The discrimination experienced by Indian Muslims in the economy is widely demonstrated by scholarly literature and various governmental reports. However, little is known about the sources of discrimination. This chapter argues that feelings of karahiyat (disgust, nausea, hideousness, etc.,) among non-Muslims have negative implications for the livelihood choices of Muslims in the economy. Karahiyat has adverse consequences for Muslims in their everyday social, political, and cultural arenas too. Using a micro-level case study of Muslim ex-millworkers’ occupational choices in Mumbai city, this chapter demonstrates that discrimination in the labour market compels Muslims to work in the ghettoised economy, where the high-caste or Other Backward Caste (OBC) Hindus will not work because of its perceived low social status and meagre earnings; and some occupations are considered as polluting and defiling. I conclude this chapter by arguing that religion as a social institution, combined with negative emotions and lack of political patronage, creates barriers for Muslims in the labour market, which compels them to seek livelihood opportunities in a ghettoised economy.