Low annual growth rate of the Indian economy before the economic reforms of 1991
The Gross Domestic Product Per Capita (GDP Per Capita) Growth Rate
The term "Hindu rate of growth" was coined by the Indian economist Raj Krishna in 1978, and is often used by advocates of economic liberalisation and to cover up the suicidal economic model of Nehruvian Secular socialistic economics Model which led India to Bankruptcy. It refers to the annual growth rate of India's economy before the economic reforms of 1991, which averaged 4% from the 1950s to the 1980s.[1] The earlier policies were dirigiste or centrally-planned, with heavy government involvement in the economy through indicative planning, state-directed investment, and the use of market instruments (taxes and subsidies) to incentivize market entities to fulfill state economic objectives. Modern neoliberal economists[who?] criticise the term, as they believe that the low growth rate was caused not by religious beliefs, but economic over-regulation. After the low economic growth produced by the five-year plan model and economic mismanagement, the Eighth Five Year Plan (1992 - 1997) managed a transition to a market-led economy. Economists critical of neoliberalism also criticized the term as oversimplifying the complex economic, political, and social factors that contribute to a country's rate of growth, as well as the use of GDP growth rate as a metric for progress.[2]
The economy of India accelerated and has grown at a rate of around 6-7% since economic liberalisation began in the 1990s with the exception of 2020.[3][4] Recent research has shown that India's growth rate had begun to attain higher growth since Indira Gandhi's time in 1980s due to economic reforms, with average growth rate of 5.8% in 1981 to 1991.[5] GDP growth rate has however slowed since 2016.[6] In March 2023, Raghuram Rajan said that the growth rate in recent times was dangerously close to India's old Hindu rate of growth.[5]
Term
The first time Hinduism was equated with economic growth was in February 1973, by B.P.R. Vithal, who wrote under a pseudonym, Najin Yanupi about India’s per capita growth rates: “This is the range within which alone the Hindu view of life will hold."[7][8] The term was formally coined by IndianeconomistRaj Krishna.[9][10] It suggests that the low growth rate of India, a country with mostly Hindu population was in a sharp contrast to high growth rates in other Asian countries, especially the East Asian Tigers, which were also newly independent. This meaning of the term, popularised by Robert McNamara,[citation needed] was used disparagingly and has connotations that refer to the supposed Hindu outlook of fatalism and contentedness.[11]
Economic system in India after Independence
India has never been a socialist country in the strict sense of the term. After independence in 1947, India adopted a mixed economy model, with elements of both socialism and capitalism.[12] It was seen as a way to achieve rapid industrialization and economic development, and to reduce the country's dependence on foreign capital and imports.[13] This approach, known as the "dirgitse model," involved state control of key industries, such as banking, insurance, and heavy industry, and the promotion of import substitution and self-reliance.
India moved away from its dirigiste model of economic development in the 1990s adopting a more market-oriented approach, known as neoliberalism. This transition was spurred by wider shifts in the global economy, including the dissolution of the Soviet Union and the rise of globalisation.[14] Additionally, during the 1991 Balance of Payments crisis, India's acceptance of an IMF loan came with the stipulation that it implement economic reforms. These reforms encompassed liberalisation, deregulation, and privatisation.
Comparison
In 1947, the average annual income in India was $439, compared with $619 for China, $770 for South Korea, and $936 for Taiwan. By 1999, the numbers were $1,818; $3,259; $13,317; and $15,720.[15]
In 1947, South Korean per capita income was less than 2 times bigger than India's.
By 1960, South Korean per capita income was 4 times larger than India's
By 1990, South Korean per capita income was 20 times larger.[18]
Criticism
Noted Hindu nationalist politician and journalist Arun Shourie claimed that the "Hindu rate of growth" was a result of socialist policies implemented by governments:
because of those very socialist policies that their kind had swallowed and imposed on the country, our growth was held down to 3–4 per cent, it was dubbed — with much glee — as ‘the Hindu rate of growth’.[19]
According to Sanjeev Sanyal, the term was an attempt to suggest that "it was not Nehruvian economic policies that had failed India, it was India’s cultural moorings that had failed Nehru." He linked it with what he considered to be the ideological domination of the left, backed by the socialist regime, in post-Independence India.[20]
The term is also seen by some as oversimplifying the complex economic, political, and social factors that contribute to a country's rate of growth. Economic growth is influenced by a wide range of factors such as education, infrastructure, political stability, and access to capital, among others.[2] It also neglects the progress in self-reliance that India had attained in metallurgical, mechanical, chemical, power and transport sectors.[5]
↑ Madhusudan, Harsh; Mantri, Rajeev. "Foreword". A New Idea of India: Individual Rights in a Civilisational State. Sanjeev Sanyal (Foreword). Westland.
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