The “Hindu rate of growth” is a term coined by Indian economist Raj Krishna in the 1970s to describe the sluggish economic growth India experienced from the 1950s to the 1980s. During this period, India’s GDP grew at an average annual rate of around 3.5 percent, significantly lower than in other developing countries, particularly East Asian countries such as South Korea and China.

This slow growth rate was largely attributable to the economic policies adopted by India after gaining independence in 1947. The government transitioned a socialist-inspired, centrally planned economy with extensive state control over key industries, trade, and the financial sector. This framework, known as the License-Permit-Quota Raj, imposed numerous regulations and bureaucratic hurdles on businesses, stifling entrepreneurship, innovation, and competition.

The term “Hindu rate of growth” is somewhat controversial and considered by some as pejorative, as it implies a cultural or religious basis for the economic stagnation, which was not the case. Instead, the sluggish growth was a result of policy choices and structural inefficiencies.

During this era, India faced several economic challenges, including inefficient public sector enterprises, a lack of foreign investment, limited access to technology, and inadequate infrastructure. The heavy emphasis on self-reliance and import substitution further isolated the Indian economy from world markets.

The stagnation began to change with the liberalization of 1991, which unleashed India’s economic potential, leading to significantly higher growth rates and transforming India into one of the world’s fastest-growing major economies today.