India has overtaken Britain as the world's sixth largest economy and is set to receive £130m in aid from the UK taxpayer by the end of 2018.

The government had earlier announced foreign aid to India would cease in 2015 but this deadline was extended following pressure from Whitehall departments.

However, despite the taxpayer's largesse, India's booming economy has exceeded that of Britain according to economic observers.

UK Chancellor Philip Hammond is facing lower than expected economic growth figures

Indian PM Narendra Modi, right, is running the world's fastest growing major economy

Britain began 2016 as the world's fifth largest economy, but now it is feared it has been overtaken by both France and India.

Economists had predicted India would overtake Britain by 2020, but this has happened some four years earlier than expected.

The United States remains as the world's largest economy, followed by China, Japan, Germany and France.

A combination of the post-Brexit economic uncertainty, the decline in the value of sterling and India's booming industries has seen the switch.

According to Foreign Policy, India's GDP is expected to increase by 7.6 per cent during 2017, while Britain's economy is expected to grow by only 1.1 per cent.

Experts disagree on the possible impact of Brexit as the government has refused so far to release any details of their negotiation strategy.

Mr Modi has banned many of India's largest denomination banknotes as he believes they are used to fund the black economy and avoid the payment of income and other taxes

Indian Prime Minister Narendra Modi has imposed major changes on the country's economy to reduce the influence of the black market and ensure that trading and commerce is regulated.

When announced, the abolition of high-value banknotes of 500 and 1,000 rupees (£6 and $12) came as a bolt from the blue.

The secrecy was aimed at outflanking those who might profit from prior knowledge, by pouring cash into gold, property and other assets and hide illicit wealth.

While Italy has been celebrating its economic success, Chancellor Philip Hammond has been forced to abandon deficit reduction goals introduced by his predecessor George Osborne.

The government has lobbied Indian companies such as Tata Steel to support British jobs

The Office for Budget Responsibility said weak growth in tax revenue has hampered government efforts to reduce Britain's large budget deficit this year, even before the economy has seen much impact from June's referendum.

The OBR expects this problem to deepen. A surge in corporation tax revenue in October was not expected to persist, and a one-off boost to property sales tax revenue in early 2016 would not be repeated.

Moreover, public spending was likely to rise due to greater investment commitments and the rising cost of servicing index-linked government bonds as inflation picked up, the OBR said.

According to the OECD the Indian economy will grow by 7.5 per cent over the next 12 months, faster than any other G20 economy.

However, their opinion on the UK economy is far less optimistic.

Tory MP Andrew Mitchel

'The Brexit referendum vote has reduced growth prospects and increased volatility, as reflected by the large currency depreciation.

'Monetary policy has mitigated the immediate impact of the shock by stabilising financial markets and shoring up consumer confidence. This projection assumes the United Kingdom will operate with a most favoured nation status after 2019, but there is considerable uncertainty about this, which will increasingly weigh on growth, and in particular private investment, including foreign direct investment.

'Higher inflation is projected to hit households' purchasing power and to reduce corporate margins, weakening private consumption and investment. As growth slows, the unemployment rate is projected to rise.'

Despite the markedly different prospects, more than £185million from Britain's controversial overseas aid budget was lavished on India last year.

The world's fastest-growing economy has sent a mission to Mars, boasts more billionaires than Britain and hands out millions to needy nations itself.

But latest figures show India was given a staggering £185.4million by the UK last year. Some £53.8million is set to be handed over this year, with at least a further £64.8million in the following two years.

Former international development secretary Andrew Mitchell announced four years ago that aid to India would finish by the end of 2015, but that policy has since been reversed

Despite promises to concentrate UK aid on the poorest nations, India received Britain's ninth-biggest handout.

Four years ago then-international development secretary Andrew Mitchell announced that the main aid programme for India would finish by the end of last year, saying: 'We are walking the last mile with them, we won't be there forever.'

But the Department for International Development (DfID) continues to fund projects that boost India's economy.

Of the £185.4million given last year, the Foreign Office gave £21.6million, the Business Department provided £13.3million and the Department for Environment, Food and Rural Affairs (Defra) stumped up £66,000. Foreign Office grants included £15,316 on encouraging prison officials to improve accommodation and healthcare in jails.

Andrew Rosindell MP asked whether the British taxpayer would accept the amount of money given to India in foreign aid, when their government can invest £10bn in bullet trains

A project aimed at increasing political participation of tribal women in north-east India received £20,609, while £6,614 went on raising awareness of sexual harassment among students. DfID spent £150.4million, including £10million on a house-building project aimed at helping first-time home ownership.

Some £10.6million was spent giving the poor access to financial services to help them start businesses.

A DFID spokeswoman said: 'As set out four years ago we have now ended traditional financial aid to India and moved towards a more strategic relationship which focuses on sharing skills and expertise.