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Political economy of infrastructure spending in India, Volume 1
 
Author:Khemani, Stuti; Country:India;
Date Stored:2010/09/16Document Date:2010/09/01
Document Type:Policy Research Working PaperSubTopics:National Governance; Parliamentary Government; Debt Markets; Public Sector Management and Reform; Public Sector Economics
Language:EnglishMajor Sector:Education; Public Administration, Law, and Justice; Health and other social services
Rel. Proj ID:1W-Public Services Team -- -- P086338;Region:South Asia
Report Number:WPS5423Sub Sectors:Other social services; General education sector; General public administration sector
Collection Title:Policy Research working paper ; no. WPS 5423Volume No:1

Summary: This paper examines a puzzle in the political economy of infrastructure in India -- the co-existence of relatively low shares of capital spending in public budgets alongside evidence of large demand for village infrastructure from poor voters. It argues that this pattern is due to infrastructure projects being used at the margin for political rent-seeking, while spending on employment and welfare transfers are the preferred vehicles to win votes for re-election. New suggestive evidence on the variation of public spending composition across states, and within states over time is offered that is consistent with this argument. This evidence underscores a growing argument in the development literature that the level and composition of public spending per se may not be sufficient metrics to assess the quality of public goods policies -- greater infrastructure spending in some contexts may go to political rents rather than to the actual delivery of broad public goods for growth and poverty reduction.

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