The relationship between democracy and economy is more than abstract theory—it shapes the everyday experiences of citizens, determines the inclusivity of political participation, and ultimately tests the health of constitutional institutions. In recent decades, the Indian experience, like that of many democracies worldwide, has revealed both the transformative potential and the systemic vulnerabilities that arise when economic policy becomes captive to narrow interests or fails to serve the wider public good.
The Economy in Democratic Life
Democratic politics is not simply about elections or policy debates; it is deeply interwoven with the fabric of daily life—jobs, livelihoods, housing, education, and health. An equitable and effective economic framework underpins the legitimacy of democratic governance by ensuring that growth translates into tangible improvement in citizens’ life conditions.
When economies flourish inclusively, public faith in democracy is reinforced. When economies are marked by exclusion, insecurity, and inequality, the authority of the political system erodes, fueling cynicism, polarization, and unrest.
Everyday Polity and Economic Agency
- Welfare Delivery: The quality of health, education, and social protection is a direct measure of a democracy’s priorities and success.
- Access and Opportunity: Economic power inequality often translates into political power imbalances, limiting who can participate meaningfully in public life or even access justice.
- Employment and Security: Persistent joblessness, precarious work, and stagnant wages heighten public discontent and weaken civic engagement.
Critique of the Current Economic Framework and Practices
Centralization and Exclusion
India’s economic model remains heavily centralized, with fiscal authority and resource allocation predominantly controlled by central agencies. Despite federal rhetoric, state and local governments—closer to citizens’ real needs—have limited discretion in tax collection and expenditure. This top-down approach often results in inefficiencies, gaps in welfare delivery, and limited local accountability.
- Resource Flow: Funds are frequently delayed or diluted as they move through multiple bureaucratic layers, encouraging leakages and local corruption.
- Policy Disconnect: Centralized economic decisions can be out of touch with local realities, resulting in schemes that fail to address specific community challenges or needs.
Crony Capitalism and Rent-Seeking
The intersection of big business and politics in India has fostered an environment where policies are sometimes tailored to benefit a few at the expense of the many. Regulatory capture, preferential contracts, and tax incentives disproportionately favor the well-connected, undermining both economic efficiency and public trust.
- Public Sector Banks: Repeated banking crises and rising non-performing assets (NPAs) have stemmed in large part from politically motivated lending and inadequate oversight.
- Corporate Influence: Regulatory bodies intended to safeguard public interest have at times been compromised by partisan or business pressures.
Social Sector Neglect
Despite constitutional commitments, the allocation to critical sectors like health and education remains inadequate. Both the quality and accessibility of public goods are far below democratic aspirations:
- Healthcare: Public health spending in India has hovered at 1.5% of GDP, far below the global average and insufficient to ensure universal access or robust responses to crises.
- Education: Shortfalls in funding and oversight have left many government schools understaffed and under-resourced, leading to high dropout rates and persistent disparities.
Inequality and Exclusion
India’s economic growth has produced impressive aggregate gains, but the benefits have not been evenly shared. The Oxfam 2024 report on inequality showed that the richest 1% in India held more than 40% of the country’s total wealth, while the bottom 50% owned only 3%. Economic polarization feeds resentment and undermines the inclusive promise of democracy.
Reports and Statistics: The Plight of Economic Institutions
- Banking oversight has been challenged by persistent loan defaults and controversial write-offs, contributing to enormous taxpayer burdens and undercutting public sector bank credibility.
- Healthcare and education systems are chronically underfunded, with outcomes lagging behind other emerging economies despite India’s scale and resources.
- Welfare programs continue to be plagued by leakages and inefficient targeting, with a significant fraction of allocated funds failing to reach intended beneficiaries.
Thus, Economy shall be the Fourth Pillar
The economy is neither a neutral backdrop nor a purely technocratic concern within democratic politics. It is the terrain upon which justice, participation, and well-being are contested and realized—or betrayed. The shortcomings of the current economic framework in India, and the enduring weakness of many core institutions, show how democratic ideals can be hollowed out by practices that prioritize the welfare of a few over the rights and opportunities of the many.
Addressing these failures calls for not only technical fixes, but a radical rethinking of economic governance that centers local accountability, inclusivity, and public participation. Only then can the promise of democracy be genuinely redeemed in the everyday lives of citizens.
Certainly. Here’s a final transition passage to close Part 1: Anti-Thesis and flow naturally into Part 2: Thesis of your Public Pālikā book:
The Turning Point: From Crisis to Construction
The diagnosis is now clear. What began as a celebration of democracy has, over time, devolved into a performance—elections without empowerment, policies without proximity, governance without grounding. We’ve witnessed how the democratic promise falters when detached from the daily lives of people, and how economic centralisation, institutional fatigue, and performative representation have hollowed out the spirit of participatory governance.
We are not the first to notice these failures. Many before us have critiqued the inadequacies of the state, proposed reforms, and even built alternatives. Yet most such efforts, while well-intentioned, merely patch symptoms without redesigning the structure. The missing piece—what this anti-thesis has laid bare—is not a lack of policies, but the absence of a foundational philosophy and architecture that connects economic justice with democratic sovereignty.
To move forward, we must shift from critique to creativity—from what democracy lacks to what it could become. That journey begins now.
In the next section, we articulate the Thesis: a constructive vision grounded in the philosophy of Lifeconomics. It redefines governance through the lens of human needs—Essential, Existential, and Eternal—and proposes a new distribution logic, the Rainfall Model, as a corrective to the inefficiencies of trickle-down economics. It then explores Ihloktantra, a vision of personalised democracy where the individual is not merely a voter, but an active node of civic agency. Finally, it culminates in the proposal for Public Pālikā—not a replacement of existing institutions, but the long-missing economic pillar needed to complete our democratic framework.
If the first part has shown us what went wrong, the next part begins to imagine what could go right.
Let us now build, not just a better system—but a more human one.
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: India’s health spending as % of GDP: World Bank, WHO data 2023
: Oxfam India: “Survival of the Richest” report, 2024
: RBI Financial Stability Report, June 2024
: National Statistics Office (NSO), India, Education Report 2024
: Periodic Labour Force Survey (PLFS) 2023
: NITI Aayog reports on PDS and welfare leakages, 2022–2024
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