The economic buoyancy displayed by our economy in the last nine years is unprecedented since the last couple of centuries. Bharat has left behind 5 major global economies, including England, the erstwhile colonial ruler, in these nine years. The critiques of the Hindu worldview, bent upon maligning Hindu values, have now resorted to calling a minor economic correction in the growth rate of the third quarter of the financial year 2022-23 as the ‘Hindu rate of growth’ – a derogatory term coined in 1978. Maligning Hinduism on the basis of a minor economic correction is unfortunate.
Former RBI Governor Raghuram Rajan has portrayed the minor correction, in a mere three-month period between October and December 2022 as ‘dangerously close’ to ‘the Hindu rate of growth’. This correction has occurred on revision of Internet rates, in the aftermath of the post Ukraine war inflationary trends visible across the world.
Overall annual economic growth is not likely to dip and the comparison is ill intended. It is worth mentioning here that the January 2023 World Economic Outlook Update projects a fall in the global growth rate to 2.9 per cent in 2023 from 3.2 per cent in 2022 with an alarming inflation of 8 per cent. Even in this state of global downturn, most of the global bodies and rating agencies have been predicting a growth rate of 6.5 per cent for 2023-24 for India, almost more than twice the global average. The rate of growth in 2022-23 is also expected to be more than 7 per cent. The Economic Survey has also forecast a 6.5 per cent growth in 2023-24, which shall be highest among all major economies and the nominal growth for the country would be at 11 per cent. The dubbing of the Nehru-Indira-era slow growth as ‘Hindu Growth Rate’ was mischievous and sinister. The Nehru-Indira era was marred by the highly restrictive socialistic policies.
THEN AND NOW
The socialistic policies adopted post Independence, till the mid 1980s, such as public sector reservations in several sectors, license raj, denying permissions to the domestic industry even to manufacture half of the domestic demand, had restrained the average growth to 4 per cent per annum. Before Independence, in the Christian era rule of the East India Company followed by the British Crown, the growth rate was pegged at 1 per cent between 1890 to 1910 – the worst in several millennia. India’s share in the world GDP had also declined from 34 to 22 per cent during the Islamic Moghul rule. Today, Bharat is the producer and supplier of a wide range of necessities from food grains to medicines, including Covid vaccines, and defence products from aircrafts (Tejas) to guns.
It would be worth reminding here that at the end of the UPA regime, Bharat’s economy was at 10th place, and since 2014 onwards, we have left behind Russia, Italy, Brazil, France and England. Prime Minister Narendra Modi has already announced that Bharat is poised to be the third largest economy of the world inter alia by imparting skills to youth and making them better employable.
The Confederation of Indian Industries (CII) and certain other agencies have opined that Bharat can become a 40 trillion dollar economy, if the entire working age population can be meaningfully employed. Today, even the global economy has only 100 trillion dollar GDP. The US is a 20 trillion dollar economy. Moreover, on the basis of purchasing power parity (PPP) cost, Bharat has already become the 3rd largest economy after the US and China, growing at a faster rate than both. Unfortunately, Raghuram Rajan has chosen to link a single quarter low growth of end 2022 to the Hindu worldview at a time when the country is growing at more than double the average global growth rate.
FALLOUT OF DEVALUATION
It was under the missionary dominated rule of European imperials that the Rupee suffered the worst. As per B.E. Dadachandji (author of ‘History of Indian Currency and Exchange’, 1928), one Rupee was equal to 23.12 pence sterling, which had fallen to 15 pence and then to a further low of six pence for one Rupee.
Immediately after Independence, Jawaharlal Nehru, the champion of pro-Left policies and critical of Hindu revivalism, had without any pressing need borrowed from the World Bank under the condition of devaluing Indian Rupee. The Rupee-Dollar exchange rate was then revised from Rupees 3.5 per dollar to Rupees 4.49 per dollar. Even Pakistani Rupee was still at Rs 3.5 per dollar then in 1949. The second devaluation was done in 1966 by Indira Gandhi and the third and last devaluation was done by Manmohan Singh in 1991. Pt. Deendayal Upadhyay brought out a monograph to warn against the fallout of that devaluation.
At the time of Independence, England was indebted to Bharat by a Pound sterling loan equivalent to Rs 1400 crore, and India was one of the five largest shareholder/ quotaholder of the world Bank and IMF. By virtue of this, Bharat was one of the five permanent directors on the board of both, the World Bank and the IMF. On account of the devaluation of Rupee by Jawaharlal Nehru to borrow from the World Bank, the value of our share in the IMF and World Bank fell and consequently we lost our permanent directorships.
IMPACT OF SOCIALIST POLICIES
The private sector, up to mid 1980s, was not allowed to set up new manufacturing capacities or expand existing ones. As a result, the country had become import dependent and stricken by scarcities of all type of products from sugar and cement to steel. Bharat had to import steel worth Rs 31,000 crore till 1981, despite having plenty of iron ore. Bharat could have had foreign exchange surplus of Rs. 13,000 crore, had the domestic manufacturers been allowed to fulfill the demand of iron and steel. The Industrial Policy Resolutions of 1948 and 1956, the Industries Development & Regulations Act of 1951 (the law establishing corrupt license raj) and the Monopolies and Restrictive Trade Practices Act prevented the industry from growing and fulfilling domestic demand. Hence, the low 4 per cent rate of growth till mid 1980s was not a result of Hindu economics but of draconian socialistic policies. The Indian Rupee is emerging as an international currency for global trade after almost a millennium. Already 12 countries are now trading in the Indian Rupee, and almost 35 countries have shown interest to do so. India is presiding G20. India has pioneered in developing the most effective Covid-19 vaccine and administered 100 crore people with free vaccines. India has championed the cause of global humanity by calling the WTO member nations to free Covid medicines and vaccines from patents. India is also leading the Global Solar Alliance and has declared the target for carbon neutral economy as well. At such a moment, dubbing of a single quarter growth rate as ‘Hindu growth rate’ and raising nationwide alarm is unfortunate.
In fact, the economy is rather poised to take a bigger leap, as highlighted by the State Bank of India’s research report Ecowrap, which has dubbed Rajan’s view as ill conceived and biased. The SBI report emphasised that gross capital formation (GCF) by the government has touched a high of 11.8 per cent of GDP in 2021-22, up from 10.7 per cent in 2020-21. This also had a domino effect in private sector investment that jumped from 10 per cent to 10.8 per cent over the same period. At the aggregate level, the gross capital formation is supposed to have crossed 32 per cent in 2022-23, the highest level since 2018-19. In 2021-22, gross savings have risen to 30 per cent from 29 per cent in 2020-21. The ratio is supposed to have crossed 31 per cent in 2022-23, the highest since 2018-19. The economy is on a sound footing as evident from the Incremental Capital Output Ratio (ICOR) that has improved from 7.5 in FY12 to 3.5 in FY22, as per the report. Thus, only half of the capital is now needed for the next unit of output, the report said.
Indeed, the Hindu Worldview – embracing all aspects of life including economic, scientific, technological political, social and cultural – can now usher the society in an era of prosperity and global wellbeing.