India & Hindu Nationalism: What Is the Economic Cost of Marginalising Muslims?

The growing religious divide will affect India not just domestically but also its global image as a rising nation.

Photo for representation.

(Photo: AP/PTI)

Today, India is increasingly witnessing a state-sponsored effort towards vilifying and criminalising its largest minority population, the Indian Muslims – and this has an ‘economic’ cost. But first, let me offer some background context.

The intricate, often complex relationship between an economy’s macro and micro-foundations and society and the underlying forces that drive human interactions were first discussed in a series of research studies put forth by renowned social scientist Karl Polanyi.

Polanyi’s work gave the disciplinary roots to what was later termed the modern field of “economic sociology”. In the basic tenets of his work in The Great Transformation (1944), he argues that the discipline of economics emerged from the observations of human beings and their practices in society. Because of the social nature of humans, ‘embeddedness’, ie, the process of interaction between social relations and economic foundations, becomes a necessary condition for the economy.

• India is increasingly witnessing a state-sponsored effort towards vilifying and criminalising Indian Muslims – and this has an ‘economic’ cost.

• As Okonkwo in his paper, The Economics of Ethnic Discrimination, argues, “The pigmentation of a worker’s skin, a common cause of colour discrimination, is a permanent characteristic of the worker whether he is in or out of the labour market.”

• Any economic discrimination against Muslims will affect not only the 80% of the Indian Muslims working in the informal economy but also the entire Indian labour market as a whole

• About two-thirds of Indian citizens abroad – 8.9 million of 13.6 million people – live in the six nations of the Gulf Cooperation Council.

• According to the Migration Policy Institute, a Washington-based think tank, GCC countries in recent years have come to account for more than half of India’s roughly $87 billion in remittances.

Importantly, for an economy to function smoothly and to expand across social and cultural networks across time and space, maintaining communal harmony is both essential and a prerequisite.

Muslims Fare Worse than Other Marginalised Groups

India is home to some two hundred million Muslims, making it one of the largest Muslim populations in the world but a minority in a predominantly Hindu country. From the time of the British colonial era, Muslims across India have faced systemic discrimination and violence despite constitutional provisions.

This lived discrimination has only worsened over the last eight years under the Narendra Modi-led Bharatiya Janata Party (BJP) administration. Social media and state-supported media propaganda have unfortunately made the day-to-day life of an average Muslim in India almost unbearable.

There is sufficient data on how Muslims in India have experienced discrimination in terms of ‘access’ to equal opportunities and social amenities. From healthcare to employment, education and housing, studies have shown how the community faces barriers across the country, with limited state intervention offered to improve their living conditions. Even in areas of procedural justice and in terms of access to legal recourse, Muslims find it hard to get their voices heard.

A 2021 study by the Centre for New Economics Studies (CNES), while creating an ‘Access (In)Equality Index’, analysed the high degree of variance in restrictive access to basic social, economic and legal services amongst marginalised groups. Here, the indicators for Indian Muslims were found to be far worse than some of the other most discriminated groups (Scheduled Castes, Other Backward Castes). A 2019 report by Common Cause found that half of the police surveyed showed anti-Muslim bias, making them less likely to intervene to stop crimes against Muslims.

The Forgotten Sachar Committee Report

Now more than ever, there is widespread impunity for those who attack Muslims. Government-sponsored bulldozers are wrecking the homes of dissenting Muslim activists without any proper ‘due process’. Courts and government bodies are overturning convictions and withdrawing cases that accuse Hindus of involvement in violence against Muslims.

Previously, the Congress-led government commissioned in 2006 what was then termed a ‘landmark study’, the Sachar Committee Report. It focused on India’s Muslim population. The report identified many inequities that affect the socioeconomic upward mobility of the minority community across India. However, the government failed to implement most of the Sachar committee recommendations during its tenure.

How Discrimination in US & South Africa Affected Victims

What is “bad” about any form of social discrimination is not necessarily the fact of its occurrence, but the painful economic and other effects that its victims must suffer. These effects stand out clearly in some societies.

For example, in the US, the residential segregation and housing market discrimination against non-whites leads, on the one hand, to the ghetto and other related urban problems of inner-city areas, and, on the other hand, to educational segregation and discrimination, which, in turn, affects the capacity of non-whites to invest in themselves or enhance their capabilities.

South Africa provides another example of a nation that historically experienced blatant discrimination. Its apartheid policy of separate but unequal racial development, implemented by the setting up of ‘Bantustans’, only sowed more seeds of future racial discord in the past.

The literature on the economics of discrimination has developed along two main lines. I will mention only one aspect, which is more critical to our story’s focus here. A greater part of the academic literature explores the effects of discrimination by different economic agents on the workings of a competitive economy. Products may not usually bear the ethnic label of their producer. Similarly, a Muslim tailor’s work may not be clearly reflected in the ‘labelling’ or ‘branding’ of the finished apparel product (say, a stitched shirt or a trouser).

However, this is not the case in ‘factor’ markets, ie, access to land, labour, capital, entrepreneurship and technology.

As Okonkwo in his paper, The Economics of Ethnic Discrimination, argues, “The pigmentation of a worker’s skin, a common cause of colour discrimination, is a permanent characteristic of the worker whether he is in or out of the labour market.”

This explains the large volume of academic literature on labour market discrimination.

Discrimination Will Affect the Labour Market

In the context of India, too, academic studies documenting the explicit costs of political, social and economic discrimination against Muslims are well-documented in terms of how such acts of discrimination have directly affected their own livelihoods, from a labour or factor market perspective.

Most of India’s Muslims work in the ‘informal’ economy. It is worth emphasising how any economic discrimination against them will affect not only the 80% of the Indian Muslims working in the informal economy but also the entire Indian labour market as a whole, 85% to 90% of which is broadly based in the informal, vulnerable employment-economic landscape. The informal economy is deeply entwined and feeds into the overall functioning of the formal, organised economic structure.

Nearly 85% of wage workers among Muslims are still employed precariously without any ‘written contract’, according to the 2019 Periodic Labour Survey Data. More than half of the workers in the Muslim community are engaged in self-employment, and another 25% of their workers are engaged in casual work.

Recent attacks on Muslim street vendors are markers of a deepening political polarisation and attempts at further economic marginalisation of informal workers of the minority community. Poor institutional networks to enable unionisation amongst minority populations have further made it difficult for Muslims to voice their concerns.

While conducting fieldwork in the aftermath of the riots in Northeast Delhi in 2020, our Centre’s research team analysed how the targeted Muslim community, even after the riots, was facing systemic discrimination in getting access to rehabilitation funds, seeking rental accommodation.

They were also being marginalised further by local Hindu communities through price-based discrimination (making Muslims in the area buy vegetables and fruits at a higher price than others).

In a recent set of academic studies, articulated in an article by Article 14, evidence from both quantitative analysis and qualitative fieldwork in the National Capital Region of Delhi shows that Muslims and Dalits face the worst residential segregation in Indian cities, relegating them to spaces with poor public services like piped water and sewage.

These latest findings are in line with other studies that find Indian cities to be defined by segregation based on ‘caste’ and ‘religious’ identity.

Why We Can't Afford to Irk the Gulf

An anti-Muslim, hate-filled, state-sponsored narrative under a Hindu nationalistic agenda, where foreign countries across the world continue to point out human rights violations against minorities in India, may also dent the country’s economic image as a rising nation.

Last week, while releasing a report on international religious freedom, US Secretary of State Antony Blinken called out India for “rising attacks on people and places of worship”.

A recent controversy that led up to the boycotting of Indian products in Gulf countries is another classic case in point.

India has a close relationship with most Gulf countries. For starters, as Sadanand Dhume in the Wall Street Journal recently pointed out, about two-thirds of Indian citizens abroad – 8.9 million of 13.6 million people – live in the six nations of the Gulf Cooperation Council.

According to the Migration Policy Institute, a Washington-based think tank, GCC countries in recent years have come to account for more than half of India’s roughly $87 billion in remittances.

The Gulf is also among India’s largest trading partners. Last year, the two-way trade with the six GCC countries was $87.4 billion, which is more than India’s bilateral trade with the European Union or Southeast Asian countries. West Asia supplies more than half of India’s oil and gas imports.

An 'Us vs Them' Approach Can Backfire

New Delhi also has close strategic relationships with some of these countries. As India has grown closer to the US in recent years, it has also stepped up cooperation with American allies as Saudi Arabia and the UAE. The Saudi government has extradited terrorism suspects to India.

In 2019, the UAE bestowed its highest civilian award on Prime Minister Narendra Modi. Four years ago, Oman, with which India has close strategic ties dating back to British rule, granted the Indian Navy access to one of its ports. This gives India a foothold in a region where China has made inroads with its Belt and Road Initiative.

India would do well to avoid a domestic environment with persistent polarisation (against its Minorities and Muslims) and an ‘us versus them’ pitch.

One must note how there are almost 870 million Muslims living in the five geographical regions of Asia alone: South Asia, Southeast Asia, East Asia, Central Asia, and West Asia.

So, while Indian Muslims may be demographically positioned as a minority within India, for much of the regions and countries close to India’s neighbourhood as part of Asia, Muslims enjoy a much larger demographic base. Ensuring social cohesion across communities and allowing economic systems to work in/across diverse embedded social structures is key to sustained development of all.

Scaling Up Research 

Noted American economist Lisa Cook has closely analysed the economic impact of ‘racial’ violence and discrimination, going beyond issues faced and highlighted from a labour-factor market perspective, which offers useful lessons for the future of research on the economics of discrimination against Muslims (and other minority communities) in India.

In her path-breaking research, Cook linked the surge in segregation laws, lynchings, and other racial violence in the US from 1870 to 1940 to a significant decline in patenting and innovation among African Americans. The economic impact of that decline was equivalent to the GDP of a medium-sized European country at the time, and the impact is still felt today, she calculated.

“Violence diminishes innovation and economic activity, with persistent effects,” says Cook. “The year 1899 is still the peak year for patenting-per-capita for African-Americans – and that’s even using 2010 patent data.”

To conduct her analysis, Cook had to first compile data on race and patents, which did not previously exist. She has also helped develop a national database of lynchings that can be used in empirical research going forward.

Similar efforts are now needed in developing a more robust and comprehensive dataset for designing a more nuanced, better academic understanding of discrimination against minorities in India (particularly Indian Muslims). It’s important to study not just how such acts of discrimination and calls for boycotts have affected the rate of their upward mobility and economic activity, but also the effects of a breakdown in social cohesion at the national level.

(Deepanshu Mohan is Associate Professor and Director, Centre for New Economics Studies, Jindal School of Liberal Arts and Humanities, OP Jindal Global University. He is Visiting Professor of Economics to Department of Economics, Carleton University, Ottawa, Canada. This is an opinion piece and the views expressed are the author's own. The Quint neither endorses nor is responsible for them.)