ExplainSpeaking: What is ‘Hindutva rate’ of (GDP) growth; how it compares with ‘Hindu’ rate

At one level, the discussion was on predictable lines: The Opposition parties tried to corner the government on all the worrying trends — unemployment, inequality, poverty, hunger etc. — while the government pointed to all the good news — the rising stock market, the rebound in GDP growth etc.

But there was one pretty new addition to the lexicon: The Hindutva rate of GDP growth.

The phrase was introduced by Sudhansu Trivedi, a member of the ruling BJP and a PhD in Mechanical Engineering from Dr. A.P.J. Abdul Kalam Technical University in his hometown of Lucknow, as he recounted all the ways in which India’s economy had distinguished itself in the last decade.

Hindutva, not Hindu

The Hindutva rate of growth should not be confused with the “Hindu rate of growth”, a term coined by Indian economist Raj Krishna in 1982. Read this edition of ExplainSpeaking to understand the meaning and origins of the so-called “Hindu” rate of growth, and why Krishna, who was an ardent critic of Nehruvian economic policies, used it.

The phrase was, as The New Oxford Companion to Economics in India puts it, “a polemical device intended to draw attention to the meagre 3.5 % growth rate experienced by India over the long run.” The current government disapproves of the phrase, since it seems to associate the Hindu religion with a middling economic performance.

What is the Hindutva rate of growth? While speaking in Hindi on the issue, among other things (structural reforms, digitisation, infrastructure development, poverty reduction, inflation control etc.), Trivedi pointed to the fact that India’s annual GDP growth rate this year was much faster than that of the US, the UK, the European countries (Germany, France etc.) and Japan. Quoting IMF’s October 2023 data, he stated that India’s 6.3% GDP growth rate was far ahead of the less than 2% (in some cases, even less than 1%) growth rates in developed countries.

“India is now emerging as a leader of the world economy”, said Trivedi.

However, more interesting than the debate on India’s economy was Trivedi’s claim why this growth had come about and why he characterises it as the “Hindutva rate of growth”. “Do you know why this (transformation in the Indian economy) has happened? The reason for this is that Prime Minister Shri Narendra Modi understood very well how the money should be spent.”

He then quoted a Sanskrit shloka which, he said, meant: “Dhan wohi sukh ka karak hota hain jo dharma ke marg se vyay hota hai. Only that money brings happiness which is spent in accordance with Dharma,” he clarified. He said that the money under the Modi government was spent for the poor, for development.

He carried on to say: “There was a time when India’s economy was made fun of. They used to say that (India) cannot grow beyond 2%. This used to be called the Hindu growth rate. This is how we were mocked.”

“But ever since we have come (to power)…Now it (GDP growth rate) is 7.8 per cent because now it is those people in power who believe in Hindutva.” Trivedi then went on to explain how Independent India’s economic fortunes have actually been driven by Hindutva forces.

“I want to remind people, whether someone sees this as a coincidence or divine intervention…Of course, all this (economic transformation) is happening with the cooperation and support of the public and the strategy of Modi ji, but a new version of India is emerging. When the country became independent, the country’s economy was locked out. At that time even Ram Lalla Virajman [the infant version of Lord Ram, which was not only recognised as a juristic person but also won the Babri Masjid title dispute] was also locked. As soon as the andolan (movement) for Ram Temple started, the Indian economy too became unshackled and started transforming… This is the same era when the disputed structure (Babri Masjid) also fell as did the Nehruvian model (of economy),” he said, with the last comment leaving Finance Minister Nirmala Sitharaman struggling to contain her laughter.

“Some people might wonder what kind of a comparison this is. But I want to remind people of the next big change. In 2003-04, India became a current account surplus country. In the fourth quarter (January to March) of 2003-04 [that is, the last quarter before BJP lost to the Congress-led UPA] we became the fastest growing economy in the world. And everyone started calling India a success story. This was also the time when excavations had revealed the 70 pillars which proved that the temple (in Ayodhya) belonged to Sri Ram Lalla Virajman. Then in 2019, when the (Supreme Court’s) Babri Masjid judgement was announced the forex was $100 billion and now, under Modi ji’s leadership, it has reached $500 billion,” he said.

[A surplus on the current account in any year means that India exported more goods and services — in terms of value measured in US dollars — than it imported. Read this edition of ExplainSpeaking to understand current account and forex better ].

Trivedi continued to end with a flourish:

“Not only that Honourable Speaker, now when Ram Mandir is going to be built, we are the 5th largest economy, 4th largest stock exchange, 3rd largest automobile manufacturer, 2nd largest mobile manufacturer. We are at the first position in terms of investment in infrastructure. We have also become the country to touch the untouched corner of the moon. We are rising to the top of the G20.”

“All I want to say is that there are some coincidences which can only be seen when you have specific kind of vision…we all want India to be blessed by Mother Lakshmi [the Goddess of Wealth] and even she sits on a lotus [the election symbol of the BJP]…It is also a (similar) coincidence that India’s Finance Minister’s name has both ‘Sitha’ and ‘Raman’, “ said Trivedi as he concluded his speech. The full speech can be watched here.

How fast is the Hindutva rate of growth?

The first element to note about India’s GDP growth rate is per capita incomes. India’s overall GDP is low despite having the most population of any country on the planet. That shows up in fairly low per capita income, which, in turn, points towards our low levels of productivity.

Trivedi, however, did not highlight the wide chasm between all these developed economies and India when it comes to the average incomes. For instance, as against the world average of $13,330 per annum, India’s per person income is just $2,610 per year. Even though most of the developed countries are struggling to grow, it is also a fact that they are already much richer than India in average income level: US ($80,410), UK ($48,910), Germany ($52,820). In fact, despite India’s high growth rates, an average Bangladeshi is richer than an average Indian.

As far as his assertions about Hindutva rate are concerned, the “7.8%” Trivedi calls the Hindutva rate of growth refers to the average GDP growth rate post-Covid, albeit with a more than noteworthy tweak.
To arrive at this number, one has to cherry-pick the data for the three years immediately after the Covid year while ignoring the year when Covid hit India.

As such, while it is factually true that India’s average annual GDP growth rate in years 2021-22, 2022-23 and 2023-24 is 7.8%, such a calculation conveniently forgets how growth rates are calculated. In fact, if one looks at the data closely, it becomes clear that the Hindutva rate is eerily similar to the Hindu rate of growth that the government despises.

Hindutva rate is similar to the Hindu rate

The first noteworthy point is that the rather exalted growth rates in the years post Covid are a direct result of the economic contraction witnessed in the Covid year.

India’s GDP fell by almost 6% in 2020-21, and this low base created an illusion of fast GDP growth rate in the succeeding years. For instance, even though India’s best GDP growth in the past three years happened in 2021-22 — GDP grew by over 9% — its actual GDP (in absolute terms) was just 3% more than where it was before Covid.

In other words, the GDP grew by a total of 3% over the pre-Covid level in the next two years. As such, the only reasonable way to calculate GDP growth rate would be to also take into account the contraction during Covid while calculating the Hindutva rate. One cannot leave out a particular year because it ruins the result that one is hoping to get; doing this is often called arm-twisting the data until it throws up the wanted result.

When one does include the data for the Covid year, the whole picture changes and in fact the Hindutva rate starts to closely resemble the Hindu rate of growth.

For instance, notwithstanding the upside surprise in GDP growth in the recently released second quarter data, if one calculates how the economy has grown relative to 2019 (pre-Covid), the economy’s compounded annual growth rate (CAGR) is just 4.1% (See the TABLE 1 sourced from Morgan Stanley Research).

Table 1.

Simply put, instead of being overly swayed by high GDP growth rates in each quarter, readers should understand that if one calculates these rate relative to 2019, then the annual growth rates plummet from near 8% per annum (so-called Hindutva rate) to merely 4% (so-called Hindu rate) per annum.

How to read the GDP growth rates during Modi years?

Look at TABLE 2 to understand the different growth rates one can calculate. The first thing to note is that if one assumes that India’s economy will grow by 7% in the current financial year, then the average GDP growth rate under PM Modi over the two five-year terms will be only 5.8%.

Table 2.

This period can be broken into pre-Covid and post-Covid growth rates of 6.8% (highlighted in orange) and 4.6% (highlighted in red) respectively. The Hindutva rate (highlighted in pink) is, as explained, an unreasonable way to calculate the GDP growth rate as is evident by the far more sedate post-Covid growth rate of just 4.6%.

Over the two terms, the Congress-led UPA presided over an average annual economic growth rate of 6.8% — that’s a full percentage point more each year for a whole decade when compared to the two terms of the Modi government.

One could argue that the Modi government has had to deal with a once-in-a-century pandemic and as such its economic performance should not be compared with the years under Prime Minister Manmohan Singh.

But such an argument has several glaring gaps.

One, PM Singh’s government too had to deal with a once-in-a-century crisis in the form of the Global Financial Crisis. The GFC was and, arguably even after the Covid disruption, remains the biggest economic shock the world had experienced since the Great Depression of the 1930s. In fact, had it not been for the GFC, it may not have been as easy for India to overtake other developed economies in terms of absolute GDP. That’s because most top economies have never recovered from the economic stagnation brought about by the GFC.

Two, the growth under Congress-led UPA — arguably the “secular” growth rate of India — before the GFC was an average of 7.9% per year. That’s again a full percentage point more than the 6.8% per year at which India grew under PM Modi before the Covid pandemic.

In fact, the Indian economy had already decelerated to so-called Hindu rate even before the Covid pandemic — look at the data for the year 2019-20 in the Table. That it is growing at 4.6% post Covid is very creditable indeed but not altogether too high a rate given the historical data.

For instance, post-GFC India’s economy lost its step but still managed to neither contract nor go into a recession. In fact, post-GFC India’s average annual growth rate (for 6 years) was 6.1% per annum — far higher than the 4.6% post Covid under PM Modi.
What makes these UPA-era performances stand out further is the fact that they were achieved not just by a coalition government but one in which the leading party was, even at the best of times, a terrible minority.

Going further back in time, one finds that the 5.8% average during the two terms of PM Modi is, if anything, a shade lower than the overall score under PM Vajpayee (5.9%). Again, the NDA under Vajpayee was led by a BJP which did not enjoy the kind of brute majority BJP under PM Modi has enjoyed.

Table 3.

If one goes further back to TABLE 3, data shows that average annual growth rate under the Congress’s even weaker minority government under PM Narasimha Rao was a respectable 5.1%, especially given the macroeconomic crisis and the wholesale changes in economic philosophy.

Lastly, the 4.6% growth post Covid is exactly the same as the average annual growth India enjoyed during the 1980s — the time when the phrase “Hindu rate of growth” was first coined.

Seen in this light, the Hindutva rate of growth is terribly similar to the Hindu rate of growth.

However, it is an open question whether economic performance matters in India’s electoral choices. As is now being heard repeatedly in the Hindi heartland at least: The log-in ID for BJP’s electoral success might be “Development” but the password is “Hindutva”.

Share your views and queries at udit.misra@expressindia.com

Until next time,

Udit