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      Question

      In the pre-1991 Indian economy, the “Hindu rate of

      growth” primarily reflected:
      A A fiscal policy focused on austerity Correct Answer Incorrect Answer
      B Rapid industrialization under the Mahalanobis model Correct Answer Incorrect Answer
      C Chronic inefficiencies due to import substitution and heavy regulation Correct Answer Incorrect Answer
      D Excessive dependence on foreign capital inflows Correct Answer Incorrect Answer
      E Large agricultural surpluses depressing prices Correct Answer Incorrect Answer

      Solution

      • The term “Hindu rate of growth” (coined by Raj Krishna) referred to low GDP growth of about 3.5% from the 1950s-80s. • Causes included license-permit-quota controls, protectionism, and state-led capital allocation that discouraged productivity and competition. • Liberalization in the 1990s broke this structural stagnation.

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