Though India has been behind other countries in terms of technology and economy, they are by no means a stupid or unambitious culture. India's rise over the UK is no real surprise, especially given the UK's recent blunders in its own economy. It is possible that India will soon surpass other countries as well.
At that stage (up until the last decade of the 20th century), India was third-world by definition. The term is commonly used now to identify "...Countries that suffer from high infant mortality, low economic development, high levels of poverty, low utilization of natural resources, and heavy dependence on industrialized nations."
The development of India's economy and heavy utilization of natural resources (possibly over-consumption) addresses the second and fourth points, but the first, third and arguably fifth remain to be overcome.
While the rise of India's economy, and surpassing of the UK economy, is proof that India is growing as a nation, does not necessarily mean that India should no longer be considered a third world nation. Many other factors have to be taken into consideration when it comes to a nation being third world, and in India's case, there is still much to be done in terms of poverty and development before this label can be removed.
India has a large population of extremely impoverished people. Living conditions in the slums of India are horrendous. Until India can improve the way of life of the poorest of the poor it should retain its status as a third-world nation. Although India has made technological and economic advances it still has a long way to go.
While India's economy is growing it also has a very large population with large portions of said population living in "third world" conditions. When so much of the population is still without toilets to use and are in need of access to clean drinking water and medical services their status of a "third world" nation is still valid.
The argument is more about whether india is a developed country and I would still say no, the conditions in the cities are deplorable and the per capita income is $6000 per year. There is no way that India should be considered a developed country and the quality of living is horrendous.
The GDP or size of a nation's economy is not as important as the GDP per capita, which truly captures how prosperous its people are.
India has the 2nd largest population in the world. If you look at GDP per capita it is still a very poor country. India could have a GDP the size of the United States even a little bigger and it still would be poor.
Most of the country has no running water and they are just behind China in terms of population. Yes, the Taj Mahal looks great, as do the other touristy areas, but the rise of their economy only looks good on paper. The reality is that not much has changed in terms of their quality of living.