India's economy at the crossroads

India's economic transformation has produced remarkable growth, but it has not distributed opportunity equally. Alongside new industries, rising markets and expanding infrastructure, millions continue to face insecure employment, inadequate healthcare, poor-quality education, housing shortages and rising living costs. The central question is therefore not whether India is growing, but who controls the growth, who benefits from it and who bears its social and environmental costs. Advertisment Clara Elisabetta Mattei an Italian economist and academic in her book Escape from Capitalism argues' that capitalism is not a natural or inevitable arrangement. It is a political and institutional system organised around wage labour, private investment and production for profit. In such a system, economic decisions are often presented as technical necessities, even though they are political choices. Austerity, privatisation and labour-market flexibility may be described as unavoidable reforms, but they can also transfer resources and power from the majority to a small economic elite.' This framework is especially relevant to India, where economic inequality has increased sharply over recent decades. Research by the World Inequality Lab estimates that the richest 1% of Indians received 22.6% of national income and owned approximately 40.1% of total wealth in 2022–23, while the bottom 50% owned only about 6.4% of wealth. These figures are not merely statistical indicators. They describe unequal access to land, education, healthcare, credit, political influence and the ability to withstand economic shocks. piketty.pse.ens The Indian form of crony capitalism Crony capitalism refers to an economic environment in which business success depends substantially on political favour, privileged access to public resources or regulatory protection rather than open competition. In India, scholars have associated it with the close relationship between political power, bureaucracy and selected business groups. The problem is not private enterprise itself. A competitive private sector can create employment, innovation and economic value. The danger arises when public assets, contracts, licences, natural resources, land and financial support are allocated through opaque arrangements that favour a few powerful companies. When this happens, the market ceases to be a system of fair exchange and becomes a mechanism for distributing privilege. Crony capitalism also damages honest businesses. A small entrepreneur who lacks political access cannot compete with a corporation that receives preferential land, easier credit, favourable regulation or government-backed protection. Over time, this reduces competition, encourages monopolistic behaviour and weakens public trust. The economy may continue to grow, but its gains become increasingly concentrated. Advertisment India's economic debate often treats growth as the solution to poverty. Growth is certainly necessary, but growth alone does not guarantee dignity or security. If new wealth is concentrated among owners of capital while wages remain stagnant and employment remains informal, economic expansion can coexist with widespread insecurity. Millions of Indian workers remain dependent on casual, contractual or informal employment. They often lack stable wages, social security, paid leave, pension protection and effective bargaining power. For these workers, 'flexibility' frequently means the freedom of employers to reduce costs while transferring risk to employees. This insecurity affects more than household income. It influences nutrition, children's education, access to healthcare and the ability to participate in public life. A worker who is constantly worried about rent, medical expenses or debt has little time or energy to engage as an equal citizen. Economic insecurity therefore weakens democracy by reducing the practical freedom of individuals. Advertisment The same concern applies to farmers, small traders and self-employed workers. When access to land, credit, storage, markets and technology is unequal, producers remain vulnerable to debt and price fluctuations. The result is an economy in which those who perform essential work possess the least control over the conditions under which that work is carried out. Austerity is often presented as responsible economic management. Governments are told to reduce public spending, limit subsidies, privatise services and control welfare expenditure. Fiscal responsibility is important, but austerity becomes socially destructive when it cuts essential services while public resources continue to support large corporations or financially powerful groups. In India, underinvestment in public healthcare and education places a heavy burden on ordinary families. Out-of-pocket medical expenditure can push households into debt, while unequal access to quality education reproduces privilege across generations. A child born into a poor family may be formally entitled to opportunity but practically denied the resources needed to use it. When the state retreats from essential services, private providers fill the gap. Healthcare, education, housing, transport and even water increasingly become commodities. Those who can pay receive better services; those who cannot are left with overcrowded public facilities or no meaningful alternative. This transforms citizenship into a hierarchy of purchasing power. Such conditions also weaken the health of institutions. Public institutions derive legitimacy when people believe that rules apply equally and that the state protects the vulnerable. When citizens observe selective enforcement, preferential access and unequal justice, they begin to view institutions as instruments of the powerful. This loss of legitimacy is dangerous because it encourages corruption, political cynicism and social conflict. Extreme inequality threatens social order in several ways. First, it creates a visible contrast between extraordinary wealth and everyday deprivation. In an age of social media, citizens constantly encounter images of luxury, while struggling with unemployment, inflation and unaffordable housing. This contrast can generate resentment and political anger. Second, economic hardship can be redirected against weaker groups. Instead of questioning concentrated wealth or institutional privilege, people may be encouraged to blame migrants, religious minorities, regional communities or welfare recipients. This is one of the most effective ways of preserving an unequal order: social frustration is converted into cultural conflict. Advertisment Third, the state may respond to economic discontent through surveillance, policing and restrictions rather than structural reform. Public order then becomes a substitute for social justice. A society can remain outwardly stable for a period while accumulating deep internal tensions. Stability maintained only through fear is not genuine social order; it is postponed conflict. The most serious consequence of this economic system may be the gradual loss of the human individual. People are increasingly valued according to their productivity, purchasing power, employability and capacity to generate profit. A person without a secure job, house or market value is often treated as a burden rather than as a citizen with rights. This reduction is particularly visible in the lives of migrant workers, unemployed youth, indebted farmers, domestic workers and those living in informal settlements. They are frequently counted as labour, consumers or beneficiaries, but not recognised as full participants in economic decision-making. The loss is not only material. Individuals lose time, community, confidence and imagination. A person trapped in debt and precarious work cannot easily imagine alternatives. The system becomes powerful not only because it controls resources, but because it narrows the field of what people believe is possible. India requires an economic model that places human needs before the unrestricted pursuit of profit. This does not mean abolishing all markets or private property. It means democratically deciding which areas must be treated as public goods and which forms of accumulation must be regulated. Several critical measure must be undertaken to : Strengthen universal public healthcare, education, nutrition, housing and social security. Ensure transparent allocation of land, natural resources, public contracts and credit. Protect workers through minimum wages, social security, collective bargaining and safe working conditions. Tax extreme wealth, speculative gains and economic rents more effectively. Strengthen independent regulators, investigative agencies, local governments and public accountability. Expand cooperatives, producer organisations, community-owned enterprises and participatory budgeting. Protect forests, water, land and other commons from uncontrolled commercial extraction. Make political finance and corporate-government relationships more transparent. Participatory budgeting, already associated internationally with experiments in democratic economic decision-making, offers one possible model. Citizens can be involved directly in deciding how public funds are spent on health, education, housing, sanitation and local infrastructure. Such arrangements do more than improve administration; they teach people that they are not merely recipients of policy but authors of collective priorities. The challenge before India is not simply to increase the size of the economy. It is to decide what the economy is for. If its primary purpose is profit, poverty and insecurity will be treated as unfortunate but acceptable outcomes. If its purpose is human well-being, then production, taxation, labour and public spending must be organised around social needs. Advertisment India's institutions will remain healthy only if citizens experience them as instruments of justice rather than mechanisms of privilege. Social order will endure only when people possess the material security required to live with dignity. And democracy will remain meaningful only when individuals regain the time, resources and collective power to participate in decisions that shape their lives. The alternative to crony capitalism is not disorder. It is a more democratic economy one that recognises that wealth is socially produced and must therefore serve society. India has the knowledge, labour and resources to build such a system. What is required is the political will to ensure that economic growth does not continue to enrich a few while gradually impoverishing the many in material, institutional and human terms. Dr. Farooq Wasil is a published author, educationist, and currently serves as the CAO of the Vasal Education Group and Founding Director of Thinksite. With over four decades of experience in education management—specializing in setting up, operating, and managing schools—he also holds strategic advisory roles for several educational and business entities.