The recently released GDP growth of 4.8 per cent in the first quarter of 2013 has all but shut the door to double-digit growth dreams. It has also opened the window to the deprecating term – Hindu rate of growth.
Professor Rajkrishna, an Indian economist, coined the term ‘Hindu rate of growth’ in 1978 to characterise the slow growth and to explain it against the backdrop of socialistic economic policies.
Policy of contentment
Besides numeric metrics of growth, the attitude of policy makers and citizens towards economic growth may also have been factored in the Hindu rate of growth. It was generally considered that India was ‘content’ with the low growth rate, post independence. While the other countries clamoured for more growth, Indian fatalism was cited as a possible reason why policy makers were not seeking ways to boost the economy.
However, 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 colonisation started, India’s share dropped to 20 per cent by 1800 and fell precipitously to three per cent in 1880.
Small rate of growth alone does not characterise 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.
For example, the global GDP growth has only averaged three per cent since 1970s and the growth rates of the UK and the US have been under three per cent since 1980s. These growths were not termed as 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.
India’s annual population growth rate was over two per cent in the 1980s and the per-capita GDP growth rate, with 3.5 per cent GDP growth, was a meagre one per cent. 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 characterised a phase, it cannot be considered a generic jargon 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.