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Partisan politics and intergovernmental transfers in India

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Author Info
Khemani, Stuti

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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. The author 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.

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Paper provided by The World Bank in its series Policy Research Working Paper Series with number 3016.

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Date of creation: 30 Apr 2003
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Handle: RePEc:wbk:wbrwps:3016

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Keywords: National Governance; Regional Governance; Banks&Banking Reform; Municipal Financial Management; Urban Governance and Management; Banks&Banking Reform; Municipal Financial Management; Regional Governance; Urban Governance and Management; National Governance;

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Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Persson, Torsten & Tabellini, Guido, 1997. "Political Economics and Macroeconomic Policy," CEPR Discussion Papers 1759, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
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  2. Grossman, Philip J, 1994. " A Political Theory of Intergovernmental Grants," Public Choice, Springer, vol. 78(3-4), pages 295-303, March.
  3. Khemani, Stuti, 2002. "Federal politics and budget deficits: evidence from the states of India," Policy Research Working Paper Series 2915, The World Bank. [Downloadable!]
  4. Snyder, James M, 1989. "Election Goals and the Allocation of Campaign Resources," Econometrica, Econometric Society, vol. 57(3), pages 637-60, May. [Downloadable!] (restricted)
  5. Bungey, Mel & Grossman, Philip & Kenyon, Peter, 1991. "Explaining Intergovernmental Grants: Australian Evidence," Applied Economics, Taylor and Francis Journals, vol. 23(4A), pages 659-68, Part A, A.
  6. Becker, Gary S, 1983. "A Theory of Competition among Pressure Groups for Political Influence," The Quarterly Journal of Economics, MIT Press, vol. 98(3), pages 371-400, August. [Downloadable!] (restricted)
  7. Avinash Dixit & John Londregan, 1998. "Ideology, Tactics, And Efficiency In Redistributive Politics," The Quarterly Journal of Economics, MIT Press, vol. 113(2), pages 497-529, May. [Downloadable!] (restricted)
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  8. Andrew Worthington & Brian Dollery, 1998. "The political determination of intergovernmental grants in Australia," Public Choice, Springer, vol. 94(3), pages 299-315, March. [Downloadable!] (restricted)
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  9. Case, A, 1996. "Election Goals and Income Redistribution : Recent Evidence from Albania," Papers 177, Princeton, Woodrow Wilson School - Public and International Affairs.
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  10. Khemani, Stuti, 2001. "Decentralization and accountability : are voters more vigilant in local than in national elections ?," Policy Research Working Paper Series 2557, The World Bank. [Downloadable!]
  11. Dixit, Avinash K & Londregan, John, 1994. "Redistributive Politics and Economic Efficiency," CEPR Discussion Papers 1056, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
  12. Weingast, Barry R & Shepsle, Kenneth A & Johnsen, Christopher, 1981. "The Political Economy of Benefits and Costs: A Neoclassical Approach to Distributive Politics," Journal of Political Economy, University of Chicago Press, vol. 89(4), pages 642-64, August. [Downloadable!] (restricted)
  13. Dixit, Avinash K & Londregan, John, 1994. "The Determinants of Success of Special Interests in Redistributive Politics," CEPR Discussion Papers 1054, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
  14. Inman, Robert P. & Rubinfeld, Daniel L., 1996. "Designing tax policy in federalist economies: An overview," Journal of Public Economics, Elsevier, vol. 60(3), pages 307-334, June. [Downloadable!] (restricted)
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Khemani, Stuti, 2002. "Federal politics and budget deficits: evidence from the states of India," Policy Research Working Paper Series 2915, The World Bank. [Downloadable!]
  2. Sarmistha Pal & Sugata Ghosh, 2006. "Elite Dominance and Under-investment in Mass Education: Disparity in the Social Development of the Indian States, 1960-92," CEDI Discussion Paper Series 06-05, Centre for Economic Development and Institutions(CEDI), Brunel University. [Downloadable!]
    Other versions:
  3. Albert Solé-Ollé & Pilar Sorribas-Navarro, 2008. "Does Partisan Alignment Affect the Electoral Reward of Intergovernmental Transfers?," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
  4. Sarmistha Pal & Sugata Ghosh, 2008. "The Elite and the Marginalised: an Analysis of Public Spending on Mass Education in the Indian States," CEDI Discussion Paper Series 08-15, Centre for Economic Development and Institutions(CEDI), Brunel University. [Downloadable!]
    Other versions:
  5. Albert Sole-Olle & Pilar Sorribas-Navarro, 2008. "Does partisan alignment affect the electoral reward of intergovernmental transfers?," Working Papers in Economics 206, Universitat de Barcelona. Espai de Recerca en Economia. [Downloadable!]
  6. Rajashri Chakrabarti, 2005. "Gains from a Redrawing of Political Boundaries: Evidence from State Reorganization in India," Others 0512002, EconWPA. [Downloadable!]
  7. Khemani, Stuti, 2000. "Political cycles in a developing economy - effect of elections in Indian States," Policy Research Working Paper Series 2454, The World Bank. [Downloadable!]
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