Courage Is All You Need

Indian civilization and the Indian state incentivize safety, and disincentivize risk.

“Culture is Destiny”
Lee Kuan Yew

First, the good news: Indians are generally adaptive and intelligent. When Indians compete with other nationals in level-playing fields - like the US job market - Indians win handsomely. Indian Americans are the wealthiest ethnic group in America. Collectively, Indians sent back $129B to India in 2024, the highest in the world. Mexicans are a distant second at $68B. But back home, India remains poor and unhappy. Because the growth of a country depends not so much on its collective intelligence as on its collective risk-taking ability.

Unfortunately, Indian culture incentivizes safety, and disincentivizes risk.

One (of perhaps, many) proxy to assess a country’s risk-taking appetite is to see its readiness to take leverage, or debt. Debt is a disciplining instrument that necessitates that one’s future be better than the present. Taking debt is an indication of self-belief. India’s household debt to GDP is one of the lowest of all major economies in the world. The recent financialization has done little to change the cultural mindset. Nothing makes a status-conscious Indian family more uncomfortable than being indebted to a faceless bank. While low debt may signal financial prudence in later stages for a culture, it signals risk aversion in earlier stages.

Source: IMF

At corporate level too, Indian companies remain massively under-leveraged, even as the cost of borrowing has significantly come down since 1991. The collective debt-to-equity ratio of India’s top 50 companies significantly lags those of US or China.

In most families, even today, government jobs are still favoured over private sector jobs. The safety of a low-paying government job outweighs the uncertainty of a high-growth private sector job. Even our finest aren’t immune to this low cultural self-belief. Nandan Nilekani recently said that building our own Large Language Model was a waste of resources, despite the sheer quantity and quality of our tech talent. Meanwhile, China quietly shipped their own LLMs, at par with American’s best models, at one-tenth the cost.

But why is India so risk averse?

There’s civilisational as well as political reasons.

What doesn’t kill you makes you stronger. And nothing has almost-killed India, ever. The Indian civilization has never seen a catastrophe in 5000 years. It has been in continuity forever. Everything was permissible here, everything was abided by, India just went on, alive even though diminished. This continuity is comforting. India, even though poor, basks in this civilizational safety. This instinct is coded deep inside our psychology. In fact, ours is the only civilization that sacralizes poverty - there’s some abstract purity and morality in being poor in India.

To understand this civilizational effect, it would help to look at two communities that were not afforded this safety: the Parsis and the Sindhis, two of the wealthiest social groups of the country. Both these groups came to India as refugees, fleeing persecution from Persia and post-partition Sindh. In India, they had nothing - no wealth, no network, and no land to call their own. The only way to survive was to take bold risks. And risk they did, and it paid off really well. When there is no downside, everything becomes an upside. Suffering makes the ground fertile for risk. Safety corrupts and coddles.

It doesn’t need to be that extreme. Even something as simple as migration, uprooting of one’s self from the comforts and Kool-aids of one’s community makes one risk-friendly. My father, a Maharashtrian, is one of the very few Maharashtrian businessmen I know. One big reason why he was able to quit his job and start his own business was because he lived away from Maharashtra, in Indore, away from the safety of a traditional risk-averse Maharashtrian upbringing. His risk paid off. I am a beneficiary of that risk. You could say the same about the Gujaratis in Mumbai and the Marwaris in Kolkata. India needs more migration within India. Perhaps building more cities, more urban centres, and not romanticizing villages is a good start.

When Indian civilization became the Indian state, the first political impulse was coddling the Indian citizen by creating large public welfare schemes without the revenue to fund them. In 1991, when India did finally open its economy, it wasn’t categorically to free the markets, but to increase the state’s revenue so more public schemes could be funded¹. When zero-balance bank accounts became a roaring success, a section of Indian political dispensation cheered not because it would unleash financialization, but because the direct transfer of monies could now be done more efficiently. Even today, look around and you’ll find that assembly elections cannot be won without politicians promising free sops, and coddling the average Indian citizen.

Indians never get tough love, only empty comfort. The result is a neutering of our animal spirits, first by our civilization, then by our state.

Cultural changes cannot be made overnight. It will take years, if not decades. However, the first step is to recognize our own flaws. The onus then falls on each one of us to fight our collective cultural psychology. The risk aversion of the Indian apparatus can only be fought by the courage of Indians.

Avoiding risk feels psychologically safe, it is an instinct of evolution to confuse this safety for progress. What it is in reality though is stasis. The arc of the Indian apparatus will bend towards stasis, unless the Indians fight back. And many Indians have fought back. It is thanks to them that we have come this far since 1947, but it isn’t enough, not nearly enough. The first step is unwavering self-belief.

Of what use is our intelligence, if we don’t have the courage to bet our future on it?

1. PV Narsimha Rao, the Prime Minister who liberalized India’s economy, partly under IMF’s pressure, was a staunch socialist. To justify his decision to liberalize India, he took help of Nehruvian socialism. He told them that opening up India’s economy will increase government’s revenue which will allow the Indian state to fund larger welfare schemes. Consequently, India’s fiscal deficit as a percent of GDP has remained the same, if not slightly increased, since 1991.