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Why is it that ethnic parties from marginal groups often seem to ignore development even when the vast majority of their constituents live in poverty? Theories of democratization and welfare after all predict that the working class should support redistribution. I argue that societies with long histories of group-based discrimination have a wider conception of social justice that is not just concerned with redistribution of material wealth, but aims at equalization of status hierarchy across groups through greater descriptive and symbolic representation. Based on a comparative historical analysis of two Indian states – Bihar and Tamil Nadu, I find that the policy agenda of ethnic parties is contingent on the level of status inequality across groups. Under conditions of high status inequality, which is indicative of discrimination and humiliation faced by members of marginal groups, concerns of dignity and recognition find precedence over pure redistributive policies. The politics of dignity is most concretely manifested through representation of non-dominant groups in the state bureaucracy as well as inclusion of marginal cultures and symbols in public spaces. Concerns of redistribution find political support only once some equalization of social hierarchy is achieved through greater representation. The findings of this study suggest that our understanding of development in multiethnic societies has to go beyond the growth-versus-redistribution paradigm that continues to dominate much of the social science discourse.