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Who Gets The Most And Why? New Lessons In Pork-Barrel Politics From India

Musgrave assumed that governments are benevolent. This led him to articulate an activist view of government. His ‘theory of public finance’, popular during the 1960s and 70s, provided intellectual support to central governments with monopolistic powers

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Musgrave assumed that governments are benevolent. This led him to articulate an activist view of government. His ‘theory of public finance’, popular during the 1960s and 70s, provided intellectual support to central governments with monopolistic powers. By the mid-1980s, however, as empirical evidence demonstrating the deleterious effects of majoritarian politics on economy and society piled up, Musgravian orthodoxy gave way to Buchanan’s ‘public choice theory’. His message was of restraining government’s power to extract rents. In the Indian context, various empirical studies have found that the Congress government during its dominance disbursed more grants to affiliated states or politically important states, irrespective of the actual needs of the state governments. This is called pork-barrel politics.

However, the puzzle that has remained unaddressed so far is how the pork-barrelling strategies of the prime minister’s party are different under a multiparty‐coalition system and why? My recently concluded major research with inputs from a Leverhulme International Network on Indian Federalism (UK), provides the answers.

Based on sophisticated multi-level regression models, the study finds that a state ruled by chief minister sharing the prime minister’s party affiliation received 21.4 per cent more aggregate discretionary grants per capita than non‐affiliated states. In the first instance, this would seem to confirm the established thesis. However, as they say the ‘devil’ lies in the detail. When a disaggregated analysis of discretionary disbursements was carried out, the data yielded baffling results. The states governed by coalition partners (aligned states), outside supporters, and even opposition parties received 22 per cent, 26 per cent, and 16 per cent higher grants, respectively, for centrally-sponsored schemes relative to states ruled by the prime minister’s party (affiliated states). This is a serendipitous finding as it goes against the established theories. Further, when the pattern of ad hoc grants distribution was examined, they were found to be extremely biased in favour of the affiliated states receiving 83.7 per cent higher than non‐affiliated states. How to make sense of this pattern?

The findings reveal that when a coalition of parties forms the national government and different parties rule different states, it becomes difficult for the formateur to practice partisan favouritism, especially with regard to the schematic grants. Thus, a two-pronged strategy becomes conspicuous. First of all, the formateur (lead party in central government), channels more funds for flagship programmes to non-affiliated states—not so much to help these states but rather to register a significant credibility gain for itself and reap electoral dividends in those states by drawing state voters’ attention to the central government’s initiatives. Secondly, in the coalition era, as overt partisan favouritism became tough, the formateur responded creatively to help affiliated states via ad hoc transfers. With the ad hoc grants emerging as a new instrument to help own-party ruled states, the share of this component in total discretionary grants (including Central Plan Schemes, Centrally Sponsored Schemes, and Ad hoc Grants) has increased from 16 per cent in the one‐party‐dominant era to 33 per cent in the coalition era. Thus, by employing ad hoc grants to favour affiliated states while not forfeiting schematic grants, the prime minister’s party has been able to maintain their lead in aggregate grants, even in much more complex coalition-setting.

The broader lesson here is that while the dominant party system (characterised by the control of a vast majority of state legislative assemblies by the party forming the majority government at the national level) provides opportunities for particularistic politics, the coalition politics limits national incumbents’ opportunities to reward party loyalty at the subnational level. In fact, the incentives of the prime minister's party under a coalition system create a universalisation effect which means "giving something to everyone". It does reduce, if not entirely eliminate, discrimination against the states ruled by the non-affiliated parties. The flip side is that if the BJP maintains its winning streak beyond 2019 and the one dominant party ‘system’ returns, with the BJP as a new congress, we expect the return of the “dominant‐party‐ style distributive politics” as well. Finally, given the political uses that discretionary grants can be put to, it is a foregone conclusion that the recommendation of economists to make them formula-driven will not be accepted yet.

Disclaimer: The views expressed in the article above are those of the authors' and do not necessarily represent or reflect the views of this publishing house. Unless otherwise noted, the author is writing in his/her personal capacity. They are not intended and should not be thought to represent official ideas, attitudes, or policies of any agency or institution.


Tags assigned to this article:
india politics public finance government of india

Dr Chanchal Kumar Sharma

Dr Chanchal Kumar Sharma, a visiting fellow at the GIGA Institute of Asian Studies, Hamburg and a fellow (Hon.) at the CMF, ISS, New Delhi is a senior faculty (on sabbatical) at the Central University of Haryana

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