This chapter analyses the emergence of caste and untouchability in India and their ramifications for poverty and inequality. It points to India’s worsening caste separation despite constitutional guarantees against untouchability and protection of entry to public education and jobs. Caste remains the certificate for dominant castes to discriminate against lower castes in work, housing, movement, marriage and education resulting, effectively, in upper caste entitlements. This has direct impact on earning capacities. Data reveal lower castes occupy a lower share of the top income decile. Caste structure comprises four main categories from priests to menials. The origin of caste is contestable. It cannot be attributed to Indo-Aryan Persia. Caste was categorized in purusha sukta, oldest among ancient texts circa 1200 BCE. Subsequent texts sharpened caste occupations, rituals and consequences of polluting caste mixes. Buddhism appeared and temporarily rid India of caste until the re-emergence of Hindu dynasties. Young widows were burnt alive on funeral pyres of deceased husbands at the diktat of brahmin priests even during eighteenth century. British rule further sharpened caste divisions through the judiciary and censuses. Caste continues with an important role in contemporary politics.