Assessing Social Justice in the Indian Economy: Progress and Shortcomings

India’s economic journey since independence presents a paradox. The nation has achieved remarkable economic growth, yet millions remain trapped in poverty and inequality. The promise of social justice-where every citizen benefits from development-remains partially fulfilled. Understanding both the progress and shortcomings helps clarify why Gandhian economic thought, with its emphasis on equity and rural development, remains relevant today.

Economic growth: from the Hindu rate to global recognition 🔗

India’s economic transformation has been substantial. Between 1950 and 1964, annual GDP growth averaged about 4 percent, a marked improvement from the roughly 1 percent recorded during colonial rule. The decades before liberalization saw what was often called the “Hindu rate of growth”-averaging about 3.5 percent annually from 1951 to 1980. However, the post-1991 liberalization era witnessed a dramatic acceleration, with growth rates reaching over 9 percent in the mid-2000s.

India’s GDP increased almost 35 times since 1950-51, transforming the country from an agrarian economy to the world’s fifth-largest by nominal GDP. The 1990s and 2000s marked more than 70 percent decadal growth rates, with the first decade of the new millennium achieving over 90 percent growth.

Infrastructure expansion 🔗

Massive infrastructure development has accompanied this growth. Power generation capacity expanded exponentially, railway networks grew extensively, and road connectivity improved dramatically. The telecommunications revolution transformed India into one of the world’s largest mobile phone markets. These developments, while uneven in their reach, created foundations for economic participation across regions.

Pro-poor initiatives and social protection 🔗

The Indian government has implemented numerous schemes aimed at supporting disadvantaged populations. The Public Distribution System (PDS) remains one of the world’s largest food security networks, providing subsidized grains to hundreds of millions. Subsidized education expanded access, particularly through initiatives like Sarva Shiksha Abhiyan, which contributed to significant literacy gains in the 1990s.

Employment guarantee: MGNREGA’s impact 🔗

Perhaps the most significant pro-poor initiative was the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA), enacted in 2005. This landmark legislation guaranteed 100 days of wage employment annually to rural households willing to do unskilled manual work. The scheme increased bargaining power of rural laborers in the agricultural sector, leading to higher wage rates, better work environments, and reduced exploitation.

The share of Scheduled Caste households in total person-days of employment increased from 25% in 2006-07 to 30% in 2009-10, demonstrating the scheme’s inclusive nature. MGNREGA reduced rural-urban migration and empowered women, with one-third of work reserved for female workers. The scheme also contributed to rural asset creation through water conservation, road construction, and agricultural infrastructure.

Reservation policies and tax reforms 🔗

Job reservations for Scheduled Castes, Scheduled Tribes, and Other Backward Classes in government employment and educational institutions have created pathways for social mobility. Progressive taxation policies and various welfare schemes have attempted to redistribute resources toward disadvantaged communities.

The shadow of inequality: growth without inclusion 🔗

Despite impressive headline growth, the benefits have been profoundly uneven. The post-1991 period saw rising inequality both within and between urban and rural areas, reversing pre-reform trends of declining rural inequality. The liberalisation policies were perceived by many as pro-business, benefiting large industries and multinational corporations while neglecting smaller enterprises and rural populations.

The critique of post-1991 reforms 🔗

Critics argue that the 1991 liberalization reforms produced multifaceted adverse effects. The rate of poverty reduction continued, but at a slower pace than anticipated, and benefits were not evenly distributed. Rural areas and the agricultural sector, in particular, did not see significant improvements in living standards.

India’s Gini coefficient increased from 35.7% in 2011 to 47.9% in 2018, indicating significant rise in income inequality. The new economic policy created an ecosystem conducive to inequality by not adequately focusing on poverty alleviation and rural development-sectors that should have received greater attention given India’s agrarian character and vast rural workforce.

Social exclusion and marginalized communities 🔗

Growth has bypassed significant segments of the population. Scheduled Tribes (Adivasis) remain disproportionately poor. While the national below poverty line population was 27.5% in 2004-05, approximately 43.8% of Adivasis lived below the poverty line. The gap in poverty incidence between marginalized communities and other groups remains substantial, reflecting structural exclusion that economic growth alone has not addressed.

Employment crisis: the challenge of jobless growth 🔗

One of the most troubling aspects of India’s development is the disconnect between economic growth and employment generation. Employment generation with reference to growth was quite impressive during the first four decades of independence, but it almost collapsed since the adoption of neoliberal economic reforms in 1991, entering a phase of “jobless growth.”

Declining employment elasticity 🔗

When gross value added was growing at 6.2% between 2000 and 2012, the employment growth rate was only 1.6%. This declined further to nearly zero between 2012 and 2019, while economic output continued growing at 6.7%. The employment elasticity-the relationship between growth and job creation-has collapsed in the post-reform era.

The informal sector dominance 🔗

In the post-economic reforms period (1991), employment growth in public and private sectors grew only by 0.05% per annum during 1994-2008 despite 7.2% average annual growth. Despite witnessing rapid economic growth over the last two decades, 90% of workers in India have remained informally employed, producing about half of GDP.

The informal sector is characterized by long working hours, low pay, difficult working conditions, inadequate social security, and job insecurity. Approximately 85 percent of laborers work in the informal sector, with most lacking formal contracts, social security benefits, and paid leave. This informal employment disproportionately affects women and increases existing socioeconomic vulnerabilities.

Organized sector stagnation 🔗

The organized or formal sector, which traditionally offered better wages, job security, and benefits, has not expanded proportionately. Most new employment has emerged in the informal sector with poor conditions, while public sector employment has declined. This represents a fundamental failure to translate economic growth into quality employment opportunities.

The gap between economic sustainability and social justice 🔗

From a Gandhian perspective, true development must serve the poorest segments of society. The current pattern of growth reveals a troubling gap between economic sustainability and social justice. While the economy has grown impressively by conventional metrics, backward classes in rural areas have not improved significantly.

Rural SCST households employed as casual workers with low educational attainment face the highest odds ratio of poverty-approximately 78.6 times more likely to be poor compared to the most advantaged socio-economic group. This reflects how geography, caste, education, and employment status intersect to produce persistent inequality.

Women’s exclusion from the workforce 🔗

Women’s labor force participation has declined significantly, from 47 percent in 1983 to around 30 percent in 2020. Less-educated women in rural areas have been most affected, often becoming “discouraged workers” who have given up seeking employment. This represents both an economic loss and a failure of inclusive development.

Toward a more just economy 🔗

Addressing India’s development deficits requires multi-pronged approaches. Strengthening rural economies through agricultural development, expanding quality employment in organized sectors, providing universal social security, and investing in education and skill development are essential. The Gandhian emphasis on village-centered development and production by the masses rather than mass production offers valuable principles for reimagining inclusive growth.

India’s economic story demonstrates that growth alone is insufficient for achieving social justice. The challenge lies in ensuring that development reaches the last person in the line-what Gandhi called the “antyodaya” principle. This requires not just policy changes but a fundamental reorientation of economic priorities toward equity, sustainability, and human dignity.

What do you think? Can India achieve truly inclusive growth that bridges the rural-urban divide and reduces caste-based inequalities? How might Gandhian economic principles offer alternatives to the current development model?

References

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