Raghuram Rajan cautioned about the “Hindu rate of growth”. What is the “Hindu rate of growth”?
Raghuram Rajan, former RBI governor, cautioned that India was dangerously close to the Hindu rate of growth. The man here referred to the country’s gradual economic growth and put the blame on the subdued private sector investment, increasingly high interests, and a deceleration in global growth.
However, it becomes crucial to understand what the Hindu rate of growth is.
Hindu Rate of Growth
The term Hindu rate of growth was first coined by Raj Krishna, a notable economist, back in the year 1978. The term was used to refer to about 4 percent growth in the GDP from the 1950s to the 1980s.
The economist taught at the Delhi School of Economics at the time when he coined the term, Hindu rate of Growth.
Governments changed, but the economic growth rate remained steady. Also, in those times, there were several wars and crises that adversely affected the economy. Raj Krishna thus called it "an inherently cultural phenomenon- hence the name".
The Hindu Rate of Growth is nothing but a controversial device that compels one to look at the 3.5 percent growth rate seen by the country over the long run.
The growth rate remained steady even despite changes in governments, famines, wars, and multiple other crises, and thus man sees it as an inherently cultural phenomenon.
The phrase
The term Hindu rate of growth is often seen as nothing but a derogatory phrase. The phrase Hindu rate of growth shows the country being unable to touch its economic potential. However, as per reports, Raj Krishna did not use the phrase critically against the Hindus.
Why did Raghuram Rajan make this remark?
After the National Statistical Office (NSO) brought forward its report last month, Raghuram Rajan made the remark. The report stated a sequential decline in the latest national income estimate. India's GDP growth was seen to decline to 4.4 percent in the months of October to December (third quarter) and 6.3 percent in the months of July to September (second quarter). "The latest October-December Indian GDP numbers suggest slowing growth from the heady numbers in the first half of the year... The RBI projects an even lower 4.2 percent for the last quarter of this fiscal," stated Raghuram Rajan.
