The Prime Minister criticised the expression *“Hindu rate of growth”*, describing it as a colonial and communalising term that wrongly linked India’s earlier economic stagnation to Hindu identity and culture.
ABOUT THE HINDU RATE OF GROWTH
The “Hindu rate of growth” refers to India’s chronically low annual GDP growth of about 3.5–4% from the 1950s to the 1980s, prior to the economic reforms of 1991. It denotes a long-run real growth pattern—not behaviour associated with any religion.
Origin: The phrase was coined by economist Raj Krishna of the Delhi School of Economics in the late 1970s (often cited as 1978).
Key Characteristics:
Persistently Low Growth:
- India’s GDP hovered around 3.5–4% for decades, with per capita income rising even more slowly due to rapid population growth—signalling structural stagnation.
Remarkable Stability:
- Growth stayed almost unchanged despite wars, droughts, famines, policy shifts, and political changes, leading economists to view it as a deeply entrenched equilibrium.
Licence–Permit–Quota Raj:
- Extensive state controls—industrial licensing, import substitution, high tariffs, and a dominant public sector—restricted private sector dynamism and kept productivity low.
State-Led Mixed Economy:
- The government controlled key industries, credit, trade, and planning, limiting competition and discouraging foreign investment in critical sectors.
Contrast with East Asia:
- While India was stuck at ~3.5% growth, countries like South Korea and Taiwan achieved 7–10%, highlighting India’s relative underperformance among newly independent nations.
Pre-1991 Improvement:
- Research suggests growth had already accelerated to around 5.6–5.8% during the 1980s, reflecting early deregulation and internal reforms even before the landmark 1991 liberalisation.
In retrospect, the term “Hindu rate of growth” oversimplifies a complex economic reality by attributing structural stagnation to cultural identity, rather than to policy choices and institutional constraints. India’s slow growth between the 1950s and 1980s was largely a consequence of extensive state control, restrictive regulations, and an inward-looking economic model. Recognizing this historical context allows for a more accurate understanding of India’s economic journey—one that highlights the importance of reforms, liberalisation, and policy innovation in unlocking growth, rather than linking it to religion or culture.
