Hindu Rate of Growth
Context:
The term recently resurfaced in public discourse, with Prime Minister stating that the expression reflected a colonial mindset linking India's slow economic performance to the faith and identity of its people.
Definition & Origin:
India’s growth rate before economic reforms (mainly from 1950 to the early 1990s) remained slow, averaging around 3.5% per year, which was considered insufficient to drive rapid improvements in living standards.
The term was coined by economist Raj Krishna, an economist in 1982.
It refers to the meagre 3.5% annual growth rate experienced by India over the long run.
Krishna used it as a polemical device, arguing that since this growth rate remained steady despite changes in governments, wars, famines, and crises, it appeared to be an inherent cultural phenomenon
Historical Analysis (Nehru Era 1951-64):
Economist Pulapre Balakrishnan noted that India's GDP growth rose from 0.9% during the colonial era (1900-1946) to 4.1% during the Nehru era (1950-1964)
During this period, India's 4.1% growth exceeded China's 2.9% but lagged behind South Korea's 6.1%
When did India surpass it?
Data indicates India surpassed the Hindu rate of growth before the 1991 liberalization reforms
While growth averaged 3.4% between 1956 and 1975 (matching the Hindu rate), it jumped to 5.8% between 1981 and 1991
Economists like Arvind Virmani and Arvind Panagariya identify the 1980s as the turnaround period(crediting reforms initiated by Indira Gandhi and Rajiv Gandhi)
Economist Baldev Raj Nayar argues the first phase of liberalization began as early as 1975.