PM Modi says ‘Hindu rate of growth… tarnished Hindus’: What was he implying

“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% because now it is those people in power who believe in Hindutva,” Trivedi said.

What is the Hindu rate of growth?

The term, coined by economist Raj Krishna, has been in use since 1982. Not someone who aligned with the ideologies of the Congress-led governments of that time, Krishna was described as “being somewhat of a right-winger.

During the Emergency, Krishna was teaching at the Delhi School of Economics. After the Indira Gandhi government was ousted in 1977, he became a member of the Planning Commission under the Janata Party government. During his tenure, the Commission wrote the draft Sixth Five Year Plan. Concurrently, he was also a member of the Seventh Finance Commission responsible for the disbursement of funds to the states.

In 1979, he resumed teaching at the Delhi School and stayed there until his death in 1985. According to The New Oxford Companion to Economics in India (OUP), it was “during this period that he coined the memorable phrase ‘The Hindu Rate of Growth’, a polemical device intended to draw attention to the meagre 3.5% growth rate experienced by India at the time. The fact that this rate of growth remained steady through changes in governments, wars, famines, and other crises, made it for him an inherently cultural phenomenon—hence the name.

During the Nehru era, India’s population grew by 2%.

In a piece titled ‘The recovery of India: Economic growth in the Nehru era’, former Ashoka University economics professor Pulapre Balakrishnan provided a context and understanding of India’s growth record in that time, from 1951 to 1964.

He wrote that India’s GDP and GDP per capita growth rate shot up from 0.9% and 0.1%, respectively, between 1900 and 1946 (the colonial era) to 4.1% and 1.9%, respectively, between 1950 and 1964. Moreover, India’s GDP growth rate of 4.1% during the Nehru era was higher than China’s 2.9% over the same period, and was also higher than the GDP growth rate of the US (3.6%), the United Kingdom (1.9%) and Japan (2.8%) between 1820 and 1992.

“It is now possible to place in perspective Raj Krishna’s lament that independent India’s record of growth until the late 1970s placed it lower than 100 economies worldwide. Krishna had used per capita GDP as his measure. This succeeds in masking the degree of progress made in the Nehru era,” wrote Balakrishnan.

When did India outgrow the ‘Hindu rate of growth’?

At first glance it may appear that India’s growth story turned a corner after the reforms of 1991. But the GDP growth rate data suggests that India started growing faster than the Hindu rate of 3.5% much earlier.

In a piece published in the Economic and Political Weekly in 2006, the late Baldev Raj Nayar, Professor Emeritus at Canada’s McGill University, argued that while it is certainly true liberalisation accelerates economic growth, “but it is equally true… of the within-system economic policy reforms of the 1980s”.

For instance, according to Nayar’s calculations, India’s average annual GDP growth rate between 1956 and 1975 was 3.4% — almost exactly the Hindu rate of growth. However, between 1981 and 1991 — that is, a full decade before the crisis and reforms — India’s growth averaged 5.8%.

For many economists, such as Arvind Virmani and Arvind Panagariya, 1980 (or the 1980s more broadly) is likely the turnaround year, thanks to the reforms initiated by the governments of both Indira Gandhi (who had returned to power after being “chastised” for enforcing Emergency) and Rajiv Gandhi.

But Nayar points out that the first phase of economic liberalisation started in 1975 — the year in which Emergency was enforced. To buttress his claim he points out that the GDP growth rate between 1976 and 2006 averaged 5.6% — well above the Hindu rate of growth.

What is the ‘Hindutva rate of growth’?

The “7.8%” Trivedi called the Hindutva rate of growth refers to the average GDP growth rate post-Covid, albeit with a more than noteworthy tweak.

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 similar to the Hindu rate of growth.

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.

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.