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Parekh was born in the village of Amalsad in the province of Gujarat, India; his father was a goldsmith with a basic education. Parekh was admitted to the University of Bombay at the age of 15, and earned a bachelor's degree there in 1954 and a Master's in 1956. He began his graduate studies at the London School of Economics in 1959, and received his PhD in 1966.
He taught at the London School of Economics and at the University of Glasgow before finding a long-term position at the University of Hull. Between 1981 and 1984 he was Vice-Chancellor at the Maharaja Sayajirao University of Baroda in India. He also held the Centennial Professorship in the Centre for the Study of Global Governance at the London School of Economics and a professorship of political philosophy at the University of Westminster. In 2002, he served as president of the Academy of Learned Societies in the Social Sciences. Parekh has also served on the Commission for Racial Equality (including a spell as vice-chairman) and has held membership of a number of bodies concerned with issues of racial equality and multiculturalism – most notably as Chairman of the Commission on the Future of Multi-Ethnic Britain from 1998 to 2000. The report of this body (often referred to as the "Parekh Report") has been the basis for much of the debate on multiculturalism in the UK in the early 21st century.
Parekh became a fellow of the Royal Society of Arts in 1988, and of the Academy of Learned Societies in the Social Sciences in 1999.
In 2008, Parekh was awarded an Honorary DUniv From The University of Hull.
On 11 July 2011, Parekh was awarded an honorary degree of Doctor of Social Sciences (DSoc Sci) from Nottingham Trent University.
As well as this he wrote an account of "The Rushdie Affair and the British Press; Some Salutary Lessons" for the Commission for Racial Equality in 1990.