The gross domestic product
The gross domestic product is a measure of the productivity of a country in terms of the goods and services produced. This is generally understood to be a more solid measure of the economic strength than stock price indices. It is interesting to see how it has varied in the near past. The short answer is that national politics does not seem to correlate with the growth rate, but wars do.
The World Bank provides data on the year by year growth of national economies. The figure above summarizes this data, both as rate, and the GDP relative to a base taken in 1980. Also marked in purple are the years of general elections. The most noticeable feature of India’s growth is the steady increase over the last thirty years. In 2012 the actual value of the GDP stood at about INR 52.4 trillion. This is relatively small, being just over 1 rupee per capita per day. Presumably an increase in GDP will require more industrial production, more efficiency in farm production, and more automation all around.
The next most interesting feature is the almost complete independence of the growth rate and politics. The years with Rajiv Gandhi as prime minister saw steady growth of around 5%, and a single spike of nearly 10%. Then there was an incredible dip in 1991, which people older than 30 may remember. The economy stabilized again during the Narasimha Rao government. Contrary to the wisdom from TV pundits, the pace of growth actually increased during the following unstable governments, and reached 8.5% in 1999. Recall that this was a year of utter instability, when the Vajpayee government was repeatedly destabilized by Jayalalitha. The economy fell back to around 5% during the first few years of the NDA government, and did not take off until past the middle of its term. The UPA 1 government saw the longest period of high stable growth. Subsequently, the global economic uncertainty has been reflected in India’s growth rate, except for a single year (2010) in which the pace of growth was the highest ever recorded in India.
For the record, RBI’s published data indicates that the average growth rate before 1980 was approximately 3.9%, and since then has been about 5.6%. It could be that the trend has accelerated again very recently. This is shown in the figure above. Economic slowdowns are seen as the economy falling below the trend lines. This is clearly so in 1991. But note also the tremendous slowing of the economy after the 1965 and 1972 wars.