Inequality and Capitalism in India

AuthorPranab Bardhan
DOIhttp://doi.org/10.1177/23210230221135850
Published date01 December 2022
Date01 December 2022
Subject MatterOriginal Articles
Inequality and Capitalism in India
Pranab Bardhan1
Abstract
Capitalism is usually associated with inequality. The Indian variant of capitalism creates its specific
structure of inequality. The recent trends of capital concentration in India, facilitated by the political
decision-making, shape particular patterns of the rise in inequalities. The nature of capitalism in India is
linked to the nature of capital concentration and the low bargaining power of the labour. The article
discusses these links. The article discusses the recent attempts at social and political legitimization of
the prevailing kind of capitalism under the current political regime. The focus is on long-term issues, and
instead of a detailed account, the attempt is to paint a picture with a very broad brush.
Keywords
Bargaining power, capital concentration, capitalism, inequality, labour
Capitalism is usually associated with inequality. But the Indian variant has some particular features of
both inequality and capitalism that require some elaboration. Also, the process of legitimization of both
in the society and the polity is culture-specific and hence somewhat different in India than elsewhere. In
this article, after briefly referring to the anatomy of Indian inequality, we’ll dwell on capital concentra-
tion and the low bargaining power of even formal-sector labour (not to speak of the vast masses of
informal labour), and link these to the nature of capitalism in India. At the end we shall discuss the recent
attempts at social and political legitimization of the prevailing kind of capitalism under the current politi-
cal regime. The focus will be on long-term issues, and instead of a detailed account, our attempt will be
to paint a picture with a very broad brush.
Contrary to the impression in some quarters, India is one of the most unequal countries in the world.
This refers not just to the deep social inequality in terms of caste and other social stratification, for which
India has been historically notorious—if anything, over the last few decades social inequality, while still
high, has probably declined in aggregate, with some perceptible improvement for some hitherto subor-
dinate groups. But we are primarily referring now to economic inequality.
Unfortunately, India does not officially collect data on income distribution. But official data do exist
on wealth distribution (wealth includes land, real estate, livestock, jewellery and financial holdings).
These data show that inequality of wealth holding by households has been very high and increasing in
India over the last few decades. The Gini coefficient of inequality of household distribution of wealth in
India is now almost reaching the Latin American range. The World Inequality Report suggests that the
Original Article
1 University of California, Berkeley, CA, USA
Corresponding author:
Pranab Bardhan, University of California, Berkeley, CA 94720, USA.
E-mail: bardhan@econ.berkeley.edu
Studies in Indian Politics
10(2) 176–184, 2022
© 2022 Lokniti, Centre for the
Study of Developing Societies
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DOI: 10.1177/23210230221135850
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