Raghuram Rajan says – India is dangerously close to ‘Hindu rate of growth’, जानिए इसका मतलब

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Hindu rate of growth: Sounding a note of caution, former Reserve Bank Governor Raghuram Rajan has said that India is “dangerously close” to the Hindu rate of growth in view of subdued private sector investment, high interest rates and slowing global growth.

Mr. Rajan said that sequential slowdown in the quarterly growth, as revealed by the latest estimate of national income released by the National Statistical Office (NSO) last month, was worrying.

What is Hindu rate of growth?

Hindu rate of growth is a term describing low Indian economic growth rates from the 1950s to the 1980s, which averaged around 4%. The term was coined by Raj Krishna, an Indian economist, in 1978 to describe the slow growth.

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GDP

The Gross Domestic Product (GDP) in the third quarter (October-December) of the current fiscal slowed to 4.4% from 6.3% in the second quarter (July-September) and 13.2% in the first quarter (April-June). The growth in the third quarter of the previous financial year was 5.2%.

Recently, Chief Economic Advisor V Anantha Nageswaran had attributed the subdued quarterly growth to the upward revision of estimates of national income for the past years.

The key question is what Indian growth will be in fiscal 2023-24, Mr. Rajan said, adding “I am worried that earlier we would be lucky if we hit 5% growth. The latest October-December Indian GDP numbers (4.4% on year ago and 1% relative to the previous quarter) suggest slowing growth from the heady numbers in the first half of the year.

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“My fears were not misplaced. The RBI projects an even lower 4.2% for the last quarter of this fiscal. At this point, the average annual growth of the October-December quarter relative to the similar pre-pandemic quarter 3 years ago is 3.7%.

“This is dangerously close to our old Hindu rate of growth! We must do better.” The government, he said, was doing its bit on infrastructure investment but its manufacturing thrust is yet to pay dividends.

Currently, Mr. Rajan is the Katherine Dusak Miller Distinguished Service Professor of Finance at The University of Chicago Booth School of Business. He further said the most developed economies of the world are largely service economies, so you can be a large economy without a large presence in manufacturing.

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