economy is primed to benefit,” Chugh said.

“India has moved up slowly, compared with some other emerging market economies. It is the largest democracy in the world, and it does take time for change to flow through.”

Several economic commentators have also projected that India could become the world’s third largest economy by 2030. This comes after the World Bank’s latest Global Economic Prospects report was released, forecasting Indian GDP growth of 7.1 per cent in 2023 and 6.5 per cent in 2024.

“There are very positive signs for a number of emerging economies, but the size of the country makes India compelling,” Chugh said.

“It has a population of 1.3 billion and a growing middle class and investors should not look past that fact.”

Chugh also noted that India’s top equity market benchmark, the NSW Nifty50 Index, has performed strongly in the last 12 months to August, returning 3.1 per cent and 14 per cent a year in the past three years.