Kamal Ghorui
Last month, at a well-attended public event, a rising industry figure – articulate, widely read, and a columnist whose intellect I generally admire – took a playful swipe at an unnamed economist from the 1970s for coining the phrase “Hindu Rate of Growth.” His point was simple and delivered with the flourish that large audiences reward: how quaint, even foolish, it must seem now to describe 2% growth as somehow emblematic when today the economy is growing at 7%. The applause was immediate and generous, as applause tends to be when hindsight is on the podium.
It is, however, worth pausing before we laugh too heartily at the past. The phrase was coined by the Indian economist Professor Raj Krishna around the late 1970s, in lectures and subsequent writings. He was referring not to a theological proposition but to a stubborn statistical reality. India’s average annual GDP growth from the 1950s to the late 1970s hovered around 3–3.5%. With population growth then running close to 2%, per-capita income growth was roughly 1–1.5%. In the shorthand of public discourse, this became “about 2%.” The term was deliberately ironic, even provocative, intended to draw attention to what appeared to be a structural resignation to slow economic expansion. Over time, it became controversial, partly because it was misread – or occasionally misused – as a religious attribution, which was never the analytical intent.
The critique embedded in that phrase was directed at policy architecture rather than culture: the licence-permit-quota regime, heavy state control, protectionism, limited private enterprise, and import-substitution strategies that dampened productivity and competition. One may reasonably argue that such critiques, among others, contributed to the intellectual climate that eventually made liberalisation politically thinkable. To dismiss the phrase today, armed with the comfortable omniscience of hindsight, risks overlooking the context in which it was coined and the purpose it served. Economists, like the rest of us, do not enjoy the luxury of tomorrow’s data.
If we step back from the rhetoric and examine India’s economic trajectory over the last decade, the picture is neither unalloyed triumph nor unrelieved disappointment. It is one of the robust expansions accompanied by structural reform, digital transformation, and uneven social outcomes. India has remained among the fastest-growing large economies, with real GDP growth averaging about 6–7% annually despite the pandemic. Nominal GDP has roughly doubled – from about $2 trillion in 2014 to well over $3.5 trillion – placing India among the world’s five largest economies. Foreign exchange reserves have risen from around $300 billion to over $600 billion, strengthening resilience against external shocks, while inflation has largely stayed within the 4–6% band.
Institutional and digital reforms have been defining features. The Goods and Services Tax created a unified national market, and the Insolvency and Bankruptcy Code improved corporate resolution processes. Financial inclusion expanded dramatically, with over 500 million bank accounts opened, near-universal biometric identification, and large-scale direct benefit transfers reducing welfare leakages. Digital payments saw a quiet revolution: UPI grew from near invisibility in 2016 to processing over ten billion transactions a month by 2024, making India a global leader in real-time retail payments – one of the few revolutions conducted with QR codes rather than slogans.
Infrastructure investment accelerated as well. National highways expanded sharply, renewable energy capacity more than tripled, and airport and metro networks spread across cities. Production-Linked Incentive schemes sought to boost manufacturing and electronics exports, with mixed but gradually improving outcomes. The skyline changed in many places; the spreadsheet changed in some.
Yet the more sobering variables resist celebratory headlines. Employment growth has averaged only about 3% annually, trailing GDP growth and keeping concerns about job quality and informality alive. India’s share of world merchandise exports has hovered in the narrow band of 1.7–2.0%, implying only modest gains in global market share despite rising export volumes, while the CAGR of India’s total exports (merchandise plus services) over this period has been around 3–3.3%. Real wage growth for large segments of the workforce has often been in the 1–3% range. Agricultural productivity has inched forward at roughly 2–3% a year, constrained by fragmented landholdings, uneven irrigation, and slow diffusion of technology. Per-capita real consumption growth, particularly during mid-decade slowdowns and pandemic years, frequently slipped into the same 2–3% range. In other words, even as the aggregate economy accelerated, several underlying indicators continued to move at speeds that would have been familiar to Professor Raj Krishna – though he might have preferred not to be reminded.
The distributional side of development adds further texture. Income inequality has widened by many measures, rural consumption has been uneven, and private investment cycles have been patchy. Human-capital indicators in health, education, and skilling have improved, but they still lag several emerging-market peers. These are not trivial footnotes; they shape the durability of growth and the breadth of its benefits.
None of this negates the genuine progress made. The past decade has delivered macroeconomic strengthening, digital-institutional modernisation, and visible infrastructure gains. At the same time, it has left open questions about employment intensity, inclusiveness, and the quality of growth. The contrast between high aggregate growth and slower improvement in several social and labour indicators is not a contradiction so much as a reminder that economies are complex organisms. They can sprint on one limb while the other prefers a brisk walk.
Perhaps the gentle lesson here is that economic phrases, like economic policies, belong to their time. They are tools for diagnosis, not eternal verdicts. To mock an earlier diagnosis because the patient now runs faster is to forget that the diagnosis may have prompted the treatment. A little historical humility costs nothing and occasionally saves us from applauding our own hindsight too loudly.
Lastly, it may be said that this piece is not so much a defence of the “Hindu Rate of Growth” as an attempt to restore the context in which the phrase was coined, and to recover its critical value as a commentary on the policy regime then in place.
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