What Is The Hindu Rate Of Growth?

 The Gross Domestic Product (GDP) in the third quarter (October-December) of the current fiscal slowed to 4.4% from 6.3% in the second quarter (July-September) and 13.2% in the first quarter (April-June). This has attracted the attention of former Reserve Bank of India (RBI) Governor Raghuram Rajan, who said India is “dangerously close” to the Hindu growth rate due to subdued private sector investment, high-interest rates, and slowing global growth.

What Is The Hindu Rate Of Growth?

The Hindu rate of growth is a term used to describe India’s low rate of economic growth for a prolonged period. It generally shows that the country is satisfied with the slow growth rate.

The term was first used by the late economist Raj Krishna in 1978 to refer to the low rate of economic growth in the pre-liberalization era. Krishna explained it against the backdrop of socialist economic policies.

It must be noted that the slow growth rate is called the Hindu rate of growth only if it is persistent and is accompanied by low per-capita GDP, with population growth factored in.

The most recent example of this is the 1980s, just before PV Narasimha Rao’s economic reforms. India’s annual population growth rate was over 2 percent, and the per-capita GDP growth rate, with 3.5 percent GDP growth, was a meager 1 percent.

According to Krishna, this was due to the socialist policies of state control and import substitution. That changed when liberalization, privatization, and globalization (LPG) reforms were initiated in 1991 when India faced a balance of payments crisis.

Why the term ‘Hindu’?

According to reports, several economists believed that the term “Hindu” was used to link the belief in Karma and Bhagya with the slow growth. However, later liberal economists and historians like Paul Bairoch rejected this connection and instead attributed the low growth rate to the then governments’ protectionist and interventionist policies.