Local Funds and Political Competition: Evidence from the National Rural Employment Guarantee Scheme in India

33 Pages Posted: 24 May 2014

See all articles by Bhanu Gupta

Bhanu Gupta

Ashoka University

Abhiroop Mukhopadhyay

Indian Statistical Institute, New Delhi - Delhi Centre

Multiple version iconThere are 2 versions of this paper

Abstract

This paper examines how local politics affects public fund allocations. It uses the context of the National Rural Employment Guarantee Scheme (NREGS) in India which was introduced by the Indian National Congress (INC). Using longitudinal data on funds sanctioned and election results from three rounds of elections in Rajasthan, a state in India, we find an inverted U-shaped relationship between existing vote share of INC and subsequent fund allocations at the block level. To address the issue of endogeneity, we instrument vote shares by their lagged values. The results using only close elections are however distinct as higher funds are allocated to blocks where the INC has lower vote share. We give evidence of a mechanism which highlights the role of a political representative in the funds sanctioning process. Further, we show that the strategy by INC was beneficial in gaining vote share.

Keywords: political economy, local elections, National Rural Employment Guarantee Scheme

JEL Classification: D72, J08, H53, H75

Suggested Citation

Gupta, Bhanu and Mukhopadhyay, Abhiroop, Local Funds and Political Competition: Evidence from the National Rural Employment Guarantee Scheme in India. IZA Discussion Paper No. 8196, Available at SSRN: https://ssrn.com/abstract=2441492 or http://dx.doi.org/10.2139/ssrn.2441492

Bhanu Gupta

Ashoka University ( email )

University Campus, Plot #2,
Rajiv Gandhi Education City
Kundli, 131028
India

Abhiroop Mukhopadhyay (Contact Author)

Indian Statistical Institute, New Delhi - Delhi Centre ( email )

7 S .J. S.
Sansanwal Marg
New Delhi, 110016
India

Do you have negative results from your research you’d like to share?

Paper statistics

Downloads
40
Abstract Views
885
PlumX Metrics