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The political consequences of resource scarcity: Targeted spending in a water-stressed democracy

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  • Mahadevan, Meera
  • Shenoy, Ajay

Abstract

We study whether resource scarcity enhances the scope for targeted spending in India. Farmers without access to groundwater during dry seasons cope using a large public-aid program controlled by local politicians. We leverage a multidimensional regression discontinuity for exogenous variation in whether local politicians are aligned with the state’s ruling party. We find that the state government channels disproportionate funds to politically-aligned jurisdictions in water-stressed areas and gains votes in subsequent elections. However, we find no partisan differences in aid allocation for non-water-stressed areas, suggesting a selective targeting of public funds to garner votes in the highest-return regions.

Suggested Citation

  • Mahadevan, Meera & Shenoy, Ajay, 2023. "The political consequences of resource scarcity: Targeted spending in a water-stressed democracy," Journal of Public Economics, Elsevier, vol. 220(C).
    • Handle: RePEc:eee:pubeco:v:220:y:2023:i:c:s0047272723000245
    DOI: 10.1016/j.jpubeco.2023.104842
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    Cited by:

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    2. Yulong Chen & Sophie Xuefei Wang & Xu Wang, 2026. "The Effects of the South‐to‐North Water Transfer Project on Agriculture in China: A Tale of Two Routes," Agricultural Economics, International Association of Agricultural Economists, vol. 57(1), January.
    3. Deng, Yanru & Nepal, Rabindra & Shao, Xuefeng & Ding, Chante Jian & Wu, Zhan, 2024. "Zooming in or zooming out: Energy strategy, developmental parity and regional entrepreneurial dynamism," Energy Economics, Elsevier, vol. 140(C).
    4. McWay, Ryan & Braaksma, Matthew, 2025. "The political consequences of resource scarcity: Targeted spending in a water-stressed democracy. A replication study of Mahadevan and Shenoy (Journal of Public Economics, 2023)," World Development Perspectives, Elsevier, vol. 39(C).
    5. Pushkar Maitra & Sandip Mitra & Dilip Mookherjee & Sujata Visaria, 2023. "Economic Policies vs. Identity Politics: The Rise of a Right-wing Nationalist Party in India," HKUST CEP Working Papers Series 202301, HKUST Center for Economic Policy.
    6. McWay, Ryan & Braaksma, Matthew, 2025. "The Political Consequences of Resource Scarcity: Targeted Spending in a Water-Stressed Democracy. A Replication Study of Mahadevan and Shenoy," I4R Discussion Paper Series 231, The Institute for Replication (I4R).
    7. Amal Ahmad, 2024. "Transfers and the rise of Hindu nationalism in India," Discussion Papers 2024-08, Nottingham Interdisciplinary Centre for Economic and Political Research (NICEP).

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    More about this item

    JEL classification:

    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • H53 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Welfare Programs
    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • Q25 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Water

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