Raghuram Rajan the former Governor of the Reserve Bank of India has predicted that Indian economy is heading toward the ‘Hindu Rate of Growth’. In an interview with the news agency PTI, Rajan expressed concern that the latest estimate of national income released by National Statistical Office (NSO) was worrying. As per reports, the Gross Domestic Product (GDP) in the third quarter (October-December) of the current fiscal has slowed to 4.4% from 6.3% in the second quarter (July-September). The same was 13.2% in the first quarter (April-June).
Earlier, he had predicted that it will take many years for India to recover from the Covid-induced economic slowdown, but India managed to bring its economy back on track in a matter of a year. He never apologized. Rajan has been infamously predicting an economic crisis for India for almost 5 years in a row and every time he is proved wrong.
He has used the expression ‘Hindu Rate of Growth’ to refer to the slowdown in economic growth. Raghuram Rajan was Governor of RBI from 2013 to 2016. The period is marred with stagnant forex reserves and a whole lot of other controversies. After he was removed from his position, the Forex Reserves of RBI jumped to touch an all-time high of 600 Billion+.
What is ‘Hindu rate of growth’
India has a glorious civilizational history of 6000+ years and during this long period, India proudly sat at the epitome of the global economy. This fact is brilliantly illustrated in the book The Case for India by Will Durant, an American Historian. Until the seventeenth century, India’s GDP was one-third of the world GDP. Even the 800 years of loot by Islamic Invaders couldn’t exhaust the resources of this great land. Only after the British came the real drain of wealth started, and India started facing consecutive famines year after year.
The term Hindu Rate of Growth was coined by a so-called economist Raj Krishna in 1978 to refer to the 3.5 percent GDP growth rate from 1950 to the 1980s. This is an intrinsically flawed notion because the Hindu were the principal contributors to the economy during this period and afterward as well. While India has people of all faiths, the economic planners then kept the onus of growth on Hindus and hence the term ‘Hindu rate of growth’ that despite everything they claimed to be trying, the growth was more or less stagnant and that too at around 3.5%. Hindus, the believing and conservative ones, had no direct say in policy formation and hence, it would be kind of unfair to name it such.
Why Nehru Rate of Growth is more apt
Nehru was the first PM of India, he remained incumbent till 1964. Most of the economic policies were decided/approved by Nehru. Therefore the expression ‘Nehru Rate of Growth’ looks more apt for the economic growth during his regime and the years that followed.
Nehru was obsessed with socialism, so much so that the Indian State ran hotels too. Industrious individuals like Birla and Tata were not given the liberty to expand their businesses. This myopic vision of Nehru should be attributed to the slow rate of growth and consequently, the expression ‘Nehru rate of growth’ is more suited and correct.
Nehruvian economic policies were so flawed that the country was almost always on the edge of a food crisis. Not only this, his myopic vision lead him to call river Dams as ‘Temples of Modern India’. Nehruvian policies were then carried forward by his daughter Indira Gandhi who proceeded to nationalise sectors such as banking, textiles, coal, steel, copper.
In that sense, a more appropriate term for this rate of growth would be ‘Nehru rate of growth’ instead of ‘Hindu rate of growth’.
