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Saturday, September 30, 2023

Understanding India’s ‘Hindu Rate of Growth’: Raghuram Rajan’s Warning

Former Reserve Bank of India governor Raghuram Rajan recently expressed concern about India’s slow economic growth, warning that the country was “dangerously close” to the “Hindu rate of growth”. This term refers to India’s sluggish GDP growth, which was around 4% from the 1950s to the 1980s, according to economist Raj Krishna who coined the term in 1978.

Rajan blamed the subdued private sector investment, high interest rates, and a slowdown in global growth for India’s slow economic growth. His remarks followed the release of a report by the National Statistical Office, which showed a sequential slowdown in the latest estimate of national income. The report revealed that India’s GDP growth rate was 4.4% in the third quarter (October-December) compared to 6.3% in the second quarter (July-September).

Krishna, who was teaching at the Delhi School of Economics when he coined the term, viewed the steady economic growth rate over several decades despite government changes, wars, famines, and crises as an “inherently cultural phenomenon.” He did not use the term critically or denigrate Hindus, according to The New Oxford Companion to Economics in India.

Although the term “Hindu rate of growth” is often considered derogatory, it draws attention to India’s failure to meet its economic potential, according to A Dictionary of Politics and International Relations in India. Rajan’s call to “do better” highlights the need for India to address the factors that are hindering its economic growth and development.

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