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%.

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.

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. GDP growth rate has however slowed since 2016.

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. 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".

Term

The term was coined by Indian economist Raj Krishna. 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.

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.

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%.

The comparison with South Korea was stark:
#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.
South Korea received much higher U.S aid and foreign investment when compared to India. 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. However, despite such policies Chinese economy grew at a much higher pace than India's, overtaking Japan in 2010.

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

Criticism

Noted neoliberal politician and journalist Arun Shourie claimed that the "Hindu rate of growth" was a result of socialist policies implemented by governments:

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.

See also

* Economic history of India
* Economic liberalisation in India
* Licence Raj
* Poverty in India
* '' The World Economy: Historical Statistics''

References

External links

''The power of ideas'', The Hindu Business Line, June 10, 2004


– An explanation by Meghnad Desai

The World Economy: A Millennial Perspective

{{DEFAULTSORT:Hindu Rate Of Growth
Economic history of India (1947–present)
Economic growth