LONDON/NEW DELHI: India has overtaken the UK to become the world's fifth-largest economy and is now behind only the US, China, Japan and Germany, according to IMF projections. A decade back, India was ranked 11th among the large economies while the UK was at the fifth position. Britain has dropped behind India to become the world's sixth largest economy, delivering a further blow to the government in London as it grapples with a brutal cost-of-living shock.

The assumption of India overtaking the UK is based on calculations by Bloomberg using the IMF database and historic exchange rates on its terminal. "On an adjusted basis and using the dollar exchange rate on the last day of the relevant quarter, the size of the Indian economy in 'nominal' cash terms in the quarter through March was $854.7 billion. On the same basis, the UK was $816 billion," stated a Bloomberg report.

The former British colony leaped past the UK in the final three months of 2021 to become the fifth-biggest economy. The calculation is based in US dollars, and India extended its lead in the first quarter, according to GDP figures from the International Monetary Fund. The UK's decline down the international rankings is an unwelcome backdrop for the new prime minister. Conservative Party members choose Boris Johnson's successor on Monday, with Foreign Secretary Liz Truss expected to beat former Chancellor of the Exchequer Rishi Sunak in the run-off.

The winner will take over a nation facing the fastest inflation in four decades and rising risks of a recession that the Bank of England says may last well into 2024. By contrast, the Indian economy is forecast to grow more than 7 percent this year. A world-beating rebound in Indian stocks this quarter has just seen their weighting rise to the second spot in the MSCI Emerging Markets Index, trailing only China's.

With India being the world's fastest growing major economy, its lead over the UK will widen in the next few years. India's GDP expanded 13.5 percent in the April-June quarter, the quickest pace in a year, to retain the world's fastest growing economy tag but rising interest costs and the looming threat of a recession in major world economies could slow the momentum in the coming quarters.

Gross Domestic Product (GDP) growth of 13.5 percent year-on-year compares to a 20.1 percent expansion a year back and 4.09 percent growth in the previous three months to March, according to official data released earlier this week.

The growth, though lower than the Reserve Bank of India (RBI) estimate of 16.2 percent, was fuelled by consumption and signaled a revival of domestic demand, particularly in the services sector. Pent-up demand is driving consumption as consumers, after two years of pandemic restrictions, are stepping out and spending. The services sector has seen a strong bounce back that will get a boost from the festival season next month. But the slowing growth of the manufacturing sector at 4.8 percent is an area of worry. Also, imports being higher than exports is a matter of concern. -Agencies