In the naughts, British-born novelist and author Rana Dasgupta was thrilled to call Delhi his home. The city was still buzzing with possibility after India’s 1991 entry into the world of market-driven capitalism. Today, he raises concerns that India’s economic rise has come with massive inequality, environmental destruction and potential social unrest. In Part 2 of an interview with the Institute for New Economic Thinking, Dasgupta shares his view of the contradictions and tensions of India’s economic and political scenes. What does it mean that pro-business Hindu nationalist Narendra Modi was elected prime minister in 2014, while Arvind Kejriwal, a firebrand social activist who speaks for the poor, easily won a second term to lead the nation’s capital in Delhi? How does India’s warlike capitalism co-exist with its deeply democratic spirit? What are the biggest challenges for India going forward?

Lynn Parramore: As the American middle-class grows increasingly insecure, how is India’s new middle-class faring? How do you view its economic status and political presence?

Rana Dasgupta: India plugs into the global system at a later stage, so the wealth, security and confidence the American middle-class gained through the 1950s and ’60s is probably never going to happen.

A few decades ago, for instance, many college graduates in America and elsewhere worked in or even owned bookshops —small businesses that usually didn’t rise to big corporate levels. Then big chains came in and bought many of them up, and then Amazon replaced this entire system with new one in which there was a very highly paid, business-owning minority and lots of minimum wage work.

Is globalizing India going to start with all those little bookshops and then go through the entire same process? No, it’s going to go straight to the end—with the book packing and delivery labor and the people at headquarters doing the marketing and financing. The form of capitalism that’s coming in India will never have the kind of promise that it had in 1950s America, even from the outset. America had to make various concessions to its working majorities for many reasons. The economy was growing so fast over the Second World War it was just better to settle disputes: give the workers what they want and get them carrying on producing.

With the spread of global capitalism elsewhere, the business owners are more careful about giving way concessions because they’re starting off in a much less profitable kind of enterprise. They get the call center work and so on from the U.S. because of low costs, and have to be very careful about offering bargaining power to workers. They can’t start bargaining over the length of the working week or wages because the business will go under very quickly. They actually expect that India will become too expensive at some point and they’ll have to move to Bangladesh or wherever, but the costs of moving are high, so they want to put it off as long as possible.

In America, at the end of the 19th century and the beginning of the 20th century, workers were campaigning for security, to be looked after when they were sick and in their old age and so on. In India, and I suspect in lots of other places in the world, all these kinds of securities were associated with socialism. In capitalism, it’s assumed that no one is going to take care of you — and even in the Singaporean version of capitalism, the Asian values take care of all that social stuff. So it’s pure business. You take care of your sick parents, not the state.

People don’t expect these securities, and the system has been set up to make sure that that kind of thing doesn’t happen. Wages are very seductive — people say, look, I can earn like $1000 a month when my father earned maybe $200. Amazing! But I don’t have health insurance or old age insurance. People can buy themselves a mobile phone and that helps win certain political battles because middle class people can function very well at the everyday level and travel and do lots of things their parents couldn’t do. But this masks the fact that they’re very insecure.

LP: In what ways has globalization impacted notions of democracy in India?

RD: One shouldn’t imply that there’s no argument about these things, even among elites. There’s a lot of debate, and to some extent the election of Modi as prime minister and the election of Kejriwal, who just won a second term as Chief Minister of Delhi, are signs of this.

What is democracy supposed to do for us? Is it just about making sure that big businesses continue making lots of money? The answer is not clear. Some people think that the best thing for India is lots of dynamic big business. It’s assumed that this creates lots of dynamism in the economy generally, and it also gives a sense of symbolic power to India, which is important to people who feel that the country has been historically marginalized and treated with contempt. We would like to have our Microsofts and so on.

Modi makes a lot of his masculine power, the width of his chest and things like that. He’s an authoritarian figure who is clearly anti-democratic in a lot of his instincts, and also very charismatic. He presents himself as vegetarian, frugal and uncorrupt. He’s got this contemporary slant on Hinduism that is all about being personally hygienic in his habits, working very hard, and being devoted to development in business. Modi is actually married, but he’s always claimed to be a single man, because sex is one of those appetites he wishes to disavow. It’s like he wishes to say I don’t eat meat, I don’t have sex, I’m not interested in pleasures, women, and so on. I’m just working for the people. I don’t take money, I’m not corrupt. I started as a tea boy. I’m Hindu and I’m going to make India great. That combination of things is very attractive to some people. It’s about big business and a masculine, pure figure leading it.

LP: What segments of the population are uneasy with his brand of politics?

RD: Modi has been conspicuously unsympathetic to lots of people who are very uneasy for various reasons. He is uninterested in the environment, and that makes people uneasy—in Delhi for instance no one can breathe. The water’s polluted and the ground is polluted. A lot of Muslims are very uneasy because there is a quiet subtext of a Hindu purification of the nation.

There’s also this very fascist undercurrent that Modi is too intelligent to actually state, but there’s a widespread feeling that he gives assent to it to some extent. A lot of women are uneasy about this very masculinist talk of India, coming at a time when women’s security is conspicuously under threat. There’s also labor —he has withdrawn or declared his lack of interest in a lot of the safety nets that were extended by the Congress Party to the poor. He basically has a neoliberal, trickle-down idea of how the economy works.

With Modi’s huge election victory, a lot of people felt that India was supporting most the authoritarian capitalist way. But there’s another idea held in reserve which calls into question all of that — an idea of a much more radical democracy that comes closer to the people and makes the poor visible in its language. Kejriwal is part of that. The broom is the symbol of his party, the sweepers, the poorest people. He’s also interested in fighting corruption and reinventing democracy. For him, democracy is not about very remote people surrounded by enormous security and the kind of accoutrements of the most imperial British power.

Kejriwal famously operated out of his tiny apartment in an unglamorous section of East Delhi. But he’s a guy who has been brought in to run Delhi just a few months after Modi’s victory, so this signals that both political currents are alive and well, that the jury is out on how politics and capitalism fit together in India. Modi can’t be too confident when in his own backyard in the capital, a tiny rival party won massively. He should be aware of putting up too many posters of himself and becoming too much of a one-party state kind of leader, because in the background there is this other, very different possibility.

I think it’s to some extent Kejriwal’s victory is a backlash or a warning. India does have a deeply democratic spirit. That is the deepest thing about Indian culture.

LP: Sounds like people in India don’t really like political extremism, but how do they feel about economic extremism?

RD: I think that one of the things that happens in these kinds of countries is that people are a bit naïve about economic extremism. They take a long time to recognize it for what it is. Economic extremism could lead to political extremism because in the worst kinds of scenarios in India we could have enormous class warfare. We might have just so many people whose lives become unsustainable in the countryside arriving in the cities and realizing that they have nothing to do there and that they don’t have water to drink, and stuff like that. We might have big turbulence in the cities and then there would have to be some kind of political solution.

LP: What do you hope for India’s future? Can the democratic spirit survive the continuation of the kind of warlike capitalism you’ve described?

RD: I think and hope for more moderate solutions. After all, this is a democracy. Poor people have more votes than rich people. The poor in India have an immense resilience, so things can get very bad before it has any political effects. They are incredibly networked. When people in the cities don’t have anything, the people in the countryside take care of them. So there’s a lot of slack in the system even when people are in very dire situations. But ultimately if, say, 500 million people can’t feed themselves or survive, or they just don’t have anywhere to go because the countryside is just full of factories and real estate, then they convert. Hopefully there will be political ideas that have enough quality that these situations can be resolved.

There is the potential for immense wealth creation in India in the next 40 or 50 years, so there will be money and resources to redistribute and resources and as long as the tides of poverty and violence are not too catastrophic, then I think probably the system can readjust itself. Right now, within India, without anything else happening outside, there’s enough prospects for growth. In 40 to 50 years, economies of the West are going to be in dramatic decline, and in the longer term, I think the global system as a whole will face some sort of crisis and that will affect India, too. But in the medium term, India has pretty good growth prospects and hopefully there’s the quality of leadership and ideas that can redistribute some of that wealth and find livable solutions to some of these problems.

But inequality and the environment are going to be massive in Indian politics. Really, no one is talking about water, but giving 1.3 billion people clean water to drink is becoming very difficult. And you can’t survive for very long without it, so if a city of 25 million people — and there are at least two Indian cities that have that kind of number — has no water, the effects are immediate. When there’s no housing the effects could be years away, but when there’s no water, there are water riots immediately. People who don’t have it will steal it because they have to.

So water could be one of the triggering events in Indian cities for how a sort of mini-political revolution might happen and realization on the part of the middle classes that there is actually a wider world that is up against its limits.

Lynn Parramore is contributing editor at AlterNet. She is cofounder of Recessionwire, founding editor of New Deal 2.0, and author of “Reading the Sphinx: Ancient Egypt in Nineteenth-Century Literary Culture.” She received her Ph.D. in English and cultural theory from NYU. Follow her on Twitter @LynnParramore.