India’s economy has reportedly overtaken the United Kingdom’s for the first time in over 100 years, now standing as the world’s sixth-largest economy by GDP after the United States, China, Japan, Germany, and France. The milestone is a symbol of India’s rapid economic growth and, conversely, the U.K.’s post-Brexit slump. Economically, it’s been a banner year for India.
In February, it surpassed China as the world’s fastest-growing economy. And in October, the International Monetary Fund predicted India would retain that title for the foreseeable future; its GDP is projected to increase by 7.6 percent through 2017. “India may have a large population base but this is a big leap,” Kiren Rijiju, India’s minister of state for home affairs, said of the news earlier this week.
India’s former colonial ruler, the United Kingdom, is projected to grow by only 1.8 percent in 2016 and 1.1 percent in 2017. Since it voted to leave the European Union in June, which could entail leaving the EU’s lucrative common market, Britain’s economy and currency have struggled. India’s economy benefitted from a global commodities price slump through large trade gains and lower-than-expected inflation, according to the IMF. And since elected in 2014, Indian Prime Minister Narendra Modi has driven sweeping market reforms to spur economic growth. But with growth spurts come growing pains.
Many of the reforms, touching everything from creating unified national taxes to deregulating the agricultural industry’s fertilizer pricing, have been incredibly complicated, as a report from the Center for Strategic and International Studies noted. And some controversial reforms have not gone smoothly. Take the most recent currency reform, for example.
In an effort to root out corruption and tax dodging, Modi announced in November that high denomination currency rupee notes (which comprise 86 percent of India’s currency in circulation) would be taken out of circulation immediately. It was a drastic measure for a drastic problem in the world’s second-most populous country; only 2 to 3 percent of Indians pay income tax because so many can hide their earnings with unaccounted-for cash, or “black money.” Modi’s move plummeted business transactions, interrupted salary payments, and caused infamously long waiting lines at banks nationwide as people went to withdraw cash. One man even died Tuesday while waiting in line at a bank.