Article

Political Economy of Infrastructure Spending in India

Stuti Khemani

in The Oxford Handbook of the Indian Economy

Published in print March 2012 | ISBN: 9780199734580
Published online November 2012 | | DOI: http://dx.doi.org/10.1093/oxfordhb/9780199734580.013.0017

Series: Oxford Handbooks

 Political Economy of Infrastructure Spending in India

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This article attempts to understand a significant puzzle in the political economy of infrastructure spending in India: the coexistence of low public spending on infrastructure (as a proportion of the total budget) in Indian states, and low efforts to secure private participation for greater investments, despite large demand from citizens for infrastructure services. A broader attempt of the article is to identify the key political constraints to effective infrastructure policies. The argument is based on two separate assumptions—one, on the division of voters between organized interest groups that seek rents, and unorganized swing voters who seek general benefits from public goods; and two, on the degree to which different kinds of public spending programs can be used for rent-seeking versus vote-buying, with infrastructure projects more suited to the former and broader poverty alleviation programs to the latter.

Keywords: political economy; infrastructure spending; private participation; infrastructure services; interest groups; poverty alleviation

Article.  10838 words. 

Subjects: Economics ; Economic Development and Growth ; Health, Education, and Welfare

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