India pips Japan to be 3rd largest economy in purchasing power
India has emerged as the third-largest economy in the world, ahead of Japan, based on purchasing power, says a new report on the issue by the World Bank released on Tuesday.business Updated: Apr 30, 2014 23:32 IST
India has emerged as the third-largest economy in the world, ahead of Japan, based on purchasing power, says a new report on the issue by the World Bank released on Tuesday.
The US continues to top the table, followed by China and India, in a count that is done every six years by measuring economies on the basis of their purchasing power parity (PPP).
PPP is price-relative, according to the report, which show the ratio of prices in national currencies of the same good or services in different economies.
For example, if the price of a hamburger in France is 4.80 euros and in the US it is $4.00, the PPP for hamburgers between the two economies is $0.83 to the euro from the French perspective (4.00/4.80) and 1.20 euro to the dollar from the US perspective (4.80/4.00).
The report is compiled by the World Bank under the International Comparison Programme (ICP), a worldwide statistical initiative considered the largest in geographical scope.
ICP 2011, as this round is being called, covered 199 countries.
India was ranked 10th largest economy in the 2005 survey, and is at the third position in 2011.
The US controls 17.1% of the world's gross domestic product (GDP) based on PPP measure, followed by China (14.9%) and India (6.4%), leaving Japan far behind at 4.8%.
But India continues to rank poorly in terms of per-capita GDP — 127th compared to the US at 12, Japan at 33 and China at 99.
The six largest middle-income economies — China, India, Russia, Brazil, Indonesia and Mexico — account for 32.3% of world GDP, whereas the six largest high-income economies of US, Japan, Germany, France, UK and Italy account for 32.9%.