India’s Growth Experience

Perceptions of India’s economic growth are shifting. In the first three decades after independence in 1947, the economy was known for its steady “Hindu” rate of growth of 3.5 percent. It is now apparent that India moved onto a higher growth trajectory in the 1980s, and that this underlying momentum lasted through the 1990s, notwithstanding some deceleration at the end of the decade. As many other fast-growing economies succumbed to financial crisis in the 1980s and the 1990s, the steadiness of India’s growth performance began to attract greater attention abroad, as did India’s reform program launched in 1991. In the eyes of many observers, by the end of the 1990s India had moved to being a “six percent growth” economy—not a “miracle” perhaps, but certainly respectable. This steady growth has produced predictable consequences. Sales of 10,000 motorcycles a day and more than one million new mobile phone subscriptions each month are some reflections of this momentum (Waldman (2003)). After fierce academic debate, there is also consensus that significant progress has been made in poverty reduction, but without a significant change in the personal distribution of income.2