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Policy Brief: Resource transfers to local governments (West Bengal)

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This EDI Policy Brief provides an accessible summary of key insights and findings from research for a case study on “Discretion versus rule-based budgeting and assignment in Indian governments“.

Clientelism and vote buying are commonly mentioned symptoms of poor governance in developing countries. They are said to distort the disbursement of public spending, result in favoritism within constituencies and lower overall effectiveness of government benefit programs.

Research was undertaken on government benefit programs in West Bengal, India between 2004-2011. The authors find that benefit allocations were subject to manipulation by elected officials for political reasons. Increasing political competition caused resources allocated to local level governments controlled by the opposing party to shrink, while those controlled by the same party expanded. Households responded to these variations in benefit flows in a manner consistent with clientelism: short term recurring private benefits such public works employment was most closely associated with political support for the local incumbent. Public benefits such as roads did not have any effect on political support; neither were road programs manipulated by upper-level bodies in response to increasing competition.

Authors:

  • Pranab Bardhan, University of California, Berkeley
  • Sandip Mitra, Indian Statistical Institute
  • Dilip Mookherjee, Boston University
  • Anusha Nath, Federal Reserve Bank of Minneapolis

Read the full EDI Working Paper on “Resource transfers to local governments (West Bengal)

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