Lobbying, Economic Disbursement and Redistributive Politics in India’s Federal Polity

Two interrelated themes are explored in this project. The first is: ‘Political lobbying and its impact on economic disbursements from the centre to the states in India’. In a quasi-federal democratic polity that India has, lobbying for central funds by the states is often done in a covert fashion. This research is one of the first few attempts at constructing political proxy variables to quantify the extent of such lobbying in India, for instance, through the ministerial representation in the council of ministers, and using time and state dummies to account for the constituent states’ political alignment with the Centre. Taking panel data that covers 29 years and 14 major states the results show that the constructed variables do explain disparity in central fund disbursements under the ‘discretionary’ head in a robust way. The second theme is ‘Redistributive politics in the Indian context’ and deals with how a populist incumbent government can stay in power for a long time by pursuing an intelligent redistributive strategy between the urban and rural sectors of the economy, without giving attention to economic growth. With the help of a standard probabilistic voting model, the research shows that a political cycle in the distributive variable might generate through and, under certain conditions, this low-level equilibrium situation might continue to exist. The project also consists in building up a model where the poor favour a pure redistributive strategy rather than a long-term public investment. The results of this work are expected to make a contribution to the standard literature on inequality and growth since they would show that it is not the ‘impatience of future’ that makes the poor vote in favour of redistribution, a standard assumption in this literature, but rather a credibility deficit with regard to public investment.
  • Participants :
    Velayoudom MARIMOUTOU - Sugata MARJIT