Economic Growth vs. Social Justice: The Post-Liberalisation Dilemma in India | Nithya N.R

Abstract
This article examines the intricate dynamics between economic growth and social justice in post-liberalisation India, a period marked by significant economic reforms initiated in the early 1990s. While these reforms have catalysed impressive GDP growth and attracted foreign investment, they have also exacerbated social inequalities and marginalised vulnerable populations. The article argues that the neoliberal development model, driven primarily by market-oriented reforms and economic compulsions, has prioritised efficiency and growth over social justice and equitable distribution. This paper highlights the dichotomy between the neoliberal focus on market efficiency and the urgent requirement for inclusive strategies that address disparities in wealth, education, and access to basic services. It appears that the economic liberalisation initiated in 1991 was primarily driven by the government’s economic challenges rather than the people’s economic needs or the nation’s long-term development goals. The roles of the government and public sector, as well as the market and private sector, are likely to evolve over time as the country advances through successive periods of development. Through a critical examination of various economic indicators and social outcomes, the author concluded that sustainable development in India needs a sensible methodology that prioritises both economic progress and social equity. It calls for a re-evaluation of policy frameworks to guarantee that progress benefits all segments of society, thereby fostering a more just and equitable socio-economic landscape.
Keywords: Economic liberalisation, Social Justice, Economic Growth, Economic Inequality, Vulnerable groups

Introduction

Economic liberalisation refers to the process of reducing government control and regulation over economic activities by promoting market-oriented reforms, privatisation, deregulation, and globalisation. The Indian economy underwent a major transformation following the adoption of the Liberalization, Privatization, and Globalization (LPG) reforms in 1991. Initiated in response to a severe balance-of-payments crisis, these reforms marked a paradigm shift from a state-led developmental framework to a neoliberal economic model that emphasised market efficiency, foreign investment, private-sector participation, and integration with the global economy. The liberalisation process accelerated economic growth, expanded the service sector, increased exports, and positioned India among the world’s fastest-growing economies. However, despite these macroeconomic achievements, the benefits of growth have not been distributed equitably across different sections of society.

The post-liberalisation period has witnessed widening income inequalities, regional disparities, agrarian distress, unemployment, privatisation of essential services, and the continued marginalisation of vulnerable communities such as women, dalits, tribals, minorities, and informal sector workers. While economic growth has improved wealth creation and global competitiveness, it has also raised critical concerns regarding social justice, distributive equity, and inclusive development. Issues relating to poverty, hunger, inadequate access to healthcare and education, gender inequality, and uneven development continue to challenge the sustainability and inclusiveness of India’s growth trajectory. Consequently, the tension between rapid economic growth and social justice has emerged as a central debate in contemporary development discourse (Swaminathan & Aiyar, 2016).

The core argument of this article is that the neoliberal development model adopted in post-1991 India prioritised market-driven growth and capital accumulation over equitable distribution and social welfare, resulting in significant socio-economic disparities. The study argues that economic growth without distributive justice and human development cannot ensure sustainable and inclusive progress. Therefore, development must be assessed not merely by GDP growth but by improvements in human capabilities, social opportunities, and access to basic services.

The article primarily examines the relationship between economic growth and social justice in post-liberalisation India. Specifically, it seeks to analyse the impact of neoliberal reforms on inequality, employment, poverty, marginalised communities, and human development; to evaluate the changing roles of the state and the market in the development process; and to assess whether rapid economic growth has translated into inclusive and equitable development. The study also attempts to explore the relevance of distributive justice and capability approaches in understanding the contradictions of post-liberalisation development.

This study is primarily based on a qualitative, descriptive research methodology, using secondary data sources. The paper critically examines the relationship between economic growth and social justice in post-liberalisation India through an analysis of government reports, Economic Surveys, policy documents, scholarly books, journal articles, reports of international organisations, and statistical data related to GDP growth, inequality, unemployment, poverty, health, and education. The study also employs theoretical analysis by engaging with neoliberal, distributive justice, and capability approaches to understand the socio-economic implications of liberalisation. Through comparative and interpretative analysis, the paper evaluates whether the benefits of economic reforms have translated into inclusive and equitable development.
The paper begins by examining the emergence of economic liberalisation in India and the theoretical debates surrounding neoliberalism and social justice. It then traces the historical evolution of liberalisation and analyses the economic achievements of the post-1991 reforms, including growth, globalisation, and investment expansion. The study further explores the adverse social consequences of these reforms, including inequality, unemployment, poverty, agrarian distress, and the exclusion of vulnerable groups. Finally, it evaluates the changing role of the state and market and argues for an inclusive development model that balances economic growth with social justice and equitable distribution.

Growth vs. Justice in the Post-Liberalised Era: Theoretical Perspectives

The Neoliberal theory advocates for free markets, deregulation, and privatisation as drivers of economic growth. In the 1980s, neoliberalism emerged as the dominant development approach, supplanting modernisation theory. This perspective emphasises that certain economic policies and institutions impede development by restricting free market operations. The consensus among the World Bank and IMF that neoliberal policies represent the most effective route to development is known as the Washington Consensus, stemming from a meeting of global leaders in Washington in 1989 (World Bank, 2010). Neoliberalism insists that developing countries remove obstacles to free-market capitalism and allow it to generate development. Neoliberal proponents argue that if governments create a business-friendly environment that attracts investment and promotes production, it will lead to increased exports and foster free trade. Thus, promoting "free" trade is a key strategy within the neoliberal framework for development (Saad-Filho and Johnston, 2005). A report from the CEPR compared the years 1960 to 1980, when many countries had more restrictive, inward-looking economic policies, with the period from 1980 to 2000, characterised by neoliberalism. The findings indicated that progress in both economic and social terms was greater before the 1980s. Neoliberal theory has significantly influenced economic growth in India, particularly since the 1991 economic reforms. Following the implementation of neoliberal reforms, India experienced significant GDP growth, especially in the 1990s and 2000s. The shift towards a market-oriented economy contributed to higher growth rates than in previous decades (Panagariya, 2004). While neoliberal reforms spurred economic growth, they also contributed to rising income inequality and regional disparities. Despite its successes, neoliberalism in India has faced denunciation for neglecting social welfare, leading to inadequate support for vulnerable populations. The focus on market solutions has been questioned in the context of health, education, and poverty alleviation. Neoliberalism prioritises market efficiency and economic development above societal fairness (Laruffa, 2022). This emphasis can lead to policies that overlook the needs of marginalised communities, widening existing inequalities.

Milton Friedman’s Capitalism and Freedom critiques government intervention in the economy, asserting that such actions often lead to inefficiency, loss of personal freedom, and unintended consequences. Friedman advocates for minimal government involvement in economic matters (Friedman, 2002). Friedrich Hayek’s "The Road to Serfdom," published in 1944, argues against the dangers of central planning and collectivism (Hayek, 2007). Jeffrey Sachs’s ‘Development and Poverty Reduction’, while recognising the prominence of market mechanisms, Sachs critiques some aspects of neoliberalism, particularly when it leads to neglect of social safety nets and fails to address inequalities. He argues for a well-adjusted method that considers both market efficiency and social justice (Sachs, 2005). Thomas Piketty’s influential book "Capital in the Twenty-First Century" argues that these strategies have exacerbated rising wealth inequality. He highlights how the focus of wealth in the hands of a few undermines democratic institutions and social cohesion (Piketty, 2014).

The theory of Distributive Justice focuses on the fair allocation of resources and goods in society. John Rawls argued the principles of justice that ensure equitable distribution, including the "difference principle," which allows inequalities only if they benefit the least advantaged members of society (Rawls, (1999). In contrast to Rawls, Nozick’s "Anarchy, State, and Utopia" argues for a libertarian approach to distributive justice, emphasising individual rights and the entitlement theory, which states that distribution is just if it arises from just acquisition and transfer (Nozick, 1974). Sen critiques traditional views of distributive justice by focusing on capabilities rather than just resources. He argues that justice should consider individuals’ abilities to achieve well-being, leading to the capability approach (Sen, 2009). The post-liberalisation era in India has prompted a critical examination of distributive justice and social justice. As economic reforms have spurred growth, questions have arisen about equity in resource allocation and the impact on marginalised communities.

The capability approach, developed by Amartya Sen and Martha Nussbaum, emphasises individuals’ capabilities and opportunities to achieve well-being. Sen emphasises that true development should assess individuals’ capabilities to lead lives they value. He maintains that progress should not focus solely on economic growth or resource distribution, but also on enhancing people’s freedoms and opportunities (Sen, 1999). Nussbaum argues for "threshold levels" for each capability, suggesting that societies should ensure that all individuals meet a minimum standard for each to promote dignity and justice (Nussbaum, 2011). In the context of post-liberalised India, the intersection of economic growth and social justice has grown progressively significant. Despite this growth, disparities in wealth and access to resources have widened, particularly among marginalised communities. Policies must be designed to enhance capabilities, focusing on education, health, and social welfare to guarantee that fiscal progress transforms into social justice.

The Trajectory of Liberalisation in India

According to Ghosh (1998: 295), liberalisation refers to "reducing government regulation of economic activity and limiting state intervention—except in ensuring private property rights—while allowing market forces to operate freely in shaping economic processes." This can involve either opening the economy to the external flow of goods and services or easing domestic regulations. Since 1991, the Indian economy has experienced a blend of liberalisation—both domestic and external—and structural adjustment, marking a significant shift in the management of the economy (Kohli, 2006). In ‘Democracy, development, and the countryside: Urban-rural struggles in India’, Ashutosh Varshney remarked that “Nehru himself did not consider the profit motive to be a key factor driving farmers’ behaviour, and even when he accepted its importance, he leaned against it on normative grounds, arguing that he did not want to encourage acquisitiveness beyond a certain measure." The political uncertainty following Nehru’s death was marked by a food crisis, soaring inflation, a war with Pakistan, dwindling foreign exchange reserves, a decline in industrial growth, rampant unemployment, and the inability of government plans to meet their targets. During Lal Bahadur Shastri’s tenure as Prime Minister from 1964 to 1966, a notable shift occurred from the Nehruvian socialist agenda towards a greater emphasis on market-oriented policies. This shift was partially driven by the economic challenges India faced at the time, including food shortages and inflation. In 1964, the World Bank report by Bernard Bell highlighted the need for reforms to enhance India’s economic performance. One of the key recommendations was the devaluation of the Indian rupee (Kaur, 2003). The basis behind this plan was that devaluing the currency could make Indian exports cheaper and more competitive in global markets, thereby boosting export growth and improving the balance of payments. Shastri contemplated this devaluation as part of a broader strategy to address the country’s economic difficulties. By promoting exports, the government aimed to stimulate industrial growth and alleviate some of the financial pressures facing the economy (Kaur, 2003). This period marked a crucial turning point, as it indicated a readiness to embrace more pragmatic financial strategies in response to pressing economic realities, departing from strict adherence to the socialist framework established under Nehru.

Gurcharan Das’s ‘India Unbound’ examined the upcoming liberalisation move in early 1965. During Smt. During Indira Gandhi’s tenure as Prime Minister, the Indian economy faced significant challenges, including a weak, troubled economic environment, fiscal problems stemming from the 1965 war with Pakistan, drought-induced food crises, famines, and one of the sharpest recessions in Indian history. These multifaceted issues necessitated a reevaluation of economic policies (Singh, 2006). In response to the deteriorating economic conditions, the government recognised the necessity to liberalise the economy. This involved reducing state regulation and promoting market-oriented policies to stimulate growth and recovery. A pivotal decision during this period was the decision to devalue the Indian rupee. The rationale behind this devaluation was to make exports more economical in international markets, thereby enhancing foreign exchange earnings and improving the balance of payments. Additionally, the government sought restoration of foreign aid as a means to stabilise the economy. The agreement to devalue the currency was crucial for securing aid from global organisations like the World Bank and the International Monetary Fund (IMF) (Sharma, 2015). This aid was intended to provide the necessary resources to address immediate fiscal challenges and support long-term development goals.

Rajiv Gandhi’s tenure as Prime Minister marked a significant turning point in the liberalisation of the Indian economy, characterised by a comprehensive wave of reforms aimed at reducing state control and promoting economic growth. His government recognised the need for modernisation and efficiency amid global competition and domestic challenges. Key initiatives include easing state control, lowering corporate taxes, substituting tariffs for import restrictions, devaluation, lowering import barriers, and a pro-business economic agenda (Rao, 2007). In ‘Glimpses of Indian Economic Policy’, I.G. Patel pointed out that devaluation became inevitable towards the end of 1967.

A Paradigm Shift: The Dynamics of Economic Liberalisation After 1990

In 1991, the worst economic crisis, the 1990-91 Gulf War, led to a sharp increase in oil prices and a fall in remittances from the Indian workers working overseas, Debt Trap, Rise in Inflation Rate and shrinking of International Trade, Industrial Sector’s Poor Performance. Arvind Panagariya, in an IMF Working Paper titled ’India in the 1980s and 1990s: A Triumph of Reforms’, remarked that "Growth during the 1980s was also propelled by fiscal expansion financed by borrowing abroad and at home (Panagariya, 2004). But this was unsustainable and led to the June 1991 crisis. The PV Narasimha Rao Government, in 1991, initiated economic reforms to rebuild internal and external confidence in the Indian economy. Objectives of Liberalization are to promote the involvement of private Indian businesses and multinational corporations, to facilitate the Indian economy’s internationalization, to Promote foreign trade to boost exports, to resolve the balance of payments crisis facing India, to proliferate the private sector’s involvement in the progress of India’s economy, boost external direct investment in the Indian industry and encourage domestic enterprises to contest with one another (Kapur, & Mukherjee, 2007).

According to Deepak Nayyar, the changes that occurred in 1991 were significant enough to be realised as a paradigm shift, characterised by three main dimensions. First, the primary focus shifted to achieving economic growth alongside economic efficiency, with previous concerns about equity being set aside under the trust that growth would ultimately alleviate poverty. Second, there was a deliberate decision to substantially diminish the state’s role in development, placing greater reliance on market mechanisms. This meant reducing the public sector’s share in both investment and output, and the government would no longer direct the allocation of limited investment resources within the private sector. Third, there was a concerted effort to rapidly and significantly expand the economy’s openness to trade, investment, and technology. The goal was to instil cost discipline on the supply side, with the expectation that foreign investment and technology would play a key role in driving industrialisation (Nayyar, 1996). Thus, the financial alterations initiated in 1991 comprised two key components: macroeconomic stabilisation and structural reforms. The emphasis of structural reforms was placed on several areas such as the industrial sector, trade framework, foreign investment, foreign technology, public sector, and financial sector. The emphasis of economic liberalisation was primarily on short- and medium-term goals, leading to a neglect of long-term national development objectives. It is ironic that there was marginal consideration given to social sectors such as education and health, especially in an economy where enhancing the quality of human resources was indispensable for effectively utilising the country’s most abundant resource—its people—for development (Nayyar, 2017).

Revisiting the Dilemma: Economic Growth vs. Social Justice in Post-Liberalisation India

The focus of India’s post-liberalisation economy has been on higher incomes. The rapid economic growth in India is frequently attributed to economic liberalisation, but this perspective is somewhat misleading. If we examine the entire 20th century, the real turning point in economic performance—or the structural break in growth—occurred in 1951-52. Analysing the period from 1950-51 to 2000-01, another significant turning point in economic growth emerged in 1980-81 (Nayyar, 2006). Throughout the 20th century, the most notable structural shift from the long-term trend in economic growth took place in 1951-52, followed by 1980-81. Therefore, it is clear that 1991 did not represent a turning point (Nayyar, 2006; Rodrik and Subramanian, 2005). According to the Economic Survey 2024, FDI inflows to India declined from USD 42.0 billion during FY23 to USD 26.5 billion in FY24. USD 97 million in 1991. The 2026 Survey observed that, despite favourable macroeconomic fundamentals, Foreign Direct Investment (FDI) inflows into India have remained below their potential, while foreign portfolio investments have fluctuated significantly due to heightened global uncertainty and subdued investor confidence (GoI, 2026). India’s total exports reached a record USD 825.3 billion in FY25, registering a 6.1 per cent year-on-year growth, primarily driven by the strong performance of the services sector, which recorded a 13.6 per cent annual increase in exports. India ranks 5th in the world’s GDP rankings for 2025, and the economic growth rate reached 8.2 per cent (GoI, 2026). The country’s GDP progression since 1991 has been remarkable, making it the fastest-growing economy after China. However, alongside this growth, income inequality is rapidly widening.

Social and human development has been overshadowed by economic growth. The remarkable expansion in the service sector, and to a lesser extent in the manufacturing sector, has primarily occurred at the expense of the agricultural sector (Gupta). The most notable shortcoming of rapid economic growth in India has been the lack of employment creation. In 1991, the unemployment rate was 6.84%. As of June 2024, the unemployment rate has risen to 9.2%. India’s unemployment rate increased to 5.1 per cent in March 2026, marking the highest level recorded in the previous five months (Forbes, 2026). These shifting trends in labour demand and employment rates require careful policy measures to address current financial challenges and promote sustainable growth in both rural and urban areas. Unorganised, unskilled, and untrained workers in the informal sectors have borne the brunt of this situation. Women, children, dalits, tribals, and minorities—who together represent a significant portion of the vulnerable population—have largely been excluded from the benefits of economic gains (The Hindu, 2021). We can see a shift from ‘Shining India’ to ‘Suffering India’ and the prevalence of poverty and starvation in the post-liberalisation period. According to the Global Hunger Index 2025, India ranks 102 out of 123 nations (WHO, 2025). 21% of people live on less than US$1.90 a day. 1/4 of the world’s undernourished people reside in India (WFP).

Certainly, growth has contributed to a substantial reduction in absolute poverty; however, its incidence remains high. Economic growth has not significantly improved infrastructure in rural areas, including hospitals, roads, and water and sanitation facilities. While economic developments have led to affluence in the industrial, technological, and entrepreneurial sectors, underprivileged communities continue to lack access to essential amenities.
Many fundamental socio-economic issues that could have been resolved through enhanced economic growth remain unresolved, awaiting effective action from the government (Patel, 2013). In the ‘Social Progress Index’ 2025, India stood at 110 among the 171 countries. According to Amartya Sen and Jean Dreze, education, enrolment, and infrastructure differ across regions, genders, urban and rural areas, and among various social groups (Drèze & Sen, 2013). Globalisation-led economic development has meaningfully affected land acquisition, habitat, and livelihoods, mainly for marginalised groups in India. As the economy opened up and industrialisation accelerated, demand for land to accommodate infrastructure projects, factories, and urban expansion increased. This often led to the forcible acquisition of land from local communities, frequently without fair compensation or adequate consultation (World Bank, 2018). The processes surrounding land acquisition often violate the basic entitlements of these groups. Legal protections intended to defend the rights of marginalised communities are sometimes overlooked or poorly implemented. Economic Growth and Human Development in India – Are States Converging?, Janak Raj, Vrinda Gupta, Aakanksha Shrawan (2024) examines the relationship between economic growth and human development in India, analysing national and state-level patterns, convergence in growth and development, and India’s strong performance in income, health, and education over the past two decades.

India is a distinctive case as a nation grappling with deep-rooted social divisions, hierarchies, and disparities. Caste and gender-based inequalities are compounded by class differences, setting India apart from other emerging economies due to its unique social structure. Inequality has been entrenched for thousands of years, and independent India inherited a multitude of disparities (Gupta, 2000). Unifying the new nation while addressing inequality and poverty posed a significant challenge for the Indian government. The aim of structuring an egalitarian society was established as a primary objective in the first five-year plan, which was implemented in 1951. However, over the years of planned development, India’s performance in reducing poverty and inequality has been unsatisfactory (Chakroborthy, 2018). According to Vandana Shiva, “rapid increase in indebtedness has been at the root of farmers taking their lives… Debt is a reflection of a negative economy, a losing economy (Shiva, 2016).” “The policies of trade liberalisation and corporate globalisation have set off a widening spiral of debt and despair, initiating the process of farmers’ suicide since 1997”. India is ranked 130 out of 193 countries in the 2025 Human Development Report. India has the largest gender gap in labour force participation rate—a 47.8 percentage-point difference between women (28.3%) and men (76.1%). Global Gender Gap Report for 2025 shows that India is 131 out of 146 countries (UN, 2025). Poverty has emerged as a consequence of economic reforms. India has witnessed a revolution in its economic development, where these reforms expanded the scope for the private sector. However, this high growth has been accompanied by a notable increase in income inequality, leading to the exclusion of both rural and urban poor from its benefits. The pressure to meet the demands of international investors has often overshadowed efforts to address human poverty, with frequent financial crises diverting attention away from pressing social issues. As a result, growth has not significantly impacted critical areas such as poverty, literacy, public health, and sanitation (Deccan Herald, 2024). Biswa Swarup Misra’s Development and Economic Growth in India (2023) analyses state-level drivers of growth, emphasising regional disparities, governance, infrastructure, and policy interventions for balanced development.

In terms of Income Inequality, the top 1 per cent in India holds 40 per cent of the wealth. “Income and Wealth Inequality in India, 1922-2023: The Rise of the Billionaire Raj” by Nitin Kumar Bharti, Lucas Chancel, Thomas Piketty, Anmol Somanchi revealed that ‘between 2014-15 and 2022-23, the rise of top-end inequality has been particularly pronounced in terms of wealth concentration’. “The Billionaire Raj, headed by India’s modern bourgeoisie, is now more unequal than the British Raj, headed by the colonialist forces (2024). The economic restructurings have led to “an authoritarian government with centralisation of decision-making power, coupled with a growing nexus between big business and government”. According to Forbes’ billionaire rankings, the number of Indians with net wealth exceeding $1 billion rose from 1 in 1991 to 162 in 2022. Asia’s two richest men are Reliance Industries’ Mukesh Ambani and Adani Group’s Gautam Adani (Business Standard, 2024).

World Inequality Lab data show that the gap between India’s rich and poor is now so wide that by some measures, the distribution of income in India was more equitable under British colonial rule than it is now (Bharti and others, 2024). In the opinion of Jean Dreze and Amartya Sen, “indeed, even today, after 40 years of rapid growth, India is still one of the poorest countries in the world, something that is often lost sight of, especially by those who enjoy world- class living standards thanks to the inequalities in the income distribution”. The gains of development are not being distributed equitably. Current debates focus on whether growth is pursued solely for its own sake or if it should also aim to diminish poverty and inequality. Prominent scholars claimed that "sustainable high growth must be evaluated based on its impact on people’s lives and freedoms" (Drèze, & Sen, 2013). Furthermore, economic growth alongside increasing income inequality poses risks of social tension and instability. Comprehensive growth alongside the exclusion of disadvantaged segments from India’s rapid financial development are key phenomena. The Planning Commission’s approach paper on the ‘Eleventh Five Year Plan’ titled “Towards faster and more inclusive growth” remarked that “….. that economic growth has failed to be sufficiently inclusive, particularly after the mid-1990s (GoI). Agriculture lost its growth momentum from that point on and subsequently entered a near-crisis situation. Jobs in the organised sector have not increased despite faster growth. The percentage of our population below the poverty line is declining, but only modestly. Malnutrition levels also appear to be declining, but the problem’s magnitude remains very high. Far too many people still lack access to basic services such as health, education, clean drinking water and sanitation facilities without which they cannot claim their share in the benefits of growth. Women have increased their participation in the labour force as individuals, but continue to face discrimination and are subject to increasing violence, one stark example of which is the declining child sex ratio.”

The approach paper emphasized that rapid economic growth is meaningless without the upliftment of the poor and weaker sections. Recently, the concept of the Indic market economy has emerged, highlighting the dynamic interplay between the government and the private sector. This model recognises that both sectors possess unique strengths and weaknesses that can shift over time. As a result, the Indic market economy is not a static framework but one that continuously adapts and evolves to meet changing needs and circumstances. The Planning Commission also recommended reforms to encourage greater private participation and enhance the role of markets. It emphasised the need to provide incentives for entrepreneurs, particularly those in the Micro, Small, and Medium Enterprises (MSME) sector, to stimulate economic growth and innovation. (MMEs). Prime Minister reiterated that ‘government has no business to be in business ‘and “minimum Government maximum governance.” The state’s role in alleviating extreme poverty, misery, disease, and hunger is crucial for achieving balanced growth. Effective government intervention is necessary to ensure that economic development translates into improved living standards for all citizens, particularly the most vulnerable populations. In “Starvation and India’s Democracy”, Dan Banik opined that “the policymakers, bureaucrats, and public representatives often evade accountability for high levels of malnutrition and hunger-related deaths by arguing that such challenges are typical of a developing country in transition. They contend that these issues are necessary hardships that must be endured before achieving stability and self-reliance” (Banik, 2015). Regarding the impact of LPG on agriculture, farmer suicides have increased to 1,12,000 from 2014 to 2023 (NCRB). The Suicides by daily wage workers has increased to 3,12,214 (2014 and 2023- NCRB). The Allocation for MGNREGA has been drastically curtailed (a 33% decrease in 2023). The 2024 UN Report on food security stated that at 194.6 million, India -the highest undernourished population in the world (Down to Earth, 2023). When we go through the contradiction in the union budget 2025 on Rapid growth vs increasing inequality, the share of the budgeted expenditure for food subsidy through the public distribution system has weakened from 6.61 percent in 2019–20 to 4.25 percent in 2024 (GoI, 2025).

The Standing Committee on ‘Human Resource Development’ (2020) highlighted that the allocation for the Ministry of Women and Child Development in the Union Budget has remained stagnant at around 1% over the past five years. The committee noted that women and children in both rural and urban areas continue to face significant gaps in human and social development. As the Ministry is tasked with ensuring access to essential services such as health, nutrition, and education for these groups, it recommended an increase in the Ministry’s budget share. However, contrary to this recommendation, the Ministry’s share in the 2023-24 budget has declined to 0.6% of the total Union Budget. This allocation has remained at 0.6% since the 2022-23 fiscal year. Only 2.5 per cent of the total budget (0.37 per cent of India’s GDP) is allocated for Education. This year, the funding earmarked for the UGC (University Grants Commission) has been reduced by almost 61 per cent, from Rs 6,409 crore in last year’s revised estimate to Rs 2,500 crore in this year’s budget. Privatisation of education led to barriers to access to education but also reinforces social hierarchies of caste, class, and gender. Allocation to the Ministry of Health declined from 2.16 per cent in 2019–20 to 1.88 per cent in 2024–25. National Family Health Survey (NFHS)-5 shows that 60 per cent of women in India cannot access affordable health services due to inadequate infrastructure and a shortage of healthcare workers. 40.4 per cent of women were unable to access medicines, -39.2 percent could not reach healthcare providers, and 31.2 per cent felt that there were no female service providers at health centres. Hence, the successive budgets fail to address India’s pressing socio-economic challenges (GoI, 2025).

This raises several critical questions: Can neo-liberal policies achieve growth while ensuring equity? Should priority be given to growth over redistributive policies, or vice versa? Can private entities, such as corporations and business groups, effectively address the needs of marginalised populations? Is it possible to meet the demands of social justice alongside rapid economic growth? Will investment be directed toward non-profitable areas essential for social development? Lastly, in a globalised context, can a reduced role for the state adequately protect the rights and interests of vulnerable groups?.
According to Amartya Sen and Jean Dreze, “The welfare of individuals must take precedence, with a focus on enhancing their capabilities to foster true freedom. Development should be understood as a process aimed at expanding these freedoms”. “removing poverty, tyranny, lack of economic opportunities, social deprivation, neglect of public services and the machinery of repression.”
In the words of Jagdish Bhagwati ‘market-induced economic reforms and growth, “redistribution, as distinct from growth, cannot be the answer to removing poverty.”(2013). Shiladitya Chatterjee’s Inclusive Economic Growth in India (2025) examines India’s economic strengths and challenges, highlighting policies for agricultural reform, MSME support, and the reduction of social inequalities to achieve inclusive growth aligned with the SDGs. In India’s Economic Evolution Towards Inclusive Development: Exploring the ‘Bhartiya’ Model (2026), Charan Singh and Arvind Virmani provide a comprehensive analysis of India’s developmental trajectory by examining the socio-economic challenges associated with economic transformation and highlighting the proposed ‘Bhartiya’ model, which emphasizes equity, empowerment, sustainability, and community participation in the development process (Charan Singh & Virmani, 2026).

The state has the potential to promote inclusive growth that prioritises vulnerable groups, especially in the context of globalisation. Atul Kohli, in his work Politics of Economic Growth in India, 1980-2005, argues that while the modern state has achieved significant economic growth, it has retreated from its earlier social welfare functions that were more prominent during the socialist era in India prior to the 1980s (2006). While discussing about post-liberalised India, Vivek Chibber commented that, “as the space for laboring classes has narrowed, as their political muscle has waned and their presence in the policy apparatus has been more precarious.” Political support for social welfare initiatives has waned, leading to a diminished emphasis on policies that aid vulnerable populations. This decline in support reflects a broader shift towards prioritising economic growth over social equity, resulting in fewer resources allocated to social programs and welfare measures (Nagaraj, 2012).
The increase in GDP has not led to inclusive and equitable growth, resulting in "jobless growth," "employment-hostile growth," and "job-destroying growth." Since liberalisation, the Indian economy has faced rising disparity across sectors, regions, and households. While growth has created significant opportunities for economic advancement, it has also created various vulnerabilities and insecurities. Regional imbalances have exacerbated this issue, resulting in unequal distribution of opportunities for growth. There is a noticeable gap between economic growth and equitable redistribution, as well as between growth and social justice. This disconnect indicates that while the economy may be expanding, the benefits are not being shared fairly across different segments of society, undermining efforts to achieve social equity and justice. The structural crisis of the neoliberal regime, with the dominance of international finance capital over productive capital, is marked by the loot and plunder of resources of the Nation by the foreign and domestic Corporates, devastating the lives and livelihood of the masses amidst hate-mongering divisiveness. To further the interests of neo liberal forces, the present corporate communal nexus in governance is undertaking economical, social and political restructuring through majoritarian authoritarianism. Economic inequality: States with better infrastructure and governance benefited more, while less developed regions lagged behind. The analysis applies neoliberal theory to explain how post-1991 reforms in India promoted market-oriented growth through liberalisation, privatisation, globalisation, and reduced state intervention, resulting in rapid GDP growth, export expansion, and increased foreign investment. However, the study also uses critiques of neoliberalism to show that these reforms widened inequality, intensified jobless growth, agrarian distress, and the marginalisation of vulnerable groups. Distributive Justice Theory is applied to evaluate the unequal distribution of wealth, opportunities, and public resources, while Amartya Sen’s Capability Approach is used to examine how economic growth has failed to adequately improve education, healthcare, employment, and human development. Together, these theories demonstrate the contradiction between rapid economic growth and social justice in post-liberalisation India.

Conclusion

This study examined the relationship between economic growth and social justice in post-liberalisation India using a qualitative, descriptive methodology based on secondary data, including government reports, Economic Surveys, scholarly works, and socio-economic indicators. Since the 1990s, these strategies have propelled India to become one of the fastest-growing economies, even surpassing China in GDP growth rate. However, this impressive economic growth has not resulted in an equitable distribution of its benefits across all segments of society. Resources generated through liberalisation have been insufficiently directed toward alleviating poverty and inequality, which continue to affect an important percentage of the population.

The market-oriented reforms implemented in India pose risks, as they shift the state’s accountability away from delivering development opportunities for the underprivileged, who often lack the purchasing power to benefit from market mechanisms. The analysis was theoretically grounded in neoliberal theory, distributive justice theory, and Amartya Sen’s capability approach to critically evaluate the outcomes of liberalisation, privatisation, and globalisation (LPG) reforms. The study finds that although neoliberal economic policies accelerated GDP growth, export expansion, foreign investment, and global economic integration, the benefits of this growth have remained unevenly distributed across different sections of society. The findings reveal that rapid economic growth has been accompanied by widening income inequality, jobless growth, agrarian distress, regional disparities, inadequate public investment in health and education, and the continued marginalisation of women, dalits, tribals, minorities, and informal sector workers.

The study further establishes that the neoliberal development model prioritised market efficiency and capital accumulation over distributive justice and human development. From the perspective of distributive justice theory, the concentration of wealth and unequal access to opportunities reflect the failure of economic growth to ensure equitable distribution of resources. Similarly, the capability approach highlights that development cannot be measured solely by GDP growth but must also expand people’s capabilities, freedoms, and access to essential services such as education, healthcare, employment, and social security. The research, therefore, concludes that sustainable and inclusive development requires a balanced developmental framework in which the state continues to play an active role in reducing socio-economic inequalities and protecting vulnerable populations.

The study suggests that India must strengthen welfare-oriented public policies, increase investment in education, healthcare, agriculture, and employment generation, and ensure equitable access to development opportunities. Greater emphasis should be placed on inclusive growth, social justice, capability enhancement, and accountable governance. Reducing regional imbalances, strengthening public institutions, improving social security mechanisms, and addressing structural inequalities based on caste, class, and gender are essential for achieving sustainable development. Thus, economic growth should not be pursued as an end in itself but as a means to ensure social equity, human dignity, and inclusive socio-economic transformation.

(Author: Nithya N.R, Assistant Professor,, Department of Political Science, , University of Kerala)

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