Partisan Politics and Intergovernmental Transfers in India

40 Pages Posted: 20 Apr 2016

See all articles by Stuti Khemani

Stuti Khemani

World Bank; World Bank - Development Research Group (DECRG)

Date Written: April 2003

Abstract

Recently there has been a surge in international empirical evidence that national policymakers allocate resources across regions based on political considerations, in addition to any normative considerations of equity and efficiency. In order to mitigate these political compulsions, several federations around the world have attempted to create independent constitutional bodies that are responsible for determining federal transfers to subnational jurisdictions. Khemani tests whether constitutional rules indeed make a difference in curbing political influence by contrasting the impact of political variables on two types of intergovernmental transfers to states in the Indian federation over a period of time, 1972-95. The pattern of evidence shows that transfers, whose regional distribution is determined by political agents, usually provide greater resources to state governments that are politically affiliated with the national ruling party and are important in maximizing the party's representation in the national legislature. But the political effect on statutory transfers, determined by an independent agency with constitutional authority, is strikingly contrary, with greater resources going to unaffiliated state governments. The author argues that this contrasting evidence indicates that constitutional rules indeed restrict the extent to which partisan politics can affect resources available to subnational governments.

This paper - a product of Public Services, Development Research Group - is part of a larger effort in the group to study the impact of public spending programs.

Suggested Citation

Khemani, Stuti, Partisan Politics and Intergovernmental Transfers in India (April 2003). World Bank Policy Research Working Paper No. 3016. Available at SSRN: https://ssrn.com/abstract=636378

Stuti Khemani (Contact Author)

World Bank ( email )

1818 H Street, N.W.
Washington, DC 20433
United States

HOME PAGE: http://econ.worldbank.org/staff/skhemani

World Bank - Development Research Group (DECRG)

1818 H. Street, N.W.
MSN3-311
Washington, DC 20433
United States

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