From Manusmriti to modern labour governance: the caste-blind economics behind India’s 2025 National Labour Policy Draft

According to the World Bank’s latest estimates, India’s Gini Index stands at 25.5, a figure that, in statistical terms, places it among the more equal economies globally. Add to this the fact that India has recently overtaken Japan to become the world’s fourth-largest economy, and you have what seems like a textbook success story: a nation that is not only growing but distributing its growth fairly. Or is it? 

Scratch beneath the surface, and the sheen of equality quickly begins to fade. The Indian labour market continues to churn out disparities rooted not in market logic, but in the rigid scaffolding of caste. The inequalities we see aren’t incidental; they are historical. Scheduled Castes (SCs) and Scheduled Tribes (STs) make up a significant portion of India’s working population, yet many remain stuck in the most demeaning, insecure, and low-paid jobs. The labour market, in short, isn’t just layered; it’s rigged, hardwired by an inherited system of social stratification. 

Family-run enterprises helmed by the Baniya caste continue to dominate large swaths of Indian commerce. Capital, social networks, and legitimacy are passed down like heirlooms. At the same time, Dalit communities are still overwhelmingly represented in manual scavenging. These occupational patterns are not accidental cultural leftovers; they are the economic echoes of the Manusmriti, a text that once (and arguably still does) undergird a social order where work and worth are allocated by birth. 

So when the Ministry of Labour and Employment released its draft National Labour & Employment Policy – Shram Shakti Niti 2025 – it understandably attracted attention. The policy claims to be rooted in constitutional values like dignity and equality, but curiously, it also draws on ancient religious texts like the Manusmriti, Yajnavalkyasmriti, Naradasmriti, Sukraniti, and Arthashastra. These are positioned as the wellsprings of India’s indigenous labour philosophy, participatory, inclusive, and self-regulatory, or so the argument goes. 

The problem? The Manusmriti doesn’t just offer a labour framework; it codifies a social hierarchy. It assigns tasks to four varnas, Brahmin, Kshatriya, Vaishya, and Sudra, with Dalits, once considered ‘outcastes’, relegated to the bottom. This isn’t dusty, dead theory. Its legacy lives on. In modern India, almost every priest is a Brahmin, most business owners are Vaishya, and nearly all manual scavengers are Dalits. Dr B.R. Ambedkar captured this best: caste in India is not a division of labour but a “division of labourers”. 

By treating the labour of Brahmins as “pure” and that of Dalits or Sudras as “impure”, the Manusmriti embeds inequality at the level of moral reasoning itself. Verses like “A Shudra who serves faithfully should be fed and clothed, but never be given wealth” or “A servant, even when freed, is not independent” normalise servitude. Value isn’t derived from effort or productivity, but from the accident of birth.

Women fare no better in this worldview. The same text states, “A woman must be subject to her father, her husband, and later, her sons.” There is no room for autonomy, let alone employment rights. Yet, this very text is being held up as a foundation for contemporary labour governance. 

This should alarm us. 

Citing isolated principles like “fair wage” (Sulka Nyaya) or “guild harmony” (Sreni) as redeeming aspects of such texts amounts to whitewashing their deeply hierarchical context. To integrate these into a 21st-century policy risks embedding caste and gender discrimination into the state’s official imagination of work and worth. 

And the data backs up this concern. In her groundbreaking book Grammar of Caste, economist Ashwini Deshpande demonstrates that while wage gaps between castes have narrowed in the lower rungs of the income ladder, they’ve widened for elite, white-collar jobs. What’s more troubling is the rise of the “unexplained” component in wage differences, a proxy for discrimination, even in urban, ostensibly meritocratic settings. 

This should shatter any illusion that caste is a rural anachronism. In India’s tech parks and office towers, caste still silently decides who gets hired, promoted, and paid more. 

And then comes the double whammy: caste and gender together. Dalit women are stuck in the worst of the worst, low-paid, insecure work, with virtually no ladder to climb. This isn’t just about unequal pay for equal work. It’s about being shut out from the very jobs that offer security and mobility. 

Through the lens of the wage-setting (WS) and price-setting (PS) framework, the story becomes starker. Marginalised caste workers, due to their low reservation wage and limited bargaining power, are unable to negotiate better wages. Formal protections and unions often exclude them. The market doesn’t reward their productivity; it exploits their vulnerability. 

Even labour unions, traditionally seen as equalisers, rarely amplify caste-based demands. For those in occupations like manual scavenging, unionising often leads to dismissal, not dialogue. 

So, what does Shram Shakti Niti 2025 offer them? Rhetoric, mostly. Promises of fairness and dignity, yes, but without the institutional scaffolding needed to uphold them. The 2020 OSH Code doesn’t even explicitly mention sanitation workers or manual scavengers. The PEMSR Act of 2013 banned manual scavenging, but loopholes allow it to continue in the name of “mechanical cleaning”. Meanwhile, Dalit workers continue to die in sewers. 

This isn’t just a policy gap. It’s a moral chasm. 

A truly transformative labour policy must start by recognising these fault lines. Symbolic gestures won’t cut it. We need structural reform: anti-discrimination audits, caste-diversity tracking, mandatory safety protocols for hazardous caste-bound occupations, and enforceable mechanisms for grievance redressal.

The proposed Labour and Employment Policy Evaluation Index is a start, but only if it includes caste-sensitive metrics: the number of SC/ST workers in formal jobs, reductions in manual scavenger deaths, and disaggregated workforce data by caste and gender. Extend collective bargaining to informal sectors. Ensure social protections actually reach the people they’re meant for. Economic progress must not be built on social regression. If Shram Shakti Niti is to live up to its name, it must honour the labour of all, not just by citing ancient texts, but by dismantling the ancient chains that still bind millions to indignity.

References

• Draft National Labour & Employment Policy – Shram Shakti Niti 2025 (Ministry of Labour and Employment, India)
• Grammar of Caste by Ashwini Deshpande (Oxford University Press)
• The Prohibition of Employment as Manual Scavengers and their Rehabilitation Act, 2013

Photo by Pop & Zebra on Unsplash