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Bribery, democracy and their impact on governance and welfare: The case of rural India

Author

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  • Raghbendra Jha
  • Hari K Nagarajan
  • Anirudh Tagat

Abstract

Participation in welfare programs, administered by local government (Panchayats) is a significant source of consumption expenditure for households in rural India. In the context of imperfect local governance, we hypothesize that access to such programs may be limited, thus creating incentives for households to bribe in order to gain access. Using a 10-year panel dataset, we jointly estimate determinants of bribes, participation in welfare programs, and consequent change in economic welfare of households. We show that bribing does improve program participation and thence private consumption. Factors such as deepening democracy and increased fiscal buoyancy improve the quality of governance and increase the rate of participation in welfare programs and reduce the incidence of bribes.

Suggested Citation

  • Raghbendra Jha & Hari K Nagarajan & Anirudh Tagat, 2017. "Bribery, democracy and their impact on governance and welfare: The case of rural India," ASARC Working Papers 2017-03, The Australian National University, Australia South Asia Research Centre.
    • Handle: RePEc:pas:asarcc:2017-03
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    More about this item

    Keywords

    corruption; democratization; decentralization; rural development;
    All these keywords.

    JEL classification:

    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • D73 - Microeconomics - - Analysis of Collective Decision-Making - - - Bureaucracy; Administrative Processes in Public Organizations; Corruption
    • H11 - Public Economics - - Structure and Scope of Government - - - Structure and Scope of Government
    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development

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