If persuasion does not click, dissuasion may be needed to obtain the desired result. That’s what the Economic Survey presented last week by the government seems to suggest. Authored by chief economic adviser Krishnamurthy Subramanian, the document doesn’t just speak of using behavioural economics. It also invokes religious beliefs as a way to get people to pay off debts. It is expected to work by deterrence, which would presumably be put in place by gentle reminders of what awaits those who fail to do the needful—as divinely ordained. In the Hindu tradition, the Survey says, the non-payment of debts is a sin. If a person dies indebted, his soul may have to face adverse consequences. In such an event, it is the duty of the errant debtor’s children to save his or her soul. The Survey also cites an Islamic injunction on paradise being barred to those who haven’t cleared their debts, with the addendum that heirs could pay on their behalf if the money left behind by the deceased proves insufficient. Christian tenets have also been quoted. The Bible, the Survey notes, says, “Let no debt remain outstanding except the continuing debt to love one another," and “the wicked borrows and does not repay, but the righteous shows mercy and gives." Even if it’s part of a broader thrust aimed at framing policies that seek to modify the behaviour of people, such a discourse in an official document is rather unusual, to say the least.
Could this approach work in India? After all, religion is deeply ingrained in Indian society, be it in people’s personal lives or the nation’s polity. Images of deities are often put up on walls and other objects in public places to deter vandals. In the economic sphere, however, the efficacy of such a behaviour-modification tool remains largely untested. Indeed, appeals to the conscience of people have had some success. One example of it was Prime Minister Narendra Modi’s exhortation to the well-off to give up their cooking gas subsidy in favour of those who really needed it. However, whether morality drawn from religion could get citizens to meet their financial obligations is unclear. Could it nudge borrowers not to skip paying their dues, make tax evaders come clean, or prod corporate wilful defaulters to cough up the crores they owe?
The bigger question is whether we should resort to religious ideals as an economic instrument at all. Granted that money itself probably evolved as a debt settlement mechanism, with I-owe-you tokens being exchanged within a human settlement that had discovered division of labour. It’s also likely that codes of faith helped prevent payment breakdowns in olden days. However, finance took off only after the role of fate was taken over by yardsticks of risk that were globally applicable, regardless of belief systems. In a country of India’s diversity, debt itself has varied views. Usury, for instance, is a sin in the Christian and Islamic traditions, and this is sometimes interpreted as a ban on interest charges per se. Also, modern liability limitations have been found to help encourage the risks that businesses must take to generate returns. Stirring up thoughts of divine retribution on matters of money could have unforeseen results, possibly. It’s one thing to arouse people’s conscience for a worthy cause. It’s quite another to particularize principles that work best on a universal acceptance of their logic. Yet, divine deterrence could be just the nudge that the fiscal faithful seek.