DP4371 From 'Hindu Growth' to Productivity Surge: The Mystery of the Indian Growth Transition

Author(s): Dani Rodrik, Arvind Subramanian
Publication Date: April 2004
Keyword(s): economic growth, india, liberalization
JEL(s): O40, O50
Programme Areas: International Trade and Regional Economics
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=4371

Most conventional accounts of India?s recent economic performance associate the pick-up in economic growth with the liberalization of 1991. This Paper demonstrates that the transition to high growth occurred around 1980, a full decade before economic liberalization. We investigate a number of hypotheses about the causes of this growth ? favourable external environment, fiscal stimulus, trade liberalization, internal liberalization, the green revolution, public investment ? and find them wanting. We argue that growth was triggered by an attitudinal shift on the part of the national government towards a pro-business (as opposed to pro-liberalization) approach. We provide some evidence that is consistent with this argument.