PM Modi stated that the label “Hindu rate of growth” wrongly portrayed India as inherently unproductive, despite evidence of stronger economic growth before and after liberalisation.

About the Hindu Rate of Growth

• The term “Hindu rate of growth” was coined by economist Raj Krishna in 1982 to describe India’s slow GDP growth of about 3–3.5% from the 1950s to the late 1970s.
• It was used to highlight structural economic weaknesses, not religious identity or culture.
• Key Features of Hindu rate 
• • Low and Stable Growth Rate: India grew at ~3.4% annually between 1956–1975, showing minimal variation even during wars or political changes.
  • High Population Growth: Population rose by nearly 2% annually in the Nehru era, reducing per capita income growth to around 1.9%, masking real economic progress.
  • Licence–Permit Raj: Strict controls on production, imports, and private investment limited competition and kept productivity low.
  • Type of Economy Represented 
    • State-dominated, inward-looking economy with large public sector roles in steel, power, transport, and machinery.
    • Import substitution model with high tariffs and quotas protecting  domestic industry but restricted innovation and export competitiveness.
    • Limited market incentives, which slowed industrial expansion and technological upgrading.

Need for Reassessment

• Evidence of Higher Pre-1991 Growth: Studies by Baldev Raj Nayar and Arvind Panagariya show India grew at around 5.8% in 1981–91, proving it had already moved beyond the so-called “Hindu rate of growth.”
• Under-Recognised Early Reforms: Policy liberalisation pre liberalization of 1991 such as easing industrial licensing boosted investment and productivity.
• Impact of Post-Emergency Measures: Deregulation and better capacity utilisation after 1975 strengthened industry performance, contributing to sustained growth.
• Correcting Misleading Terminology: The term wrongly tied economic outcomes to faith and Cultural Identity  of the  region reflecting colonial prejudice; reassessment is essential to shed this biased and inaccurate historical framing.

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About the Current Model of Growth

• Economic Planning Evolution: India has moved to a market-driven, globally integrated economy, reducing state controls, encouraging private investment, and improving ease of doing business.
  • Planning has shifted from Five-Year Plans to NITI Aayog’s cooperative federalism and long-term strategies.
• Current Growth Performance: India is now one of the fastest-growing major economies, averaging 7% or more in recent years, driven by services, manufacturing, and digital innovation.
  • Key programmes such as Atmanirbhar Bharat, PLI schemes, infrastructure missions (Gati Shakti) are boosting production and exports.
• Targets: National goals include becoming a $5 trillion economy, raising manufacturing share, creating employment-rich growth, and achieving developed nation status by 2047.

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