The Scarcity Mindset in India: Capitalism in Disguise

In India, wealth creation is often treated with suspicion, a stark contrast to how it's perceived in the West, where it's celebrated as a badge of achievement. Here, we're seemingly trapped between two worlds: the socialist ethos of sharing the spoils, and the desire to create personal wealth—a curious case of being socialists pretending to be capitalists. The contradictions are glaring. Individually, we crave material success, but as a society, we’re quick to distrust or envy those who achieve it, especially if it's done ethically.

Here's my attempt at diving into the roots of this mindset, tracing its evolution from our colonial hangover to the post-liberalization period, while exploring the current generation of entrepreneurs challenging this narrative.

The Colonial Hangover: A Legacy of Scarcity

The scarcity mindset in India, particularly regarding wealth creation, has deep roots in our colonial past. Under British rule, India's wealth was systematically drained, creating a society where opportunities were limited, and survival meant adhering to the status quo. Generations were conditioned to believe that resources were finite, and any personal gain was at the expense of others. This left a deep psychological imprint on our collective consciousness, where suspicion became the default reaction to anyone amassing wealth.

Post-independence, India adopted socialist ideals, further embedding this mindset. The government took control of key industries, and wealth creation outside of narrow state-sanctioned limits was frowned upon. The ambition to build personal wealth was often equated with moral compromise, and success was seen through a lens of ethical ambiguity.

Post-Independence Struggles: Low-Paying Government Jobs and Servitude to Private Employers

The initial decades after independence saw India grappling with economic instability. Most families, including mine, grew up in environments where government jobs were the pinnacle of aspiration. They were stable, but low-paying, reinforcing the idea that financial success was for the elite or corrupt.

Servitude to private employers wasn’t much different. Working for multinational corporations, or even local private companies, often meant being at the mercy of someone else’s success. Entrepreneurs, in contrast, were few and far between, mainly operating in tightly controlled industries with limited avenues for expansion. This cemented the scarcity mindset—a belief that one could only survive, not thrive.

I grew up in a multicultural business family that had global roots from early on. The exposure was different. My family’s business stretched across borders, and the mindset was inherently global. This gave me a vantage point to see how business, entrepreneurship, and wealth were treated in different cultures. However, most of India wasn’t so lucky. The average Indian household saw wealth as something that came with servitude or inheritance—not something one could create ethically through entrepreneurship.

The Turning Point: Post-Liberalization Era

The liberalization of the Indian economy in the 1990s marked a seismic shift. India opened up to the world, allowing the private sector to flourish and making wealth creation more accessible. The IT industry boom was a watershed moment. It showed Indians that you could create wealth through intellectual capital and innovation—legitimately. The tech sector also helped India break free from the traditional dependency on agriculture and low-paying jobs.

However, the dot-com bust in the early 2000s sobered this enthusiasm. It reminded the country that wealth creation was not a linear path, and failure was part of the journey. But by this time, a new seed had been planted: entrepreneurship was a viable career path.

This was when the suspicion surrounding wealth creation began to erode, but only slowly. Older generations, steeped in a survivalist mindset, were still skeptical. The ghost of colonial rule lingered, manifesting in the way many still questioned the ethics of anyone becoming successful, as though success and morality were inherently at odds.

The 2010s: The Age of New-Age Entrepreneurs

By the 2010s, a new breed of entrepreneurs began to mushroom across India. The startup ecosystem was born, largely fueled by technology, e-commerce, and a digital revolution. These entrepreneurs were different. They were solving real problems, creating genuine value, and in the process, generating significant wealth—not just for themselves, but for their employees, investors, and the broader ecosystem.

Yet, even as this new wave of entrepreneurship gained momentum, the suspicion persisted. It was no longer about wealth creation being impossible; it was about why someone else was succeeding while others weren't. There's a deep-seated discomfort in seeing peers rise, almost as if their success diminishes the potential of others.

This phenomenon is not unique to India, but it’s particularly pronounced here due to our history. Unlike in the West, where wealth is seen as a byproduct of hard work and ingenuity, in India, wealth is still viewed through a socialist lens. You’ll find that even within the startup ecosystem, where entrepreneurship is supposed to be celebrated, there's a palpable undercurrent of resentment. If you’re succeeding too much, too fast, you must be cutting corners—or worse, exploiting someone.

Evolving from a Survivalist Mindset: A Work in Progress

As a society, we’ve evolved from merely surviving to thriving in some sectors. The IT boom, followed by the rise of e-commerce giants and fintech disruptors, has shown us that wealth creation is not only possible but also desirable for the nation’s progress. However, the transformation is incomplete. Many still view wealth through a scarcity lens, believing that success for one comes at the cost of others. This zero-sum game mindset is holding us back.

Part of this is the hangover from the socialist structures of the 20th century, but it’s also a reflection of deeper psychological scars left by colonial rule and the survivalist ethos of our forebears. Government jobs, servitude, and the sheer grind for survival for many generations have ingrained this mentality deeply in our DNA.

The Road Ahead: Shifting Perceptions of Wealth and Success

To truly evolve, India needs to embrace a more open, opportunity-oriented mindset. Wealth creation is not inherently unethical; in fact, it is often the most ethical path, particularly when it comes from solving problems and creating value. The post-liberalization generation, especially the new-age entrepreneurs of today, understand this.

It’s crucial that we shed the suspicion and envy that surround success and instead foster an environment where wealth creation is seen as a national asset rather than a personal gain. Only then can we fully unleash the potential of India’s entrepreneurial spirit.

Let’s acknowledge the progress we’ve made, but also recognize that we still have miles to go. The mindset shift is underway, but it needs to accelerate. Wealth creation is not just about personal gain—it’s about lifting the collective potential of society. The faster we understand this, the closer we’ll be to realizing India’s full potential as a global economic powerhouse.

The debate isn’t over yet, but it’s certainly evolving. The question is: will we evolve with it? Or will we continue to be socialists pretending to be capitalists, trapped in a mindset where success is always someone else’s moral failing?

"True progress is not in pulling others down but in lifting ourselves up to build a society where success is shared, not envied." — Amit Gupta

Authored by Amit Gupta : Ecosystem Enabler & Advisor to growth-stage companies and startups. Partner at Factoryal , a Boutique Management consultancy advising businesses in their holistic growth journeys. Contact at [email protected]

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