India’s economic liberalisation in 1991 initiated far-reaching reforms—privatisation, globalisation, deregulation—which transformed the Indian economy. However, these changes also had profound effects on India's social fabric, particularly in terms of ethnic identity assertion and communal tensions.

Impact on Ethnic Identity

1. Cultural Assertion as Reaction to Globalisation

   • With rapid exposure to global media and consumerist culture, many regional and ethnic communities reasserted local languages, dress, rituals, and symbols as a form of identity preservation.
   • Example: The Kannada language movement gained traction in Karnataka as a cultural assertion against Hindi and English domination in commerce and media.

2. Regionalism and Sons-of-the-Soil Movements

   • Post-liberal policies led to migration for jobs and services, prompting fears of economic displacement among locals.
   • Example: In Maharashtra, the Maharashtra Navnirman Sena (MNS) rose to prominence by attacking North Indian migrants, accusing them of ""stealing"" local jobs.

3. Marginalization and Displacement of Tribal Communities

   • Expansion of mining and industrial corridors displaced Adivasi groups, pushing them to the margins of the economy.
   • Example: The planned mining project in the Niyamgiri Hills (Odisha) by Vedanta was opposed by Dongria Kondh tribes, invoking both cultural and environmental concerns.

4. Political Mobilisation of Ethnic Identities

   • Rise of ethnic-based regional parties that used identity politics to secure vote banks.
   • Example: The Bodoland People's Front (BPF) in Assam represents the Bodo ethnic group, demanding territorial autonomy within the Indian Union.

5. Ethnic Tourism and Commodification of Culture

   • Liberalisation encouraged states to promote cultural tourism, which sometimes led to superficial packaging of ethnic identities.
   • Example: In Nagaland, festivals like Hornbill Festival were state-sponsored to attract tourists, but some locals criticized this for reducing tribal rituals to spectacles.

6. Language-Based Mobilisation

   • Demands for recognition of local languages in administration and education intensified.
   • Example: In Telangana, there was agitation for the inclusion of Telugu dialects and local curriculum even before the statehood movement succeeded.

Impact on Communalism

1. Uneven Growth & Economic Anxiety

   • Liberalisation benefitted certain urban and caste groups (upper castes, urban elites), while others were left behind, creating resentment.
   • Example: Communal riots in Gujarat (2002) occurred in a backdrop where Muslims were economically sidelined in the booming textile and diamond sectors.

2. Urban Ghettoization and Segregation

   • Real estate and housing markets post-1991 led to religious segregation, especially after communal riots.
   • Example: In Ahmedabad, post-2002, localities like Juhapura became Muslim ghettos, with poor access to services, further isolating communities.

3. Identity-Based Vote Bank Politics

   • Political parties increasingly mobilized voters on religious or caste identity, as ideological politics gave way to electoral pragmatism.
   • Example: Frequent communal mobilisations during elections in Uttar Pradesh and Bihar, such as the Ram Mandir issue.

4. Privatisation and Shrinking Welfare State

   • As state withdrew from public services, competition over limited resources like education and jobs sharpened identity divides.
   • Example: Quota politics intensified as marginalized communities like Patidars in Gujarat and Marathas in Maharashtra demanded reservations.

5. Role of Media and Digital Platforms

   • A profit-oriented media model post-liberalisation gave rise to sensationalism and polarised narratives.
   • Example: Certain TV news channels have been accused of disproportionately covering inter-community crimes to provoke communal sentiments.

6. Communalisation of Developmental Conflicts

   • Disputes over land, employment, and water often took on communal colour.
   • Example: In Muzaffarnagar (2013), a personal dispute escalated into a riot between Jats and Muslims, also reflecting competition over sugarcane trade.

7. Global Influences on Local Communalism

   • Exposure to global Islamist and Hindutva ideologies through the internet increased ideological polarisation.
   • Example: Influence of ISIS propaganda on a few Indian youth or the transnational support for Hindutva groups among the diaspora.

While economic liberalisation enhanced India's global stature and economic performance, it also amplified pre-existing social fractures. Ethnic identities became more visible as protective responses, while communal fault lines widened due to competitive politics, unequal development, and media misrepresentation.