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

Abstract

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Politicians, Bureaucrats, and Development: Evidence from India

“…Growing research on NREGS has examined the impact of the program on socioeconomic outcomes such as wages and employment (Dutta et al 2014, 2012; Imbert and Papp 2015), fund allocation (Banerjee et al 2014; Gupta and Mukhopadhyay 2014), and political violence (Fetzer 2014; Khanna and Zimmermann 2015). However, we know of no published research that has systematically explained the substantial microlevel variation in the quality of implementation at the local level across all of India at the village, village cluster, or block levels.…”

Political Decentralization

“…In contrast, many Indian states allow upper-level governments to retain discretion over these transfers, allowing scope for political manipulation. Gupta & Mukhopadhyay (2014) show that the Rajasthan state government dominated by the Indian National Congress (INC) allocated larger funds for the national employment guarantee program to blocks (a layer of government between the district and village levels) in which the INC lost the previous election by a narrow margin and that this helped the INC recover its vote shares. Retaining discretion over interjurisdictional transfers enables parties dominating higher-level governments to manipulate these to secure political advantages, in a manner rarely visible to citizens.…”

A Consensus Unravels: NREGA and the Paradox of Rules-Based Welfare in India

“…In Rajasthan, those seats in which the Congress won less than 39 per cent of the vote received 22 per cent on average higher funds allocated to them under the NREGA, suggesting that the NREGA was being used to influence voters. However, more generally, in Rajasthan NREGA funds were reasonably well targeted, being negatively related to the prevalence of irrigated land, positively linked with the local proportion of SCs and STs, negatively related to the quality of the local infrastructure and more prevalent in areas where the literacy rate was lower (Gupta and Mukhopadhyay, 2014).…”

“…In Indian Lok Sabha elections between 1957 and 1991 a winning party needed 55 per cent of the vote in districts where there were two competitive parties and 38 per cent in districts with 3+ effective parties. Empirical evidence shows that multi-party systems in India spend less on public goods relative to targeted goods and salaries; (Chhibber and Nooruddin, 2004), and the successful implementation of the NREGA in Andhra Pradesh (Kholsa, 2011) and in Rajasthan (Gupta and Mukhopadhyay, 2014) was linked to close, two-party competition for power at state level.…”