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A number of scholars have classified states on the basis of its policy priorities. Cohesive-capitalist states, for example, focus on growth-oriented policies, while social democratic regimes support generous social entitlements. The existing research on the state and development, however, has rarely examined the role of identity in policy making. This paper addresses this gap in the literature by presenting the concept of dignity regimes as a distinct type of state in multiethnic societies that prioritizes issues of recognition and representation over the purely material concerns of growth and redistribution. In contrast to a class-based understanding of state-formation, this paper examines how inequality in status across ethnic groups shapes the policy priorities of the state. Societies with long histories of group-based discrimination are more likely to develop a wider notion of social justice that is not just rooted in distributive concerns across classes, but principally target equalization of status hierarchy across ethnic groups. This paper outlines the definition and identifying criteria of dignity regimes and examines the conditions under which they emerge. Based on a comparative historical analysis of three states in India, this paper finds that dignity regimes are shaped by two factors – the identity of the political elite, and the nature of inter-ethnic status inequality. If the political elite assumes power conditions of high status inequality, concerns of dignity and recognition find precedence over pure redistribute policies. The politics of dignity is most concretely manifested through reorganizing the ethnic composition of the state bureaucracy in favor of non-dominant groups. Concerns of redistribution find political support only once some equalization of social hierarchy is achieved through greater representation.