International Tax Panorama

Why the Former Reserve Bank of India (RBI) governor Raghuram Rajan cautioned that India was “dangerously close” to the ‘Hindu rate of growth’?

The term “Hindu rate of growth” was originally coined by Economist Raj Krishna in 1978, to refer to the meagre 3.5% growth in GDP between 1950s to 1980s . It is often regarded as a derogatory phrase concerning India not being able to meet its economic potential, according to A Dictionary of Politics and International Relations in India

In the present scenario Raghuram Rajan was referring to India’s slow economic growth and blamed subdued private sector investment, high interest rates and a slowdown in global growth as the factors.

Raghuram Rajan’s remark came after National Statistical Office (NSO) released its report last month. The report showed a sequential slowdown in the latest estimate of national income. 

The country’s GDP growth was seen to slow down to 4.4% in the third quarter (October-December) against the 6.3% in the second quarter (July-September).

Also the RBI projects an even lower 4.2 per cent for the last quarter of this fiscal.

That’s why Raghuram Rajan said that it is dangerously close to our old Hindu rate of growth!

But what actually is the Hindu rate of growth?