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The Political Economy of Sectoral Credit Provisioning in India: An Empirical Analysis

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  • Kohli Deepti

    (Department of Economics, Swami Shraddhanand College, University of Delhi, New Delhi, India)

Abstract

Electoral dynamics is believed to have a direct bearing on the scope of governmental control over the supply of credit to different economic sectors. This paper attempts to examine the impact of opportunistic electoral manipulations, ideological beliefs and political lobbying on the supply of agricultural and industrial credit across the Indian states. The findings indicate that more competitive elections are associated with increases in credit provision. An incumbent party with a more liberal ideology is found to provide greater average credit to agriculture relative to industry. Finally, an increase in the political contributions provided to an incumbent state government is found to entail greater industrial credit and lower agricultural credit, on an average.

Suggested Citation

  • Kohli Deepti, 2021. "The Political Economy of Sectoral Credit Provisioning in India: An Empirical Analysis," Statistics, Politics and Policy, De Gruyter, vol. 12(2), pages 413-456, December.
    • Handle: RePEc:bpj:statpp:v:12:y:2021:i:2:p:413-456:n:9
    DOI: 10.1515/spp-2021-0004
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    More about this item

    Keywords

    credit provision; electoral competition; legislative assembly elections; political contributions; political lobbying;
    All these keywords.

    JEL classification:

    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • D73 - Microeconomics - - Analysis of Collective Decision-Making - - - Bureaucracy; Administrative Processes in Public Organizations; Corruption
    • E59 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Other
    • P16 - Political Economy and Comparative Economic Systems - - Capitalist Economies - - - Capitalist Institutions; Welfare State

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