India’s ‘Fear Tax’: How bureaucratic delays hurt economic growth, explains Shashi Tharoor

India’s economic ambitions could be undermined not only by corruption or administrative incompetence, but also by a less visible problem: government inaction. In a recent piece on retired IPS officer OP Singh’s book Decision Velocity: Rational Abdication, the Fear Tax, and the Road to Viksit Bharat, Congress MP and author Shashi Tharoor argues that bureaucratic delays impose an invisible cost on citizens, businesses and the wider economy.

The price of not deciding

Tharoor describes Singh’s central concept of the “Fear Tax” as the price society pays when government decision-makers conclude that “the safest course is not to decide at all”. The problem, he argues, stems from an administrative system in which taking a decision can expose an official to scrutiny, while delaying it may carry comparatively little personal risk.

“It's safer not to act at all,” Tharoor writes, describing the paradox confronting officials. A decision that subsequently goes wrong can invite audits or investigations, whereas a file that remains pending can avoid the same degree of scrutiny.

Singh calls this behaviour “rational abdication”. According to Tharoor, it is effectively a survival strategy within a bureaucracy where officials can face punishment for decisions that are later judged unfavourably. This can encourage officers to seek additional consultations, studies and approvals rather than take responsibility for a definitive decision.

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How delays become an economic tax

The economic consequences of such delays can be significant. When approvals or administrative decisions hold up an industrial project, investment is postponed and jobs can be delayed. Businesses operating under uncertainty may also reconsider where they locate new facilities, particularly when competing states or countries can offer faster decision-making.

For entrepreneurs, the costs can be even more immediate. A prolonged bureaucratic process can consume time and resources, potentially forcing businesses to abandon projects or innovations before they reach the market. Tharoor argues that “the cost of delay is not just a line item in a budget; it is the opportunity cost of growth.”

Why officials choose caution over action

At the heart of the problem, he says, is an accountability framework that can penalise errors of commission more readily than errors of omission. Officials know that decisions taken today could be examined years later, potentially with the benefit of hindsight.

Tharoor argues that India therefore needs to distinguish between honest mistakes and genuine negligence. “A system that does not tolerate the possibility of a wrong decision will rarely produce a right one,” he writes.

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Decision velocity and Viksit Bharat

The issue becomes particularly important in the context of the government’s ambition of building a developed India by 2047. Tharoor argues that a country seeking to attract capital, technology and talent cannot afford an administrative culture that prioritises procedural caution over execution.

The solution, he suggests, is to shift the focus from compliance to outcomes and create institutional safeguards for good-faith decision-making. Administrative success should ultimately be measured by whether the state delivers results efficiently.

“The most expensive decision is often the one that is never taken,” Tharoor concludes, underscoring the broader economic cost of India’s “Fear Tax”.

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