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Source: The post is based on an article “‘Hindu rate of growth’ is a phrase we must erase” published in Mint on 7th March 2023.
Syllabus: GS 3 – Indian Economy
Relevance: meaning of the term ‘Hindu rate of growth’ and concern associated with the Indian economy
News: The term ‘Hindu rate of growth’ was recently used by Raghuram Rajan, former governor of the Reserve Bank of India.
What does the term mean and when was it first used?
The term was coined by the economist, Raj Krishna in late 1970s. The term refers to a sluggish pace of economic expansion back in the 1980s when the growth of India was under 4%.
Krishna argued that our weak growth back in the 1980s was not on account of a resource or talent deficiency, but it was the result of a restrictive policy environment.
According to Krishna, our economy was held back by dismal productivity, an inefficient public sector and a sarkari maze of red tape. However, things changed after the LPG reforms of 1991.
Hence. Raghuram Rajan used the term in the current economic scenario which according to him is similar to the 1980s due to low private-sector investment, rising rates of interest and a slowing global economy.
However, there are problems with the phrase and it should not be used.
What are the problems with the phrase?
The term Hindu attached to the phrase may create controversies. The term nowhere points to religion but suggests a cultural context for poor economic performance.
Hence, it would be better to delete the phrase as it may hurt the sentiments.
What are the counter arguments to Rajan’s view?
It is true that India is currently facing slow growth. However, after the pandemic, there has been a V-shaped revival with increased state spending in the infrastructures. GDP is also expected to increase around 7% in 2023-24.
Hence, there is a need to attract private investment for more economic growth and to eliminate the risk of economic slowdown.
