India Runs on Caste, Not Capital: The Hidden Engine of Our Economy
- info scout
- Aug 17
- 7 min read
I’m told India runs on hustle. On founders and funding rounds. On “merit,” market signals, and the invisible hand.
But step behind the glass façades and glossy decks, and the engine humming underneath is not venture capital — it’s caste.
It decides who gets land and credit, whose résumé gets a call, who cleans the sewers, and who gets to “inherit” managerial comfort or entrepreneurial safety nets.
We pretend it’s about brilliance and grit. It is, far too often, about birth.
This isn’t a rant that shrugs off data. It’s the opposite — a citizen’s inventory of facts most of us intuitively know but are trained not to say aloud.
We’ll break it down into five core realities:
How caste maps onto wealth and land
How it shapes jobs and wages
The hidden “network” effects of caste
Where policy helped — and where it hardened hierarchies
What it would take to build an economy that truly runs on talent
“The Caste System is not merely a division of labour. It is also a division of labourers.”— B. R. Ambedkar, Annihilation of Caste
Meritocracy, Myth and Marketing
Let’s begin with the fairy tale we tell ourselves: markets reward skill; competition washes away prejudice; growth lifts all boats. If that were true, India’s three-decade GDP surge should have broken the caste chains. Instead, caste remains stubbornly persistent—sometimes softened at the edges, but never truly dissolved.
A. Growth Without Equality
The State of Working India (SWI) reports from Azim Premji University dismantle the myth:
While regular wage employment has increased over time, caste-linked disparities in who gets what job and for how much persist. Social identity continues to shape employment outcomes even amid economic restructuring *( Azim Premji University.)
Earnings gaps are telling: Scheduled Castes and Scheduled Tribes (SC/ST) earn just 76% of what others earn in salaried work—on par with some gender and religious gaps. The intersection of caste and gender is brutally unequal: SC/ST women earn just 54% of what upper-caste women earn *( azimpremjiuniversity.edu.in. )
Growth hasn’t liberated caste. At best, it blurred the boundaries a little; the structure remains intact.
B. Field Experiments Humble Us
A famous résumé audit in Delhi’s IT and call-center sectors tested whether caste signals matter in hiring:
Thousands of CVs were sent with caste-identifying surnames to 371 job postings.
The headline: “no overall evidence of discrimination.”But pause here: the very fact that this test was needed—that someone suspected bias in modern sectors like tech—should embarrass us *(IDEAS/RePEc.)
And the follow-up point is key: while this particular experiment found no strong average discrimination, the broader labor data and repeated patterns suggest identity still influences outcomes through hiring networks, informal referrals, and opportunity silos.
C. Caste and Class: The Unbreakable Link
If meritocracy reigned, we’d see educational attainment transcending caste. But the data says otherwise:
A 2023 analysis within the SWI ecosystem tracked caste-class mobility during high-growth years. The result? More continuity than rupture. The relationship between caste and class remains substantial—despite education *(Azim Premji University+1.)
Whether it’s job type, wages, or economic mobility, caste identity continues to travel with class status, as though tradition were coded into outcomes.
This isn’t meritocracy—it’s capitalism wearing caste as an underlayer, not a relic.
Who Owns India? Wealth, Capital, and the Billionaire Raj 2.0
A. Wealth is power crystallised. So who holds it?
According to the World Inequality Lab, by 2022–23 India’s top 1% captured 22.6% of all income and 40.1% of all wealth—the highest levels on record, unmatched since colonial times and among the highest globally. WikipediaReutersTIME
Oxfam India’s Survival of the Richest: The India Story concurs: over 40% of the country’s total wealth rests in the hands of the top 1%. Drishti IASRural India Online
This is not a rounding error—it’s an architecture.
B. Not Inequality—But Stratified Inequality
Folks often push back with: “But that’s inequality, not caste.”Fair point—but inequality is an outcome, caste is one of the key pipelines feeding it. When markets expand on scaffolding built from generations of inherited privilege, old hierarchies harden into new balance sheets.
A landmark study by Bharti, Chancel, Piketty, and Somanchi—part of the World Inequality Lab’s work—traces this arc starkly. Since the early 2000s, India’s inequality has spiked rapidly. The top 1%’s command over income and wealth is now worse than during the British Raj. The Indian ExpressWID - World Inequality Database
C. Caste Isn’t Culture—It’s Capital
What’s the connection? It’s not about belief systems—it’s about ownership: who has land, who controls enterprises, who can collateralize assets for loans. That is where caste isn’t cultural—it becomes financial.
Consider this:
A staggering 88.4% of billionaire wealth is concentrated among upper castes. Meanwhile, Scheduled Tribes have zero representation among Indian billionaires. www.ndtv.com
According to the AIDIS 2018–19, upper castes hold nearly 55% of national wealth, far above their population share—a reflection not of merit, but of structural exclusion. www.ndtv.com
Why It Matters
When wealth—and access to wealth—is inherited through caste networks, merit becomes façade. Boardrooms, land deals, credit access, venture capital—each path forks at a caste-coded junction.
Bold truth: Caste isn’t fading. It’s mutating. And the Billionaire Raj 2.0 is caste’s most modern reincarnation.
III. Land Is the First Capital—And Its Map Is Caste
In agrarian India, land isn’t sentimental—it’s collateral, insurance, bargaining power, and a pipeline into local credit and politics. Look at the Agriculture Census 2015–16, disaggregated by social groups (SC, ST, Others), and the inequalities stare back at you:
SC and ST households are over-represented among marginal holdings (plots below 1 hectare) and severely under-represented among larger holdings, while “Others” dominate medium-to-large farm categories
Average landholding sizes tell the same story: across all categories, “Others” average 1.08 hectares, while SC households average 0.78 ha, and ST households average just 1.41 ha when including larger-size classes—but drop sharply in marginal and small segments.
These numbers might seem like spreadsheets—but they’re a map of caste inequality. Bigger, secure plots mean higher surplus, cash flows, and easier access to formal finance. Smaller, fragmented plots lock you out before the business plan hits your desk.
Beyond Fields: Income Gaps Reflect Casteed Land Access
Outside farms, caste also determines income—and therefore financial breathing space:
The NABARD NAFIS 2016–17 reported that average rural household incomes were around ₹8,059/month NABARD.
But by 2021–22, household income rose nominally to ₹12,698/month—a 57.6% jump—but this is still an average; SC/ST/OBC households earn less than “Others”, and continue to face tighter margins.
Add the cost pressures: expenditures have risen faster than incomes; debt remains high; and physical asset dependence remains dominant—over 80% of portfolio is non-financial assets like land—making financial resilience caste-sensitive.
Putting It Together: Pre-Loaded Inequality Before “Merit” Enters
Here’s the brutal truth: land → income → credit → opportunity forms a chain—and caste maps every link. Let’s break it down:
Land inequality sets the baseline—SC/ST households begin with tiny, low-value holdings.
Income inequality follows—less surplus means lower savings, investment, and risk buffer.
Credit remains restricted—with little collateral, these households can't access formal finance on fair terms.
Opportunity is pre-determined—“merit” becomes a fantasy when the system doesn’t let most people start with equal footing.
IV. Labour Markets & Caste Segregation
In India, employment isn’t just about skill—it’s about who you are. Markets don’t erase identity; they encode it. Even as GDP grows, job types, wages, and career mobility remain caste-coded.
A. The Persistence of Segregation
The State of Working India (SWI) 2023 reports that caste identity continues to dictate job quality and pay:
SC/ST and OBC workers are over-represented in informal, casual, and low-paid jobs, while upper-caste workers dominate regular salaried positions and managerial roles (SWI 2023, Azim Premji University).
Even among regular wage earners, earnings gaps persist: SC/ST households earn ~76% of what others earn, while OBC households earn ~88% of the “Others” group (SWI 2023 Executive Summary).
The data shows mere marginal improvement over decades, not transformation. Growth hasn’t dismantled caste hierarchies—it has coated them in corporate jargon.
B. Field Experiments Confirm Bias
Résumé-audit experiments, even in modern sectors like IT and call centers, illustrate how identity affects opportunity:
Identical CVs with upper-caste surnames received more callbacks than those signaling SC/ST identities.
Results varied by context, but the need to test for caste bias at all exposes the myth of meritocracy (Sendhil Mullainathan et al., 2019).
This isn’t anecdotal—structural bias persists, subtly embedded in hiring networks, referrals, and “culture fit” filters.
C. Wage Gaps and Occupational Lock-In
Even with similar education:
SC/ST and OBC workers are funneled into lower-paying occupations, often with less stability and social protection.
Upper-caste networks enable job referrals, managerial pipelines, and access to capital—all invisible advantages that amplify long-term wealth accumulation.
It’s a vicious cycle: caste → occupation → wage → savings → asset accumulation → opportunity.
D. Implications
The labour market isn’t just unfair; it’s predictive:
Caste pre-selects winners and losers, long before performance matters.
Policies like reservations help, but only partially, mainly in formal sectors.
Informal sectors—where two-thirds of India’s workforce still operate—remain untouched by regulatory interventions, reinforcing historical disadvantage.
Fact: Identity travels with class. Merit may exist, but it rarely crosses the caste barrier unassisted.
Talking about meritocracy without dismantling caste is fantasy. GDP growth and start-up hype mask the truth: caste decides opportunity long before talent can act.
“Caste is not just a division of labourers; it is a division of opportunity.” — Adapted from B.R. Ambedkar
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