Opinion Based Blog

Growing Caste-Based Inequalities in a Neo Liberal Economy

Author(s): Nischal K., Student at DDMS P Obul Reddy Public School.


The caste system is a form of social stratification peculiar to India. In the past, this traditional system divided people into four stratas based on their occupation, but over time, it has evolved into a discriminating social structure that is creating harsh inequalities. Although the Indian Constitution and subsequent government statutes made strict provisions to politically abolish the caste system, unequal access to resources continues to exist socially and economically. Up until the 1990s, the economy was largely based on the socialist model. The Preamble of the Indian constitution also included the word “Socialist.” Ensuring protection of domestic industries, maximising quotas on imports, and promoting equitable distribution of resources to alleviate poverty characterised India. The LPG reforms and shifting of power brought remarkable changes in the government. Growing privatisation of enterprises that were formerly owned by the public sector and rise in public-private-partnership ventures is a clear cut indicator of a transition towards neo-liberal economy.

Neo-Liberal Economy and its Impact

Neo-liberal economy refers to an economic system which is gradually transitioning towards a capitalism model. Promoting free markets, deregulation, and privatisation are signs indicating this transitions. The neo-liberal economy brings about significant changes in the social order. There is a division between the people that own the means of production and the labour that only provide their physical efforts. This naturally polarises society and paves the way for increased instances of inequality and discrimination. With 85% of firms operating under the unorganised sector, labour exploitation in the name of caste and forced begar is prevalent. From an economic standpoint, the poverty level was highest among ST (50.6%), followed by SC (33.3%), and OBC (27.2%). In contrast, the poverty level (besides SC, ST, and OBC among others) was the lowest at 15.6 percent.[1] This indicates a continuing presence of socio-economic discrimination.

The government of the day is evidently championing a new economic model, which is moving towards privatisation. Despite the economic repercussions of the COVID-19 pandemic (shackling income and employment), zero public sector undertakings were formed, and twenty three were privatised. [2] This can be compared with the former governments, which formed sixteen to twenty three PSUs and privatised zero to three. The efforts of the government to push forward domestic manufacturing sector cannot be ignored. The Make in India campaign has attracted foreign capital and improved the state of unemployment. However, it is high end job centric, and the unskilled labour is not under consideration. Neo-liberalism and capitalism crystallise a class based social structure, and in a country like India, it is coupled with the prejudiced caste system to further increase discrimination.

How The SC/ST (Prevention of Atrocities) Act, 1989 Brought Changes

The provisions of the Scheduled Castes and the Scheduled Tribes (Prevention of Atrocities) Act, 1989 [SC/ST Act] envisioned an Indian society which no longer relied on an ascribed status to defined advantages and opportunities. The statute aimed to deter casteism, and create an egalitarian society, which prohibited acts of indignity, humiliation, and harassment against members of the SC/ST community. Socio-economic growth was a key goal, which was achieved to a certain degree in a socialist based economy. The welfare state provided equitable distribution of resources and alleviated poverty. Class-based social mobility enabled greater social integration, and achieved status was emphasised over ascribed status. Therefore, from an economic and political standpoint, caste-based discrimintation was subdued.

The LPG Reforms of 1991

In 1991, India was shackled by a balance of payments crisis, and in an attempt to receive relief from the International Monetary Fund, the nation was required to join the World Trade Organisation and open the doors of the Indian economy. This was known as the Liberalisation, Privatisation, and Globalisation Reforms. The socialist model based restrictions levied on the economy in terms of imports, foreign investment, and public sector undertakings were by an large lifted. The affluent classes leverage this paradigm shift and multiplied their wealth, whereas the underprivileged classes suffered crisis. The government of the time was in favour of globalisation and privatisation, as it generated employment, attracted foreign investment, and increased the choices for consumers. Special Economic Zones were constructed and flexible labour reforms were introduced, simply to appeal to MNCs. Workers were openly being exploited, and the labour laws of the times were blatantly infringed. Constitutional remedies were not availed by the exploited, and this led to extensive marginalisation. Small scale, local business owners could not face the stiff competition posed by the new foreign players. They were forced to shut down their enterprises and carry out odd jobs for sustenance. This led to the creation of a vicious cycle of poverty, illiteracy, unemployment, and continued for generations. The community which was affected the most was the backward classes group. A miniscule percentage of the group, which was able to grow through education, was pushed back to their original state.

The LPG reforms prevented India from entering a steep economic crisis, improved consumer choices, and generated employment. However, it also pushed small scale producers to poverty and led to downright exploitation. This indicates that only the upper castes and wealthy classes were truly able to make the most of these economic reforms. The true transition towards a neo-liberal economy began from 1991, and caste-based discrimination returned.

Caste as a Notion

Socialism is not an ideal economic system, and the purpose of this paper, is by no means a justification of advocacy of socialist model. It hinders growth of people, limits economic development, and infringes the rights of the people. However, in India, the adoption of a neo-liberal economy is indicating a rise in casteism and harsh discrimination. There have been statements made by the apex court of the country, stating that insulting or intimidating a person on the grounds of caste was not considered a crime under the SC/ST (Prevention of Atrocities Act).[3]This is evidently against the statute. Similarly, there have been cases of institutionalised murder, massacres against the backward communities, and relentless social stigma. The growth of neo-liberalism can be attributed as one of the reasons behind this rise. From a historical perspective, the advent of capitalism brought a social order of haves and have nots. This system polarised people for centuries. In India, where caste as a form of social stratification already exists, the opportunities for discrimination are only exacerbated when lower caste is coupled with lower class. India has always been recognised as a mixed economy, but this transition towards capitalism must be met with simultaneous investment in providing equal education, skill development, and healthcare facilities to the lower class communities. Through this, a level playing field is created, and every individual, regardless of his/her caste, has equal opportunities to grow as an industrialist. Without effective measure, the upper caste, affluent classes will continue to get richer, and the SC/ST communities will continue to grow poorer.


Caste is a notion, and it lacks physical structure. This system is deeply embedded in the minds of the people, but it can easily be struck down as well. Despite legal provisions existing to prevent discrimination and inequalities, it will never cease to exist in the social sphere. India is en route to becoming the 2nd largest economy in a few years, but in per capita measures, we will always be lagging behind. Creating equal conditions for everyone to grow is the need of the hour.


[1] Wahid Bhat, Poverty level is highest among SC, ST, and OBCs in India, Ground Report (Nov. 24, 2022), https://groundreport.in/poverty-level-is-highest-among-sc-st-and-obcs-in-india.

[2] ANI, PM Modi didn’t create single PSU, privatised 23: Congress in RS, The Times of India (Feb. 3, 2022), https://timesofindia.indiatimes.com/india/pm-modi-didnt-create-single-psu-privatised-23-congress-in-rs/articleshow/89321217.cms.

[3] Debayan Roy, Insulting, abusing SC/ST person not an offence under SC/ST Act unless victim abused on account of caste: Supreme Court, Bar and Bench – Indian Legal News (Nov. 5, 2020), https://www.barandbench.com/news/litigation/insulting-abusing-scst-person-not-an-offence-under-scst-act-unless-victim-abused-on-account-of-caste-supreme-court.

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