Economist Raj Krishna coined ‘Hindu rate of growth’ in 1978 to denote the around 4 per cent growth in GDP from the 1950s to the 1980s. Amazingly, despite his knowledge and position in the past, Raghuram Rajan makes a statement that the present economy is ‘dangerously close’ to the earlier Hindu rate of growth. The colonial-missionary narratives attached the Indian social systems and all its problems to Hindu religion and we still have not been able to reject it. The surprise comes when either with ignorance or deviousness even economic issues attach themselves to the Hindu religion. The ex-RBI governor has a responsibility to explain his statement and that he is not trying to undermine the integrity of the country by putting Hindu religion in the dock.
There were three economic phases in the 20thcentury: 1900-1950; 1950-1980; and 1980-2000. The first two phases were of stagnation. An economic liberalization standing on the shoulders of a huge agricultural revolution by 1991-2000 rapidly increased the strength of our economy. PV Narasimha Rao and Manmohan Singh (as an economist) played a huge role in this transformation. The successive governments continued this making India into one of the fastest growing economies of the world by the turn of the century.
India had democracy first (1950) and capitalism afterwards (1991), a reverse situation of the west. Democratic pressures ensured that ‘welfare’ began before there were welfare-generating jobs. Democratic socialism pressures like free power to farmers and other subsidies dampened growth and reform process in the first three decades of independence. The state as an entrepreneur failed mainly because of corruption and bureaucracy. The dreaded licensing system, beginning with the Industrial Licensing Act of 1951, inflicted the worst damage on the private sector. The system resulted in stifling competition and allowing only state monopolies, often in remote places with improper technology, run by ignorant and inefficient bureaucrats.
The period from 1960 to 1985, considered as the ‘dark period for Indian economy’ was a result of warped political-economic policies rather than anything else. Economist Gurcharan Das attributes six state policies as reasons for this: adopting an inward-looking, import-substituting path rather than an export-promoting route; setting up a massive, inefficient, and monopolistic public sector; over-regulating private enterprise; discouraging foreign capital and denying itself the benefits of technology and world class competition; pampering organized labor to the point of extremely low productivity; and ignoring the education of its children. The routine explanations for the slow economic growth (‘the otherworldly values of the Hindus,’ ‘the immobilizing caste system,’ ‘the conservative merchant caste’) including the label ‘the Hindu rate of growth’ may not be true at all, says Das.
Angus Maddison’s research shows how India (and very Hindu) was contributing to almost 35-40% of the world GDP consistently from the beginning of the common era to the 17th century when the East India Company landed. Indian degeneration in terms of its economy, culture, heritage, and educational systems during the colonial plunder ensured that at independence, India was contributing a pathetic 1.8 % to the world GDP. The question is if ‘Hindu’ ideas slows economic growth, why did everybody in the world come to India to make money and why did we cross our civilizational borders only for trade and exchange of culture rather than to loot and plunder? The ex-governor of RBI and the acclaimed economist must tell us how ‘Hindu’ religion factors into these economic facts of the past and present.
RANDOM MUSINGS 