India joins top 10 economies league

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India has entered the ranks of the world's 10 largest economies for the first time, according to figures published yesterday.

The World Bank said the Asian giant rose from 12th to 10th in dollar terms between 2003 and 2004, its GDP overtaking Korea and Mexico. It is now worth $692bn (£390bn). The UK was unchanged in fourth place.

The figures came as Gordon Brown urged his fellow EU finance ministers to embark on structural economic reform to ensure they could withstand competition from China and India.

India's economy has grown by more than 7 per cent in the past two years and has averaged more than 6 per cent over the past decade on the back of buoyant industrial activity and massive investment.

The country has benefited from a concerted programme of economic liberalisation over the past decade that has seen it attract inward investment and develop specialisms in areas such as IT and call centres. The World Bank said services, the least regulated sector in the economy, continued to be the strongest performer, while manufacturing, the most regulated sector, was the weakest.

In Brussels Mr Brown told the European Parliament that the EU needed to create 22 million jobs by 2010 and carry out reforms to help meet growing competition from India and China. In his first speech since the UK took over the presidency of the EU, he said Asia's share of output was poised to surpass that of Europe, saying that in 10 years it would probably be 50 per cent higher

"We have to face the fact that Europe has not only been growing at half the rate of the US, but at quarter the rate of China," Mr Brown said. "We are challenged by global forces from which there is no shelter."

According to research by the investment bank Goldman Sachs, the combined economies of India, China, Brazil and Russia will overtake those of the G6 - the G7 countries minus Canada - by 2040. The World Bank's figures showed that India is ranked 159th in terms of per capita income.