Is Your Business Experiencing the Hindu Rate of Growth?


There has been a lot of debate on the term “Hindu Rate of Growth” which describes the slowdown in the Indian economy. Many people find this new term offensive.

But the term is not new. It was coined by Professor Rajkrishna in 1978 to describe India’s satisfaction with the slow rate of GDP growth – around 3.5% –  for the thirty years between 1950 and 1980. India lagged while competition raced ahead, something that has haunted us ever since.

Nehru did not want government bodies to function as corporate entities. Yet, many businesses commit the same blunders that the Indian government committed. The result is that they suffer from the Hindu Rate of Growth. They grow slowly and painfully while competition moves ahead of them.

As a leader, are you committing these mistakes that are getting in the way of your company’s progress?

Mistake #1. Increasing restrictions and bottlenecks.

The License Raj was a complex system of licenses, rules and regulations, and red tape. It forced private companies to satisfy over 80 government agencies in order to get permission to produce something.

These bottlenecks made it impossible for goods to be produced and sold quickly, which is evident from how long we had to wait to get a landline connection or buy a Hindustan Ambassador.

When leaders control everything, take longer to make decisions, and micro-manage, people feel disengaged. Absenteeism increases and motivation declines, leading to a pileup in work and slowdown in growth.

It’s not just important to make quick decisions, but also to empower people to make decisions by themselves. Such an environment is fun to work in and makes you reach goals faster.

Mistake #2. Punishing job creators and rewarding bureaucrats.

The Nehru family was anti-profit and didn’t want the government to be held accountable for its output. To confirm its stand, the government put people with no knowledge about business and economics in bureaucratic positions.

These bureaucrats decided whether businesses got permission to set up industries in India, which led to uncontrolled corruption. India also became the only country to punish businesses that exceeded their production license. This is why many businessmen went to Hong Kong and other countries that welcomed them and took the jobs with them.

When performers find it difficult to work, they feel suffocated and leave for companies that appreciate their worth. The ones who stay are the lazy ones who create a culture where nobody takes ownership and nothing gets done.

Identify the performers of your company and give them incentives to stay. Fire the ones who lack the motivation to work. Otherwise, it won’t take long for your business to get stuck in the Hindu Rate of Growth.

Mistake #3. Lack of modernization.

For most of its years, India refused to adopt technology to modernize its ways of working. Instead, it stayed dependent on foreign nations even during floods and famines and was looked down upon by the rest of the world.

Only Lal Bahadur Shastri and T. Kurien succeeded in introducing the Green and White Revolution respectively in India. The rest struggled and the economy lagged while the population exploded.

Businesses that don’t modernize themselves by adopting technology like CRM tools and other software, cannot keep up with changing customer needs. As a result, they lag behind and can do nothing to arrest their decline.

Don’t stay stuck in the comfort zone. Evolve along with the environment to stay relevant.

Mistake #4. Not keeping up with the competition.

In the 1960s, China and Japan focused on manufacturing and fueling the growth of companies. India, on the other hand, expanded its number of universities rapidly. In the process, we created a framework where examinations were the only metric to measure merit. And while our youth scored good marks in exams, they were ineffective in the corporate world.

India focused so strongly on education that we forgot what education really means – to empower people with real-life skills and the ability to handle failure. Like that, companies that build a tunnel vision on certain aspects lose sight of the world around them and get beaten by the competition.

Summing Up

Companies that live in the past will not make it to the future. The world is evolving. It’s important to keep learning and evolving with it.

This doesn’t mean that only companies that commit the above mistakes are vulnerable and should pay attention to their processes and work culture.

There is always scope for growth. Every leader can peep into his company, conduct an honest analysis of how they’re doing and what can improve. We do the same every day and work towards ensuring that we disrupt ourselves rather than letting others disrupt us.

Constant improvement is the only way to thrive today and in the future.

Limesh Parekh

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