Politicians? fear of not being in a position to pursue personal hopes is undermining the modest hopes of India?s citizens

Many observers have commented at length on India?s apparent policy drift, in which economic reforms are being stalled, or even reversed. The last Union Budget?s retrospective taxation and anti-tax-avoidance moves prompted The Economist magazine to answer its question, ?what does the Indian government want?? with a discussion of ?three theories: that it is clueless, that it wants symbolic control, and that it wants cash.? The tax and investment policy mess is just one dimension of an odd state of affairs in Indian policymaking. What the government wants is perhaps best understood by considering what the individuals in the government want. And here the underlying emotions may be the best guide to understanding what is happening and what will come next.

In 2009, Dominique Mo?si came out with a slim volume titled, The Geopolitics of Emotion, with a subtitle, How Cultures of Fear, Humiliation, and Hope Are Reshaping the World, which summarises his central argument. Mo?si?s analysis is impressionistic and broad-brush, focusing on fear in the West and humiliation in the Arab or Muslim world, with hope associated with Asia, particularly China and (ironically) India. Indeed, hope had been rising for many in India for the first decade of the 21st century, making the current mood a stark contrast. The informal nature of the book?s arguments should not detract from the theme that emotions are powerful predictors of behaviour. With this in mind, one can extend this theme to the level of policymakers in India.

From the perspective of emotions, perhaps the seeming cluelessness, assertions of control and quest for cash are all part of a culture of fear that has pervaded the ruling party. The fear of losing power and position seems to be a common thread in attitudes towards policymaking among many in charge. Hope still exists among some decision makers, and seems to have been important in areas such as India?s policy towards Pakistan, but fear seems to have got the upper hand.

Fear is operating in many ways. Those whose positions depend on patronage are uncertain about the future, and with this uncertainty goes fear of losing materially and in status. There is fear that the revenue-expenditure imbalance will only get worse, prompting a search for cash. There is fear that deterioration of the global economy, and the machinations of fickle foreign investors will make life tougher for India?s policymakers. Fear may be contributing to decision making that is defensive and apprehensive, rather than rational and confident.

Bureaucrats may also be reacting to a mild degree of humiliation. The most senior civil servants now were recruited before the liberalisation of the economy, and have moved up the ranks to positions of enormous authority, but with liberalisation having diminished the rationale and scope for many of the previous forms of exercise of that authority. Not all senior bureaucrats may think like this, but perhaps some do?emotions of pride may matter. The fear and weakness in political leadership may give senior bureaucrats a chance to reassert themselves in exercising discretionary control.

Of course, one can also tell different stories. Perhaps India?s rulers are expressing self-confidence in seeking to raise revenue from foreigners, secure in the assumption that India will remain an attractive destination for investment. Also, the insurrections in eastern India?s tribal belt reflect increased fear and humiliation, not hope. And the government?s welfare policies have been driven by the desire to extend hope to more of India?s population, beyond those who already had the skills and capacity to enjoy the fruits of economic liberalisation. Uttar Pradesh?s electorate must have had some hope of improved governance when they dismissed Mayawati and rejected the Congress. In fact, the latter source of hope is on a firmer foundation than the ephemeral hope generated by welfare payments, or the fake hope of an abstract right to food. Meanwhile, investors, both domestic and foreign, have already signalled that India?s recent policies, even if fuelled by self-confidence, do not inspire confidence in others.

Perhaps, then, the problem is that many of India?s politicians do not understand what hope is about. They hope to get even richer than they are, and they fear not being in a position to pursue these personal hopes. This fear is amplified, and is undermining the more modest hopes of the bulk of India?s citizens. Hope does not come from handouts, from patronage, or from discretionary exercise of authority.

India?s stance towards Pakistan is instructive, and in keeping with Dominique Mo?si?s focus on geopolitics. By its actions, including restraint after the Mumbai terror attacks of 2008, and the pursuit of peace and closer economic ties, India has sought to break the cycle of fear and humiliation that has threatened South Asia?s stability. Pakistan can also have hope. But if that is so, then why not more hope and less fear for those who wish to invest in India, whether its own citizens, or others? Perhaps a simple hope-fear test can be used for policymaking, when narrow cost-benefit calculations do not work.

The author is professor of economics, University of California, Santa Cruz