How Trust In Governance Varies By The Level Of Affluence In India

Context: Trust factor remains a vital element of development and shall be revived to ensure economic recovery.

Importance of trust: Trust is closely intertwined with economic well being

• According to Kenneth Arrow, 1972 Nobel laureate, every commercial transaction has an element of trust. E.g. Creditors loan money to debtors on the promise of future repayment.
• Much of the economic backwardness in the world can be explained by a lack of mutual confidence.
• Subjective well-being is closely correlated with trust in the government, judiciary and police.

Identifying the association of trust in institutions with per capita income/expenditure as a measure of affluence: Through the data from the India Human Development Survey 2015 (IHDS)

• Trust in governments: Over one-third of households reported a great deal of confidence, under half only some confidence, and over one-fifth hardly any. Trust is declined with the rise in affluence –
  • Share of those with a great deal of confidence fell from the extremely poor to the affluent sharply.
  • Share of those with only some confidence also fell, but moderately.
  • Share of those with hardly any confidence rose moderately with rising expenditure/income.
  • Essentially, what is resented, is that they bear the brunt of a redistributive policy agenda.
• Judiciary emerged as an institution with the highest trust: A large majority (just under 70%) displayed great confidence in judiciary despite being an overload of cases and consequent delays.
  • Shares of those with a great deal of confidence fell sharply across terciles.
• Low confidence in Police: Barely 18 % of overall households reported a great deal of confidence, and the largest share of confidence remained among the extremely poor.
  • Raises doubts whether fears of police reprisal overshadowed bribes, arbitrary arrests and often unprovoked violence, which affects the extremely poor the worst.

Factors leading to further deterioration in trust

• Pandemic mismanagement:
  • Draconian lockdowns, inept handling of second wave, self-glorification of the leadership, wasteful public expenditure (such as Central Vista project) and an apparent dip in investor confidence.
  • Accommodative monetary policy has not been effective, and the fiscal stimulus announced so far has been too little and too late.
• Shift in characteristics of the ruling regime: Conduct of excessive centralization and relatively submissive state administration.
• Dip in confidence level among religious minorities and historically downtrodden groups: Due to -
  • Events around controversial Citizenship Amendment Act in 2019.
  • Allegations of extra-constitutional authority being exercised by those in power and biases against the socially vulnerable.

Conclusion: Revival of trust is key to revival of Indian economy.