Structural Breaks in India’s Growth

By Ambrish Dongre and Neeraj Hatekar
Economic & Political Weekly, 2 April 2005

How significant was the shift in the economic growth performance that occurred in the 1950s, relative to the shift that is supposed to have occurred in the 1980s? If one were to identify the single most significant break date in India?s growth performance, does it turn out to be 1951-52 or 1980-81 or some such year in the post-1980s? The hypothesis in this paper is that the single most important trend break in GDP growth is to be found not in the 1980s, as the existing literature claims, but in the early 1950s. This is not because the performance of the post-1950s period was exceptional in any way, but because the performance before the 1950s was exceptionally poor. Nehruvian socialism looks dismal if seen only in the context of opportunities that were missed. If seen in the context of the actual economic performance preceding the years 1950-1980, the achievements do not seem so bleak.