Re-engineering the development state

Since Independence, India’s economic growth has steadily accelerated, albeit from a low level, with moderating inflation rate. Breaking free from the colonial stagnation, domestic output grew annually at around three-and-a-half per cent during the first three decades — pejoratively called the “Hindu growth rate”. With a moderate balance-of-payment deficit and modest share of external debt to total debt, as ratios of GDP, India — at first glance — witnessed “virtuous growth” in deepening democracy. Yet, invoking Kuznets’ hypothesis, optimists may argue that India has a fighting chance to escape the extremes of wealth and deprivation to forge inclusive growth — with rapid growth providing tax revenue for social development.