Sustainability of Hinduism and the Hindu Rate of Growth as the Global

Growth RateBy: Surendra K. Kaushik, Professor of

Finance, Lubin School of Business, Pace University (skaushik@pace.edu) & Founder of Mrs. Helena Kaushik Women's College in

India (www.helenakaushik.org)

Abstract• This paper argues that in the long run GDP annual growth rates will most likely regress • back to the trend line in the US and India in the 3 to 4 percent range. There is a • remarkable stability and similarity of growth rates in the two countries over long • periods. In India it has been derogatorily called the Hindu Rate of Growth. Presumably • higher rates are associated with other religions and value systems. The evidence, • however, finds the same low rate in the US. Growth rates in other advanced countries and

Europe are about the same as well. Higher rates would be desirable and possible • with new human capital and technologies. The ten percent a year rate in China from • 1980 to 2010 is unlikely in the future. The Hindu Rate of Growth which is the same as • the US rate of growth is most likely to be sustainable in the future as in the past. The stability is

explained in terms of cultural characteristics specifically associated with • Vedic Hinduism. United States shares some characteristics of an open global culture • with India. Therefore what is sustainable are the common US and India rates of global • growth where India’s spirituality and yoga are taking root in the US and American • scientific research and innovation are enriching Indian trading and entrepreneurship • into industrial and materialistic society.

Sustainability of Hindu Rate of Growth

• The Hindu Rate of Growth (HRG) is a controversial and derogatory expression used to refer to the low annual growth rate of the socialist economy of India before 1991, which was around 3.5 percent from 1950s to 1980s, while per capita income growth averaged 1.3% (Chart 3).The average US nominal GDP growth rate at that time was 6.2 percent while the real GDP growth rate, at 2005 prices, was 3.4 percent a year from 1930 to 2010 (Chart 1). India’s growth rate for the most recent thirty year short-term period from 1980 to 2010 by comparison is 6.11 percent a year (Chart 2). Perhaps it is not a coincidence that the US rate of growth over the first two and a quarter centuries since 1776 is essentially the same. It is a remarkable similarity of growth rates.

United States Growth Rate

India’s Growth Rate

United States Growth Rate

India’s Recent Growth Rate

Hindu Value Drivers of Hindu Growth Rate

• There are a number of empirical truths about Hinduism that demonstrate a steady and sustainable rate of growth. Some of these are: (i) global perspective in thinking (ii) open and welcoming migratory culture, (iii) ageless view of time and space, (iv) inquisitive and open mind and knowledge-based enterprises, (v) an accepting, assimilating and tolerant society, (vi) reciprocity and exchange based on specialization, (vii) expanding view of self, (viii) acceptance of controlled aggression (ix) greater importance on knowledge based enterprises and (x) satisfaction from balance between the spiritual, mental and physical lives.

Globalization and Growth Rate• The paradigm of openness inside the economy and in its

trade, investments, and engagement with the rest of the world is building external confidence in the Indian economy (Denison 1967, Kaushik 1996). India is marching forward consistent with its long and successful history with the underpinnings provided by the Vedic system. Economic liberalization, including industrial deregulation, privatization of state-owned enterprises and reduced controls on foreign trade and investment that began in the 1991 (Kaushik and Silk 1994, Kaushik 1997, and Kaushik and Santicchia 1999) has helped accelerate the country's growth in the short term to more than 6% per year since 1980 (Chart 2).

U.S. Long-term Growth Rate• Consistent with the analysis of the sustainability

of growth at 3 to 4 percent a year, or the Hindu Rate of Growth presented above, the U.S. economy grew by an average of 3.8% from 1946 to 1973, while real median household income surged 55% (or 1.6% a year). The economy since 1973, however, has been characterized by both slower growth (averaging 2.7%) and nearly stagnant living standards, with household incomes increasing by 10%, or only 0.3% annually.

Recent Growth in India and China

Recent Growth in China and India

Conclusion• Building up of human capital and operation of the market forces

with support from social, political and business institutions are the key characteristics developed for economic progress in India in its long and sustainable journey as part of the global family.

• Our discussion should not be interpreted to imply that high rates of growth currently achieved in India are undesirable or should be reduced. A 6 percent average growth rate for the next two to three decades is entirely possible towards a 4 percent rate for yet a longer period of several decades as argued in this paper.

• The long-term key driver of India’s continuity and sustainability is the Vedic foundation on which its value systems and culture are based. The United States has many of the same cultural characteristics of openness, assimilation, broad view, and long-term perspective in addition to the focus on science and education, innovation and entrepreneurship. The proximity of long-term growth rates in India and the US is impressive.