The social ladder: how an age-old regressive tradition exemplifies Indian wealth disparity.

Article by Tejasva Pande

In India, an ancient social structure dictates the nation's distribution of wealth. Despite decades of economic growth and industrialization, the caste system, which was originally a system of social hierarchy, continues to act as one of the country's most powerful drivers of economic disparity. It determines who owns assets, who accesses capital, and who remains at the bottom in terms of wealth.

In traditional economic models, wealth inequality is analyzed through income, education, or regions; however, in India, class and caste problems deeply overlap each other. Historically, the caste hierarchy restricted land ownership, trade, and formal education to upper-caste groups. Scheduled Castes, Scheduled Tribes, and Other Backward Classes were restricted to manual labor and low-income occupations. Despite the abolition of this discrimination in the 1950s, generational capital accumulation has created a lasting period of inequality. Today, wealth remains heavily concentrated at the very top of the social ladder.

The structural impact of caste manifests across three main pillars:

Land and real estate are primary vehicles for generational wealth transfer. According to economic surveys, upper-caste households, which comprise roughly 25 to 27% of the population in India, hold up to 55% of total national wealth. In contrast, marginalized households, which are 16.6% of the population, own under 12% of agricultural land, with the vast majority limited to small holdings under one hectare.

In the urban corporate sector, upper castes continue to hold 90% of UHNW and billionaire wealth. Marginalized groups are present in the informal sector, which lacks job security, steady wages, or retirement benefits. Studies show that informal bias in private sector hiring and credit access often restricts lower-caste entrepreneurs from securing commercial bank loans or venture capital.

Over the last 50 years, significant state interventions have worked to counter these barriers:

Expanding on early constitutional provisions, the 1990 implementation of the Mandal Commission extended reservation quotas in public sector jobs and higher education to Other Backward Classes, which allowed them to get the same economic opportunities and reduce disparity.

Targeted initiatives such as the Stand-Up India scheme (which mandates bank loans for SC/ST entrepreneurs) and microfinance have focused on bringing unbanked lower-caste households directly into the financial system.

Over the last decade, digitizing welfare through direct bank transfers has helped bypass local caste-dominated intermediaries, which ensures that rural housing subsidies, agrarian income, and social welfare reach marginalized households directly.