Conventional thinking from mainstream economists travelling down to the average citizen has it that GDP growth is desirable and good – the higher the better. India now reports high growth, with the last announcement giving a surprisingly robust GDP growth of 8.2%. But the nation was not always in that league, and indeed never was right up to the 1990s when Dr Manmohan Singh introduced the era of economic reforms. Before that, largely, the economic cart of a newly independent nation remained stuck at a growth of about 3.5% on average and 1.3% per capita, all the way from 1947 to 1980. This state came to be called the “Hindu rate of growth,” a term that in its origins was entangled with the Hindu way of life but has subsequently been used almost as a harmless cliché for slow growth.
The phraseology is now under attack, with Prime Minister Narendra Modi leading the charge. The continued popularity of the usage is indicative of “a mentality of slavery,” the PM said last week. In his words: “… an attempt was made to prove that the reason for India’s slow growth rate was our Hindu civilisation and Hindu culture.” As the Indian economy races ahead, the PM has now asked: “Have you read anywhere about the rapid growth that India is experiencing today? Have you heard about it anywhere? Does anyone call it the Hindu rate of growth?” The remarks came in a speech earlier this month, highlighting on the one hand what the government sees as high achievement on the GDP growth front and on the other hand an unstated condemnation of the post-independence socialist approaches and policies that, it is claimed, failed India, a failure that cannot be labelled for Hindu society as a whole.
In a 2007 paper, economists Kaushik Basu and Annemie Maertens of Cornell University referred to the “Hindu rate of growth” as a “tongue-in-cheek expression” coined by the late economist Raj Krishna to capture the frustration of India’s planners struggling with what appeared to limit the India growth story.
“No matter what they did, growth seemed, invariably, to revert to 3.5% per annum, almost as if this magic figure was written in the land’s scriptures,” they wrote in a footnote to contextualise the term. But the roots of that coinage go back to 1973 and to the bureaucrat BPR Vithal, who was a member of the 10th Finance Commission, among serving other positions. Vithal’s thesis was complex, in part problematic and has been criticised, but this is criticism not of the kind the BJP has in mind when it sees the us age “Hindu rate” as derogatory.
Vithal’s case was centred around preserving what he called the Hindu way of life, which he argued would break down if growth accelerates. In that sense, the roots of the term that are now being labelled as denigrative of a religion or a community are not that at all. Vithal did not decry India’s historic low growth and, on the contrary, alerted economists and policy makers to the risks of higher growth merely as a target number, arguing to the effect that any faith in a higher rate of growth as a panacea will lead to a breakdown in society as citizens become slaves of Western-style consumption. And building further on this, Vithal wrote in 1993: “If, therefore, our expectations of the new economic policy are fulfilled and we get on to a trajectory of a consistently faster rate of growth, we would be well-advised to devote some thought to devising a suitable ideological and cultural framework for it. If it merely succeeds in breaking present moulds, there will be a rootlessness which can be dangerous in a large country like ours.” Here was an economist not limited to numbers and how they would be achieved, but one who delved right into the sociology of growth and what it brings for a nation like India. Without commenting fur ther on the roots of the term, or Vithal’s “intellectual subtlety” as one reviewer put it, it should be clear that the socio-political dynamic of India coupled with its claims of high growth are already bringing some huge problems that are worthy of se rious discussion rather than the idea of Hindu pride that is sup posedly hurt when poor growth is associated with the land. The arguments embedded in the origins of the phraseology and the current questions raised about it bring into sharp relief issues around the structure and the quality of India’s growth story. Is growth in and by itself good, a free radical that signals energy and achievement that will take the nation and its people to a higher ground? What are the downsides? Can the growing inequality be sustained, or will the present arrangement break down with disastrous consequences for the nation?
Ironically, the conversation has hit the headlines just around the time of the ugly excesses of corporate power bordering on national blackmail seen in the case of the havoc wrought by the country’s biggest airline, Indigo. By force-landing the airline with a massive cancellation of schedules that were then attributed to an unimplemented safety policy, Indigo gave the nation a taste of the risks of companies that are too powerful to control and thereby too big to fail. At a different scale but of a similar kind was the death of 25 people earlier this month at a nightclub in Goa, with the owners copying the playbook of Mehul Choksi and Vijay Mallya to flee the nation. The airline caused a national disaster. The nightclub hotel was a more localised story. But both mock the nation and its growth story in their own ways, highlighting the hidden costs of a faster growth that has beaten the “Hindu rate of growth” but has brought us a disaster that unfolds at periodic intervals to shock the nation and ridicule its governance structures.
In that sense, faster growth is good, but there is a condition called “bad growth.” To quote an age-old HDR report by the UNDP: “Determined efforts are needed to avoid growth that is jobless, ruthless, voiceless, rootless and futureless.” But if that is what we get with faster growth, then the “Hindu rate of growth” might even begin to look good.
The writer is a journalist and faculty member at SPJIMR.
