CAA & NRC: Do Intolerance & Social Divide Affect Economic Growth?

How are two seemingly different issues — economic slowdown and social divide — related? Mayank Mishra explains.

4 min read
Image used for representational purposes.

Two of the country’s finest minds have drawn our attention to the crises the nation is facing now, that is, the great economic slowdown and the deepening social divide. While Arvind Subramanian, the former chief economic advisor, in a co-authored research paper talks about the country's economy heading towards the ‘intensive care unit’ (ICU), Ramachandra Guha, one of our most acclaimed historians and commentators, talks about the “rapid fall in India’s standing in the world” fuelled by religious bigotry.


‘Economy’s Illness is Severe’

Subramanian and his co-author observe that “the growth of consumer goods production has virtually halted; production of investment goods is falling. Indicators of exports, imports, and government revenues are all close to negative territory. These indicators suggest the economy’s illness is severe…[this] economic slowdown seems closer to the 1991 balance of payments crisis.”

For context, 1991 is when our country was about to default on international debt obligations and we needed an urgent bailout from a global institutional lender.

Since the warning has come from an eminent economist who was an insider not so long ago, we must take it seriously.

Does Rise in Religious Intolerance Harm Economic Growth?

Ramachandra Guha, on the other hand, writes that “the passing of the nakedly communal Citizenship (Amendment) Bill will further encourage the world to see us as a nation driven by religious bigotry and sectarian prejudice.” You may not agree with their views. There may be elements of exaggeration in their arguments. But the economic slowdown is real, and we could still avoid the ICU if the forthcoming budget addresses some of the structural issues aimed at reviving consumer demand. Similarly, religious bigotry seems real, at least among a certain section of society. But has it become the majority’s view? Both the intellectuals have got their approach right, and we should look into their views with serious consideration.

How do the two seemingly unrelated factors feed into each other? Do deepening social division and religious intolerance harm economic growth? 

A body of scholarly papers does suggest that religious intolerance has the potential to do more harm than good.


‘Religious Freedom Allows for Better Economic Outcomes’

A 2014 research paper by Georgetown University scholars, after analysing data from as many as 173 countries, concludes that “religious freedom contributes to better economic and business outcomes and that advances in religious freedom are in the self-interest of businesses, governments and societies by contributing to successful and sustainable enterprises that benefit societies and individuals.” Conversely, a society that thrives on mistrust and suspicion brings immense harm to itself. The consensus is key and not conflict or confrontation.

A World Economic Forum paper takes the argument forward and quotes several scholarly pieces of research to suggest that “freedom of religion can contribute to a rich pluralism that is itself associated with economic growth.

For instance, according to recent research, the world’s 12 most religiously diverse countries outpaced the world’s economic growth between 2008 and 2012. Indeed, the active participation of religious minorities in society often boosts economic innovation, as the history of Industrial Revolution has shown.”

Religious Tolerance Allows for Innovation

There is yet another interesting paper studying the relationship between valuable patents and religious diversity of the group credited to have filed them. The evidence is from 19th century Prussia (now Germany). It points out that “by matching a unique historical data set about religious tolerance in 1,278 Prussian cities with valuable patents for the period 1877-1890, we show that higher levels of religious tolerance are strongly positively associated with innovation during the second industrial revolution. Religious tolerance is measured through the population’s religious diversity.” What’s more, the propensity to innovate goes up manifold even with a slight increase in diversity quotient.

19th century Germany (known as Prussia then) is credited to have ushered in an era of technological advances.

The paper examines whether that had anything to do with one particular sect as has been argued by many, the most notable being the German social scientist Max Weber. Authors of the paper argue that “we show that it was not a single denomination or the level of human capital embedded in a religious group that affected innovation during the second industrial revolution. Instead, it was the level of religious tolerance measured through the presence of different denominations, churches, and preachers that had a significant impact on innovation.”


Lessons from the Past

What happened more than a hundred years ago in erstwhile Prussia holds a great deal of relevance even today. This is why former Prime Minister Manmohan Singh wrote not very long ago that “there is a profound fear and distrust among people who act as agents of economic growth. When there is such distrust, it adversely impacts economic transactions within a society. When transactions among people and institutions are negatively impacted, it leads to a slowdown of economic activity and eventually, stagnation. This perilous state of fear, distrust and lack of confidence among citizens is a fundamental reason for our sharp economic slowdown.”

Shouldn’t we be listening to the sane voice of a former prime minister who has been known for his erudition and calm demeanour?

The choice before us is very clear. We can either go down the path of conflict and lead our economy to the ICU, or else let the voices of consensus and conciliation prevail. The health and wealth of the nation will depend on the kind of choice we eventually make.

(Mayank Mishra is a senior journalist who writes on Indian economy and politics, and their intersection. He tweets at @Mayankprem. This is a an opinion piece, and the views expressed above are the author’s own. The Quint neither endorses nor is responsible for the same.)

(At The Quint, we are answerable only to our audience. Play an active role in shaping our journalism by becoming a member. Because the truth is worth it.)

Speaking truth to power requires allies like you.
Become a Quint Insider

or more


3 months
12 months
12 months
Check Insider Benefits
Stay Updated

Subscribe To Our Daily Newsletter And Get News Delivered Straight To Your Inbox.

Join over 120,000 subscribers!