What is Hindu growth rate? On which former RBI governor Raghuram Rajan himself came under attack from SBI

Raghuram Rajan - India TV Paisa
Photo: PTI Raghuram Rajan

Raghuram Rajan, former governor of the Reserve Bank of India, remains in the news a lot due to his sharp statements. But recently Rajan equated India’s current growth rate with ‘Hindu growth rate’. What made Rajan make this statement, the banks working under him themselves started besieging him. A report by SBI Research has dismissed former RBI governor Raghuram Rajan’s statement that India’s current growth rate is very close to the ‘Hindu growth rate’ as ‘biased, immature and ill-conceived’.

SBI Research’s report ‘Ecowrap’ says that there is no basis in such statements after looking at the recent figures of the country’s gross domestic product (GDP) growth rate and available data on savings and investment. According to this report, “interpreting GDP growth on the basis of quarterly figures is like trying to spread confusion hiding the truth.”

what is hindu growth rate

The term ‘Hindu growth rate’ was used for India’s average growth rate of 3.5 percent in the decade 1950–80. Indian economist Raj Krishna first used the term ‘Hindu growth rate’ in 1978. This claim of Rajan has been denied in the report released by the research team of the country’s largest bank SBI. The report says, “Any serious interpretation on the basis of quarterly figures should be avoided. We find such arguments ‘biased, immature and ill-conceived’ considering the recent data on GDP growth and the savings and investment scenario.

what did rajan say

Former Reserve Bank of India (RBI) Governor Raghuram Rajan said in an interview two days ago that the GDP growth figures are indicating that it is coming dangerously close to the Hindu growth rate. He attributed this to factors such as declining private investment, high interest rates and slowing global growth.

the numbers tell more

The report has been prepared by Soumya Kanti Ghosh, Group Chief Economic Advisor, SBI. Ghosh has said that the investment and savings figures of the past decades underline many interesting aspects.

  • Gross capital formation (GCF) by the government increased to 11.8 per cent in the financial year 2021-22 as against 10.7 per cent in 2020-21.
  • Private sector investment was also affected and it increased from 10 per cent to 10.8 per cent during this period.
  • Overall gross capital formation is estimated to increase to 32 per cent in the financial year 2022-23. It was 30 per cent in the last financial year and 29 per cent before that.
  • Gross savings also increased to 30 per cent in the financial year 2021-22 from 29 per cent a year earlier.
  • It is estimated to be more than 31 percent in the current financial year, which will be the highest level after 2018-19.
  • The report says that the potential growth rate of the Indian economy will now be lower than before.
  • The country’s GDP growth rate came down to 4.4 per cent in the third quarter of the current financial year. The NSO has predicted a growth rate of seven per cent in the current financial year.

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