Hindu rate of growth

The Hindu rate of growth is a term used by advocates of liberalisation referring to the lower annual growth rate of the economy of India before the economic reforms of 1991, which stagnated around 3.5% from 1950s to 1980s, while per capita income growth averaged around 1.3%.[1]

Compare India (orange) with South Korea (yellow). Both started from about the same income level in 1950. The graph shows GDP per capita of South Asian economies and South Korea as a percent of the American GDP per capita.

The usage of the term has been criticized by modern neoliberal economists as they believe that the cause of the low growth rate was the failed dirigist model and economic mismanagement.

The term contrasts with South Korea's Miracle on the Han River and the Taiwan Miracle. While these Asian Tigers had similar income level as India in the 1950s, exponential economic growth since then has transformed them into developed countries today. However, comparisons with India's neighbours such as Bangladesh, China or Pakistan are not made.

The Indian economy of this period is characterised as Dirigism.[2][3]

The economy of India accelerated and has grown at a rate of around 3–9% since economic liberalisation began in the 1990s with the exception of 2020.[4][5] GDP growth rate has however slowed since 2016.[6]

The word "Hindu" in the term was used by some early economists like Vikas Mishra to imply that the Hindu outlook of fatalism and contentedness was responsible for the slow growth.[7][8] Later liberal economists reject this connection and instead attribute the rate to the Indian government's protectionist and interventionist policies, rather than to a specific religion or to the attitude of the adherents of a particular religion. Accordingly, some neoliberal writers instead use the term "Nehruvian rate of growth".[9] Actual Fact is lack of Innovation in both public sector and private sector, and also inefficiency of large informal sector which was private.

Term

The term was coined by Indian economist Raj Krishna.[10][11] 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, was used disparagingly and has connotations that refer to the supposed Hindu outlook of fatalism and contentedness.[12]

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.[13]

YearIndiaChinaSouth KoreaTaiwan
1947$439$619$770$936
1999$1,818$3,259$13,317$15,720

India's growth rate was low by standards of developing countries. At the same time, Pakistan grew by 5%, Indonesia by 6%, Thailand by 7%, Taiwan by 8% and South Korea by 9%.[14]

GDP Per Capita for years 1950,1999,2018[15]
Year India Pakistan China
1950 $987 $1025 $799
1999 $2708 $3112 $4667
2018 $6807 $5510 $13102

The comparison with South Korea was stark:

  1. In 1947, South Korean per capita income was less than 2 times bigger than India's.
  2. By 1960, South Korean per capita income was 4 times larger than India's
  3. By 1990, South Korean per capita income was 20 times larger.[16]

South Korea received much higher U.S aid and foreign investment when compared to India.[17] South Korea, similar to India was also forced to adopt IMF and World Bank imposed reforms during the 1997 Asian Financial crisis.

China kept a significant part of its economy under state control even after reform and opening up despite receiving criticism from liberal institutions.[18] However, despite such policies Chinese economy grew at a much higher pace than India's,[15] overtaking Japan in 2010.[19]

Pakistan meanwhile, despite implementing liberal reforms under Pervez Musharraf experienced lower economic growth compared to India.[20]

Criticism

Noted neoliberal 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’.[21]

According to neoliberal economist 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.[22]

See also

References
  1. Redefining The Hindu Rate Of Growth. The Financial Express
  2. Chandrasekhar, C. P. (2012), Kyung-Sup, Chang; Fine, Ben; Weiss, Linda (eds.), "From Dirigisme to Neoliberalism: Aspects of the Political Economy of the Transition in India" (PDF), Developmental Politics in Transition: The Neoliberal Era and Beyond, International Political Economy Series, London: Palgrave Macmillan UK, pp. 140–165, doi:10.1057/9781137028303_8, ISBN 978-1-137-02830-3, retrieved 2020-09-04
  3. Mazumdar, Surajit (2012). "Industrialization, Dirigisme and Capitalists: Indian Big Business from Independence to Liberalization". mpra.ub.uni-muenchen.de. Retrieved 2020-09-04.
  4. Subramanian, Arvind (2018-02-08). "India's Path From Crony Socialism to Stigmatized Capitalism | by Arvind Subramanian". Project Syndicate. Retrieved 2019-04-23.
  5. Derviş, Kemal (2018-02-12). "The Future of Economic Convergence | by Kemal Derviş". Project Syndicate. Retrieved 2019-04-23.
  6. "GDP growth (annual %) - India | Data". data.worldbank.org. Retrieved 2022-01-31.
  7. Mishra, V. (1962). Hinduism and economic growth. Indian Branch, Oxford University Press.
  8. "The Hindutva Rate of Growth". casstt.com. Retrieved 2022-01-31.
  9. Chakravarty, Manas (November 17, 2014). "The Nehruvian rate of growth". Livemint. Retrieved May 2, 2017.
  10. Indian Economy: Dutt & Sundaram
  11. http://planningcommission.gov.in/aboutus/speech/spemsa/msa033.pdf
  12. Tripathi, Salil (June 13, 2006). "Escaping the 'Hindu rate of growth'". The Guardian. London. Retrieved May 4, 2010.
  13. Meghnad Desai (2003). "India and China: An essay in comparative political economy" (PDF). IMF.
  14. "Industry passing through phase of transition". The Tribune India.
  15. "GDP per capita". Our World in Data. Retrieved 2022-01-31.
  16. "India: the economy". BBC. February 12, 1998.
  17. "From Aid to Trade: How South Korea is a Model for U.S. Foreign Assistance". USGLC. Retrieved 2022-01-31.
  18. "Explained, the role of China's state-owned companies". World Economic Forum. Retrieved 2022-01-31.
  19. Barboza, David (2010-08-16). "China Passes Japan as Second-Largest Economy". The New York Times. ISSN 0362-4331. Retrieved 2022-01-31.
  20. "GDP growth (annual %) - Pakistan | Data". data.worldbank.org. Retrieved 2022-01-31.
  21. "Archived copy". Archived from the original on 2007-12-30. Retrieved 2008-01-02.{{cite web}}: CS1 maint: archived copy as title (link)
  22. Madhusudan, Harsh; Mantri, Rajeev. "Foreword". A New Idea of India: Individual Rights in a Civilisational State. Sanjeev Sanyal (Foreword). Westland.
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