Fact Box: “Hindu rate of growth”
Are we moving towards ‘Hindu’ rate of growth again?
As India registered a meager GDP growth of 4.8% in the first quarter of 2013 it has rendered dreams of achieving a double-digit growth somewhat blurred. It has also opened the window to the vilipending term – Hindu rate of growth.
What is Hindu rate of growth?
The term ‘Hindu rate of growth’ was coined by Professor Rajkrishna, an Indian economist, in 1978 to characterize the slow growth and to explain it against the backdrop of socialistic economic policies. The term came into being to show India’s contentment with the low growth rate, post independence. While the other countries clamored for more growth, Indian fatalism was cited as a possible reason why policy makers were not seeking ways to boost the economy.
The word “Hindu” in the term was used by some early economists to imply that the Hindu outlook of fatalism and contentedness was responsible for the slow growth. However many later economists pointed out that the so-called Hindu rate of growth was a result of socialist policies implemented by the then staunch secular governments and had nothing to do with Hinduism.
In contrast to the term, GDP data estimates by Paul Bairoch, a Belgian economic historian, published in 1982 questions this contentment. This data, later confirmed by British economist Angus Maddisson, showed that India held close to a quarter of the world’s share of GDP in 1750. After colonization started, India’s share dropped to 20% by 1800 and fell precipitously to 3% in 1880.
When do we say that a country is having Hindu rate of growth?
Small growth rate alone does not characterize Hindu rate of growth. Prolonged low growth rate, albeit not an economic contraction, is not sufficient to be deemed as the Hindu rate of growth. In addition to growth being low and extending over a long period of time, the term also captures a low per-capita GDP, by factoring in the population growth.
For eg: India’s annual population growth rate was over 2% in the 1980’s and the per-capita GDP growth rate, with 3.5% GDP growth, was a meager 1 % characterizing Hindu rate of growth.
Annual population growth has been on a decline and is around 1.4 per cent currently, helping higher per capita income growth. So, while the phrase Hindu rate of growth may have characterized a phase, it cannot be considered a generic term for India’s growth rate. In an open global economy, we cannot get back to this phase, even if we try. The phrase may have been obsolete in a few years of being coined, as we entered the neo-Hindu cycle of growth – being in tune with the global economy.
Categories: Economy & Banking Current Affairs