I have lived in both India and the US, and what follows is my observation from living in each. Neither the US nor India gives ordinary people a cheap, predictable way to enforce a promise. The US lets you buy your way around that, India makes you wait or find a workaround, and both countries have built whole industries and habits around the gap.
Economists have a term called transaction cost. In the corporate deal, it can be the cost of brokerage, lawyers, and consultants. But for regular people it the hassle, like the deposit, the paperwork, and the lawyers we don’t want to deal with.
There are three ways to pay for that backing:
When my bike got stolen in Seattle, the police report turned out to be just on online form. I thought I’d get a call asking for more details maybe even hear back in a few months when it showed up on some marketplace. Of course, I did not. Hitting submit on that form was the end of it because my insurer only wants a case number before paying, and the cops know that as well as the victim. A public function (finding the person who did it) has turned into a private one (getting you reimbursed). In India (in my opinion) police tried to solve the petty crimes, even if success was limited.
When I was in LA, the most common billboard was not Hollywood, but injury lawyers. A few years later I did get injured due to a driver negligence in Dallas and engaged one of those lawyers. He took a share of my settlement, which was fine by me because even after his involvement I probably got more than what I would have. Someone is being paid to do what a regulator or prosecutor might otherwise do about careless behavior. 90-95% of civil lawsuits settle before trial. In my case, the payout came for the driver’s mandatory insurance. The system rewards the number and size of settlements, not stopping the next reckless driver.
And then there is the biggest offender of them all - healthcare. We have a country where going without insurance is a gamble few people can afford. A primary care checkup costs $400 in Seattle without insurance. $400! No lab work and less than 15min of interaction with the doctor. This $1000/h billing rate for a registered nurse would make most consulting partners feel like a steal. Behind it all is the mutually beneficial bloat between payers and providers. Enough is said about this in popular media that I don’t need to repeat here. But I’m happy to vent in a chat with you, if this triggers you too.
What ties the layers together is speed bought with money. In the US the dispute usually does get resolved through legal fees or the higher prices for everyone through premiums. These industries are so large and wield enough political and economic strength to kill opposition.
The US has had credit score for ~40 years. India’s is around half as old as that. The system’s age along with population, literacy, and other factors mean that the first way to back a transaction - verification is weak.
Punishment, is the second way to back a transaction. As of 2026 around 50 million cases are pending across India’s courts! That’s one case for every 30 citizens, and so many take decades to reach conclusion. If you are an Indian reading this, you probably know somebody in your family who is waiting on a property dispute. So people do what you would expect - families settle issues among themselves, community pressure fills in, or brute force can be called on.
The third way to back a transaction - Insurance - is also a maturing industry. Over 90% of Americans have health insurance, more than double of India’s. There are many systemic reasons, but to me the largest is affordability. Larger families to support, higher (adjusted) rents, family safety nets, etc mean that insurance premium is a luxury that does not have liquidity left for it.
When the official system can’t back a stranger, people fall back on someone they can see. Here are four examples - escalating from home to boardrooms.
Growing up, my family moved cities every few years, but a friendly neighbor always had a key to our house in case we get locked out or need something when away. This rarely happens in the US. People would rather leave a key under the doormat.
Amazon India offers cash on delivery (COD), not for liquidity concerns, but to bridge the lack of trust buyers have in it. They don’t want to get a brick when they order a phone. And if they do, they don’t trust customer care to address it without jumping through hoops. Amazon US does not have COD, but has an effortless returns process and customer care. India often backs itself into this death spiral of shitty systems that need to be abused, but that’s for a whole other blog.
Previously, I said verification to back a transaction was weak. But that is only in an official sense, that scales. Your last name and neighborhood can probably verify you sufficiently get you a shark loan from a local moneylender. But if you don’t have the right signals, you’re not getting further. The US calls this redlining, which has been attacked for systemic racism.
Look at India’s biggest companies - Reliance, Adani, Bajaj, Godrej, Birla, Jindal, Mahindra, Bajaj, Murugappa, HCL groups are led by their founding families. In the US, a family member in the top seat of a large public company is the exception. Founding families may retain a significant stake, yet hired executives run the company. Separating ownership from management is trust too.
Each of these works, and each has a price. The neighbor and the moneylender only help people already inside the circle, and the family firm only works for the family. That is the cost of trust built on relationships: warm for those inside, closed to everyone else. The US went the other way. It lost the neighbor with the spare key but built institutions that deal with strangers, at a price.
US and India are different in so many ways, and I’m not trying to advocate that one look like the other. What’s common about both however is the frustration at paying either time or money to get what’s fair. There are probably lessons to be learned from countries like Korea, Norway, and Singapore where it seems like you can get there without the costs