On GDP, Which Period in Independent India’s History Was Rahul Gandhi Talking About?

In his interaction with students in Gujarat on Tuesday, October 10, Congress vice president Rahul Gandhi said that, using the old method of GDP calculation, “We grew up with a GDP growth of 9 per cent, today it is 4 per cent.”

One is, first of all, curious as to which period in post-Independence Indian history Rahul Gandhi was talking about since, being born in 1970, he would have been growing up in the 1970s and 1980s. Surely not the same period in time when the students he was interacting with are/were growing up?

But on a more serious note, how sound is this claim that India today is growing at 4% and the implication that there was a prolonged period of 9% growth? For Rahul Gandhi’s benefit, and our own, let us look at India’s historical GDP figures at constant prices — from 1951 till date.

Figure 1

As we can see in Figure 1 above, the decades when Rahul Gandhi himself was presumably growing up, India’s GDP growth rates, as per constant 2004-05 prices, or the old method, could hit as low as -5.2. It reached 9% only once, in 1975-76. The next time it breached 9% was in 1988-89, but these were still the time before liberalisation and India was in economic isolation.

Since the Congress had been in power for most of this time, barring the 1977-80 “interregnum”, what we are left with is what used to be derided as India’s socialist rate of growth, for which it is difficult to see any entity responsible apart from the Congress, especially since these were days of a planned state-run economy. The chart, indeed, speaks for itself. Again, after the 1989-91 interruption, the Congress returned to power and continued till 1996 before coming back in 2004.

From 2005 to 2008, we see growth above 9. But the Congress-led UPA government had inherited a very healthy and growing economy from its predecessor – the Vajpayee administration. It was a very good time for the global economy as a whole. What the Congress and UPA did with that economy is visible again from the chart, with growth hitting 4.5, ironically, in the UPA’s last full year in power – in 2012-13. This, by the way, was calculation as per the old method. So which years of growing up with 9% growth is Rahul Gandhi actually talking about?

After the change in the base year prices, the last half-decade shows the following growth.

Figure 2

Whether we use the “old method” or new, clearly the growth rate of GDP since the change of government in mid-2014 has been higher than that in the last years of its predecessor. The fact is that the slower growth in Q1 of 2017-18 stands at 5.7%, with every forecast and estimate — showing economic activity picking up and a higher rate returning from Q2.

Be that as it may, contrary to what Rahul Gandhi claims, there never was a prolonged period of 9% growth in Indian history. In fact, there have been only 5 years since 1951 in which GDP has grown at 9 or above. Nor has India slumped to abysmal GDP growth rates for even a single quarter since Gandhi’s party left office. As a matter of fact, the legacy bequeathed by Gandhi’s Congress to the next government was the genuinely near 4% growth. And having inherited that, for each full four quarters or fiscal so far, the economy has done much better than the state in which it was left by May 2014.