Redefining The Hindu Rate Of Growth

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Apr 12 2004, 00:00 IST

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The political controversy over India’s 8% plus GDP growth during 2003-04 exemplifies the contested nature of this topic. True to form, the BJP-led government is tom-tomming this number as indica- ting that India is on the verge of explosive growth. The Opposition, for its part, is pooh-poohing it as statistical jugglery. Nevertheless, there is a lot of interest whe-ther this is a one-off phenomenon or is sustainable.

Arvind Virmani doesn’t directly address this controversy, but his latest work* has a lot to say on trends over the last 50 years. For starters, he observes that Indian econom-ic growth has been stable although two pha-ses can be dis- cerned. The first, what he terms as Indian-socialist rate of growth, starts from 1951 and lasts till 1979-80. The second, termed as the Bharatiya rate of growth, starts from 1980-81 and is still going on.

During the first phase, GDP growth averaged 3.5% per annum while per capita income averaged 1.3%. The percentage of India’s popul-ation below the poverty line increased from 45.3% in 1951 to 47.3% in 1979-80. In contrast, growth accele-rated to 5.7% per annum during the second phase while per capita income grew by 3.6%. Poverty also trended downwards during this phase.

The choice of these expressions may not be the most felicitous, but the author intends to delineate the phase of state-directed economic activity or dirigisme from the second phase in which the reform saga begins. Virmani’s intention is also to delineate sub-phases within these two broad phases to highlight

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