The decades before 1980-2000, when the growth rate of the Indian economy hovered around 3%, it was termed to be growing at the Hindu rate of growth. Now that the growth rate is around 6%, what do we call it? Well, technically it is still the Hindu rate of growth as the dominant population of India has not changed during this time! The more important question however is, how come the same people are growing twice the rate now than earlier?
According to me, this doubled growth rate is a clear evidence that people in India responded to changed incentives and institutions. Clearly, the rules and regulations we see now are more successful in fostering growth than the ones that were in place prior to 1980. Before 1980, the Indian economy was still characterized by the License Raj that was the result of the socialist (Nehruvian) policies. But later, the economy was slowly liberalized and moved towards a more market based economy. Thus, calling the lower growth rate as Hindu growth rate seems to be a misnomer as the people under the both regimes are still the same. I think it is high time we change the nomenclature to “Nehruvian growth rate” or ” a Socialist growth rate”!