What does the term ‘Hindu Rate of Growth’ signify in the context of India’s economic history, and what were the structural factors that contributed to this phenomenon during the pre-liberalization period (1950s–1980s)?
Show answer & explanation
Correct answer: C
Explanation
Solution: The correct answer is A prolonged phase of low and stagnant economic growth averaging around 3–3.5% annually, caused by excessive state control, bureaucratic inefficiencies, and limited private sector participation under a socialist policy framework.
Explanation:
☛ The term 'Hindu Rate of Growth' was coined in 1978 by Indian economist Prof. Raj Krishna.
☛ It describes the sluggish annual growth rate of the Indian economy from the 1950s to the 1980s, which stagnated at an average of about 3.5% per annum.
☛ During this period, India's per capita income grew at a modest rate of around 1.3% per year due to high population growth.
☛ The primary causes of this stagnation were the restrictive 'License-Permit-Quota Raj', strict state controls, inward-looking import substitution policies, and limited scope for private enterprise under a socialist planning framework.
Extra Exam-Relevant Facts:
☛ The economic trajectory changed significantly after the landmark 1991 economic reforms (Liberalization, Privatization, and Globalization - LPG) introduced under Prime Minister P. V. Narasimha Rao and Finance Minister Dr. Manmohan Singh.
☛ The post-1991 era witnessed India's GDP growth rate crossing the 6–8% mark, thereby dismantling the 'Hindu Rate of Growth'.
☛ The early industrial policy was steered by the Industrial Policy Resolution of 1956, which gave the public sector commanding heights of the economy.
Important One-Liners for Upcoming Exams:
☛ Who coined the economic term 'Hindu Rate of Growth'? → Prof. Raj Krishna
☛ In which year was the term 'Hindu Rate of Growth' coined? → 1978
☛ What was the average annual per capita income growth in India between 1950 and 1980? → Approximately 1.3%
☛ Which Five-Year Plan introduced the Nehru-Mahalanobis strategy focusing on heavy industries? → Second Five-Year Plan (1956–1961)
☛ In which year did India introduce the historic LPG (Liberalization, Privatization, Globalization) reforms? → 1991