Hindu Rate of Growth
Kartavya Desk Staff
Source: NDTV
Subject: Economy
Context: Prime minister criticised the phrase “Hindu rate of growth” as a colonial and communalising label that unfairly tied India’s past economic stagnation to Hindu culture and identity.
About Hindu Rate of Growth:
• What is meant by ‘Hindu rate of growth’?
• The “Hindu rate of growth” is an economic term for India’s persistently low GDP growth (about 3.5–4% per year) from the 1950s to the 1980s, before the 1991 reforms. It refers specifically to long-run real GDP growth, not to religion-based economic behaviour in any technical macro model.
• The “Hindu rate of growth” is an economic term for India’s persistently low GDP growth (about 3.5–4% per year) from the 1950s to the 1980s, before the 1991 reforms.
• It refers specifically to long-run real GDP growth, not to religion-based economic behaviour in any technical macro model.
• Coined by:
• The term was coined by economist Raj Krishna (Delhi School of Economics) in the late 1970s (commonly dated to 1978).
• The term was coined by economist Raj Krishna (Delhi School of Economics) in the late 1970s (commonly dated to 1978).
• Features: Low and Persistent GDP Growth: India’s GDP stayed stuck around 3.5–4% annually from the 1950s to 1980s, and per capita income rose even slower due to high population growth, reflecting long-term structural stagnation. Stability Across Shocks and Regimes: The growth rate barely changed despite wars, droughts, famines, political shifts, and policy variations, making economists view it as a deeply entrenched, system-wide equilibrium. Licence–Permit–Quota Raj: A heavily controlled economy with industrial licensing, import substitution, high tariffs, and a dominant public sector restricted private enterprise and kept productivity low. Mixed but State-Led Economic System: India pursued a mixed economy with the state controlling core industries, credit, trade, and planning, limiting market competition and foreign participation in growth sectors. Contrast with East Asian “Miracle” Economies: While India grew at ~3.5%, East Asian economies like South Korea and Taiwan achieved 7–10%, underscoring India’s relative underperformance among post-colonial peers. Turnaround Before 1991: Studies show growth accelerated to ~5.6–5.8% in the 1980s, indicating India had already moved beyond the old growth trap due to gradual deregulation and internal reforms pre-1991.
• Low and Persistent GDP Growth: India’s GDP stayed stuck around 3.5–4% annually from the 1950s to 1980s, and per capita income rose even slower due to high population growth, reflecting long-term structural stagnation.
• Stability Across Shocks and Regimes: The growth rate barely changed despite wars, droughts, famines, political shifts, and policy variations, making economists view it as a deeply entrenched, system-wide equilibrium.
• Licence–Permit–Quota Raj: A heavily controlled economy with industrial licensing, import substitution, high tariffs, and a dominant public sector restricted private enterprise and kept productivity low.
• Mixed but State-Led Economic System: India pursued a mixed economy with the state controlling core industries, credit, trade, and planning, limiting market competition and foreign participation in growth sectors.
• Contrast with East Asian “Miracle” Economies: While India grew at ~3.5%, East Asian economies like South Korea and Taiwan achieved 7–10%, underscoring India’s relative underperformance among post-colonial peers.
• Turnaround Before 1991: Studies show growth accelerated to ~5.6–5.8% in the 1980s, indicating India had already moved beyond the old growth trap due to gradual deregulation and internal reforms pre-1991.