How Identity Politics Can Burn Viksit Bharat

The Wire

22-07-2025

Viksit Bharat envisages a $30 trillion economy by 2047. India boasts of a younger demographic, a thriving tech ecosystem, and growing global influence. However, one internal factor may well impede the economic growth dreams: the creeping dominance of exclusionary politics rooted in Hindutva ideology.
Majoritarianism is not critical for economic competitiveness; but inclusivity, talent mobility, and social trust are. From west to north and east, India is rife with slogans that embolden identity over law, impunity over accountability. What was once fringe rhetoric has become mainstream political optics. This cultural normalisation of religious supremacy mimics Ku Klux Klan. Without social stability, economic progress is unlikely.
Communal riots have a corrosive effect on the economy
Is the ideology at odds with enterprise? Developmental economists like Jayati Ghosh confirms that communal riots, mostly masquerading for political parties, have a corrosive effect on economy of the nation – Not just the human toll, but the displacement of masses, the crash of real estate prices, and the disintegration of social networks that are essential for trade and unorganised sector.
Historical evidence is there to show how episodes of targeted violence have resulted in minority families selling property well below market value and migrating under duress. Such erosion of livelihood and security hampers consumption, impacts local economies, and aggravates system inefficiency.
The unorganised sector that employs over 90% of India's workforce is particularly vulnerable. Muslims and dalits, together constituting nearly 40% of the population, are heavily concentrated in the informal sector. Economic boycotts, discrimination in daily transactions, and targeted propaganda do not just marginalise individuals; but destabilise interconnected markets, from supply chains to consumer demand.
The informal and formal economies are not entirely distinct; they are interdependent. Marginalising one community reverberates across the whole system.
Religious identity continues to affect access to housing (both buying and rental), loans, and employment. In most cities today, qualified professionals report being denied rentals based solely on their names. Individuals quite often resort to masking their identity just to secure accommodation. These barriers are bad for labour mobility, which is key for urban productivity and economic growth.
Systemic bias can cause big damage in the financial sector. Reports of cases where business loan applications are rejected despite sufficient collateral, credit rating and proper documentation, are on the rise over the last decade – all because of the individuals' names! When access to capital is contingent on religion rather than merit or risk, the institutions destroy trust and credibility for entrepreneurs.
A more sinister danger is the growing ecosystem of fake news, which the World Economic Forum (WEF) says will be India's No.1 risk, and hate speech and slurs targeting the minorities – ranging from 'love jihad' to 'redi jihad' and 'civil services jihad.' These narratives, generated with little consequence and propagated with bots at low costs create an ambience of hostility and suspicion.
This affects inclusive hiring and educational ambition, and invite vigilante behaviour in false morals and business. Public calls for economic boycotts and even genocide have surfaced with increasing frequency in some parts of the country, often in the presence of elected officials, and without official rebuke.
This isn't just a social crisis; it's an economic one. Global investors scrutinise political stability, institutional integrity, and human rights when allocating capital. Capital flight from India is also on the rise in the last few years.
ESG-driven investment is increasingly risk-averse to countries perceived as polarising or intolerant. From what is hailed as the largest democracy and pluralistic powerhouse, India is at risk to be labelled as 'fragile democracy' if such trends are not curtailed.
In India's quest to compete with China, the entire ideology could become the biggest hurdle. China's economic model may be politically repressive, but has remained focused on unified economic integration. Its centralised planning never allowed ethnic or religious identity to override industrial or fiscal priorities.
Ethnic minorities are aggressively incorporated, albeit through coercive means, into the workforce and national production chains. Paradoxically, India's path is one of democratic fragmentation and economic dislocation driven by ideological assertiveness.
While China invests in industrial zones and technological corridors, India is spending political capital in policing love, food, faith, and dress. The comparison is less about governance styles and more about strategic coherence. One is prioritising growth; the other is at risk of prioritising grievance.
The $30 trillion future won't happen by turning diversity into debris
India's economic growth has potential: The digital revolution, demographic dividend, and rising middle class. But to make it a reality, the nation must reject the false dichotomy between faith and development. No modern economy has risen to global leadership by alienating a significant segment of its population.
The following bold corrective steps are needed to ensure that economic ambition outpaces ideological regression:
Separate politics from prejudice: Enforce zero tolerance for hate speech and communal incitement, more so by public figures. Balance free speech with the rule of law.
Support minority entrepreneurship: Enhance access to capital through special-purpose financial instruments targeted at under-represented communities.
Include inclusion in policy: Mandate discrimination a cognisable offence in housing, education, and lending. Use ESG frameworks to assess religious diversity and equity in private and public institutions.
Incentivise cosmopolitanism: Cities must reward mixed-use, diverse neighbourhoods and penalise exclusionary real estate 'society' practices. Migration and urbanisation flourish where identity is irrelevant.
Restore institutional neutrality: From universities to regulatory agencies, merit must displace dogma. Institutions should serve the republic, not ideology.
Educate against extremism: Invest in public education campaigns and curriculum reform to counter fake narratives and encourage mainstream media to report against hate and false propaganda, and publish articles like this one.
The $30 trillion future won't happen by turning diversity into debris. No nation has ever hate-marched its way to high GDP. You can't run a 21 st century economy on 12 th century grudges. If ideology keeps steering the wheel, we won't just miss the bus; we'll be under it. Growth needs unity, not uniformity. Time to choose: ambition, or annihilation.