The Political Economy of Gram Panchayats in South India: Results and Policy Conclusions From a Research Project

Transcription

1 India The Political Economy of Gram Panchayats in South India: Results and Policy Conclusions From a Research Project April 10, 2006 Agricultural & Rural Development Unit South Asia Region The World Bank

2 ii ABBREVIATIONS AND ACRONYMS AP Andhra Pradesh BP Block Panchayat BPL Below Poverty Line CEO Chief Executive Officer CFC Center Finance Commission CSS Centrally Sponsored Schemes DDP Desert Development Program DEA Department of Economic Affairs DPC District Planing Committee DRDA District Rural Development Agency EAS Employment Assurance System EGS Education Guarantee Scheme EO Executive Officer GOI Government of India GP Gram Panchayat GS Gram Sabha IAS Indian Administrative Service IRDP Integrated Rural Development Program JRY Jawahar Rozgar Yojana JSGY Jawahar Gram Samridhi Yojana KA Karnataka KE MLA MLC MP NGO OBC PRI PS SAS SC/ST SFC SGSY TAD TN UNDP VEC VTC ZP Kerala Member of Legislative Assembly Member of Legislative Council Member of Parliament; Non-governmental Organization Other Backward Caste Panchayat Raj Institution Panchayat Samitis State Administrative Service Scheduled Caste/Scheduled Tribe State Finance Commission Swarnjanyanti Gram Swarozgar Yojana Tribal Area Development Tamil Nadu United Nations Development Program Village Education Committee Voluntary Technical Experts and Core Zilla Parishad Vice President : Praful C. Patel Country Director : Michael Carter Sector Director : Connie Bernard Sector Manager : Adolfo Brizzi Task Manager : Vijayendra Rao

3 ii GRAM PANCHAYATS IN SOUTH INDIA: A Report on a Research Project TABLE OF CONTENTS Acknowledgements.....iv Executive Summary.....v I. Introduction II. III. IV. Panchayats and Resource Allocation: A Comparison of the Indian States. 3 Tables and Maps for Section Map 1.6 Table 2.1: Political Participation....7 Table 2.2: Gram Sabha Participation..8 Table 2.3: Public Goods Levels....9 Table 2.4: GP Activity, from PRA 10 Table 2.5: Private Benefits. 11 Table 2.6: Village Level Participation 12 Table 2.7: Household Willingness to Pay...13 Table 2.8: Inequality and Caste Domination...14 Caste Reservations and the Politics of Public Good Provision...15 Household Level Evidence Village Level Evidence...16 Tables for Section Table 3.1: Summary Statistics Table 3.2: Effect of SC/ST Reservation on Resource Allocation...19 Gram Sabhas and Political Participation.. 20 Determinants of holding a Gram Sabha and who attends.21 Does Participation Matter?...22 Tables for Section Table 4.1: Descriptive Statistics Table 4.2: Gram Sabha: Occurrence and Attendance Table 4.3: Gram Sabha Occurrence and Beneficiary Selection V. Political Selection and the Quality of Government..27 Political Selection Policy Effects Summarizing the results on Political Selection.. 30 Tables for Section Table 5.1: Descriptive Statistics Table 5.2: Individual Characteristics and Politician Selection...32 Table 5.3: Village Characteristics and Politician Selection

4 iii Table 5.4: Politician Characteristics and Beneficiary Selection. 34 Table 5.5: Village Characteristics and Beneficiary Selection for BPL cards.35 VI. Policy Implications References Annex A: Panchayats and Resource Allocation Annex B: The Politics of Public Good Provision Annex C: Participatory Democracy in Action Annex D: Political Selection and the Quality of Government

5 iv ACKNOWLEDGMENTS This report was jointly authored by Timothy Besley of the London School of Economics, Rohini Pande of Yale University and Vijayendra Rao of the Development Economics Research Group at the World Bank. Radu Ban and Jillian Waid provided excellent research assistance. The data were collected by the Social Research Institute of the Indian Market Research Bureau, to whom we are also grateful. It was supervised by the South Asia Rural Development Department of the World Bank under the management of Adolfo Brizzi. The research underlying the report was co-funded by the South Asia Rural Development Department, the Development Research Group of the World Bank, and the Department for International Development (DFID) of the United Kingdom. Valuable comments were provided by peer reviewers - Ruth Alsop, Rob Chase and Brian Levy, and by Adolfo Brizzi, Stephen Howes and Dina Umali Dieninger. The project benefited greatly from Luis Constantino s guidance and support.

6 v EXECUTIVE SUMMARY 1. Our aim in this report is to summarize the results from a research project on Panchayat Decentralization, and draw some policy implications. The project is an effort to understand the political economy and institutional context of village government in India with a focus on the South Indian states of Andhra Pradesh, Karnataka, Kerala and Tamil Nadu. 2. We use a unique sampling design constructed to control for differences in institutional history and cultural differences by comparing villages on either side of the border of these states which belonged to the same political entity prior to 1956 (when the states were reorganized along linguistic lines). The sample of districts and villages selected is given in Map 1. Using this method, we examine the implications of cross-state and within-state differences in demographics, social structure and administrative and political organization for Panchayat performance. Kerala leads the four south Indian states in levels of civic engagement and literacy. In terms of social organization Karnataka villages have the highest levels of upper caste domination with Karnataka voters far more likely than those in other states to vote on caste or religious lines in Panchayat elections. In terms of administrative set up Tamil Nadu has relatively low levels of autonomy and funding available to Gram Panchayats (GPs: democratically elected village councils) power is more concentrated in higher levels of government. 3. Kerala leads in the provision of public goods at the village level. But its GPs are perceived by their constituents to have current levels of investment in public goods that are lower than the other South Indian states. Tamil Nadu, on the other hand, has the lowest provision of public goods in our sample, though its GPs are perceived to have higher levels of current activity than those in Kerala. The variation in GP performance across states that we observe seems to mirror findings from the World Bank study on panchayat finances. 4. The results suggest therefore that Kerala s successes in promoting civic consciousness, along with fiscal and political decentralization, might have had real implications for better public service delivery. The current fiscal problems faced by the state may be contributing to the perceived slippage in the effectiveness of its GPs. These state level comparisons, however, cannot establish causal connections on the reasons behind the observed differences, including the important question of whether the Kerala model can be replicated in the other states. Here our more detailed analysis of the political economy of panchayats, which focuses more on examining variations within blocks/taluks, may be more instructive. 5. We examine the impact of caste reservations finding that when an SC/ST household resides in a village which has been reserved for an SC/ST pradhan (also known as President, or Sarpanch, depending on the state) they are 7 per cent more likely to obtain targeted benefits. This demonstrates that caste reservations help by improving the access of disadvantaged groups to government programs. It mirrors other research that has shown that women s reservations improve the match between policy choices and the preferences of women. Thus, reservations seem to be a valuable tool to reduce traditional forms of discrimination in local government. 6. Our results on gram sabhas and political participation also have implications for policy. We find that gram sabhas are often not held regularly (25 per cent of GPs did not have

7 vi even one gram sabha in the previous year), and even when they are held beneficiary selection is discussed only in 22 per cent. They are more likely to be held in larger villages with higher literacy rates. Interestingly, after conditioning on these variables, we find no state differences in the propensity to hold gram sabhas. However, we note that only 20 per cent of our household respondents have ever attended a gram sabha, with village literacy again associated with both hearing of and attending the meeting. The meetings are less likely to be attended by women, highlighting potentially important gender differences in participation. In contrast, SC/STs and landless are more likely to attend them. Furthermore, illiterates, landless and SC/STs are more likely to attend gram sabhas in villages which have higher levels of literacy. This again suggests the positive externalities from living in more literate communities. 7. We find that, when gram sabhas are held, there may be some policy benefits; Gram sabhas are associated with a better chance that landless, illiterate, and SC/ST households will obtain a BPL cards (identification cards assigned to the poor to obtain targeted benefits). However, while these results are suggestive we cannot conclude that they are causal. Similar results, but with weaker effects, are obtained when the village is more literate. 8. The gram sabha results are suggestive of the key role that they could play in improving the quality of panchayat government. But we find that they are often not held, and even they are held are not well attended with key issues not discussed. The findings suggest that more research into the nature and impact of gram sabhas is warranted, but the greater transparency that they engender could have positive implications. 9. The overall structure of the GP is important. The South Indian states differ in the administrative makeup of GPs, especially the number of villages per GP. We find evidence of cross village inequality in public good provision in a GP with the Pradhan s village receiving more resources. 10. The final section examines the political economy of political selection and the determinants of politician quality. This section has three key findings. First, the political class is selected on the basis of political connections and economic advantage. Second, politicians exhibit a preference for people from their own social group in service delivery and are, on the whole, opportunistic and benefit disproportionately from public transfer programs. Third, the education level of politicians has a consistently positive effect on selection and a negative effect on opportunism. This suggests that more educated politicians are better and recognized as such by voters. However, whether education matters directly or because it is correlated with other characteristics that make an individual fit for public office cannot be discerned from our results. Nonetheless, the results add to a growing appreciation among economists that education may be important because of its role in inculcating civic values. The unique observation about its role in politics given here also offers a fresh perspective on the value of human capital investments in low income countries. 11. The results demonstrate important interplays between village level variables, the process of political selection, and the targeting of public resources. For example, increased literacy at the village level reduces political opportunism while measures of political dominance are correlated with worse targeting of resources. We also find evidence suggestive of barriers to

8 vii entry land ownership and political connections predict selection but not behavior when in office. 12. Our finding that educated politicians are better in terms of actual performance suggests that it is important to focus on factors that select better politicians as a step toward improving the quality of government. More generally, the results and analyses in the paper reinforce the observation that formal institutions of democracy are no guarantee of effective government. It is essential that preconditions exist for sorting in the right kinds of people the talented, the virtuous and those who give political voice to the disadvantaged. There is clearly much more we can learn about this process, but these results are a first effort to study the issue empirically. 13. To summarize, we can draw the following lessons for policy from these findings: a. Caste Reservations work by improving targeting of private transfers to schedule castes and tribes. We find that programs that provide private benefits such as toilets, housing and transfers to the poor and disadvantaged (including provision of BPL card) are more likely to reach SC/STs when the GP has a Pradhan that is reserved for an SC/ST. This suggests that caste reservations are effective in including disadvantaged groups into the purview of local government. It supplements previous research that finds that woman Pradhans in seats reserved for women tend to make decisions more in line with the needs of women. b. Pradhans prefer their home village: The home village of the pradhan tends to receive more high-spillover public goods than other villages in the GP controlling for factors such as village size and head quarter status. This result, a consequence of the incentives that underlie democracy, points to inequalities that may exist within GPs that could be persistent and may be important to address. c. Gram Sabhas may be central to effective local government but are not regularly held: When gram sabhas are held we find that benefits are better targeted to the poor and disadvantaged, and reduce political opportunism. Therefore they seem to improve the transparency of government. Further research will have to determine how this works and their implications for public goods allocation, but clearly they are potentially central to the effective and equitable functioning of GPs. The fact that they are often not held is worrying and needs attention. Also, while SC/STs are more likely to participate in gram sabhas, presumably because of their role in beneficiary selection, we find that women are far less likely to attend them. This is a potential source of gender exclusion that needs attention. d. Literacy Matters: Several results point to the importance of village literacy in improving the functioning of GPs in reducing political opportunism, improving targeting, etc. We also find that more educated politicians are less opportunistic. Therefore, investments in human capital can be central to improving the quality of democratic governance in addition to their enhancing individual well-being.

9 viii e. Finance Matters Corroborating findings from the recent World Bank report on fiscal decentralization in India (World Bank, 2004), we find that differences in the quality of local government between the four South Indian states are correlated with what we know of their levels of fiscal decentralization. In particular, Kerala has led the other states in providing public services at the local level but seems to be slipping more recently in a manner that concurs with its worsening fiscal situation. More generally we find that it is very difficult to understand the state of GP finances because of vast inconsistencies in accounting practices at the GP level. GP budgetary data is therefore very difficult to obtain and even when it is available is difficult to compare and evaluate. f. Socio-Cultural Institutions Matter We show that villages demonstrate high levels of inequality within them, and that this inequality is both within and between castes. We find evidence showing that caste dominance tends to increase political opportunism. g. Higher salaries may reduce opportunism A result with direct policy implications is that relatively higher real wages for politicians tend to attract wealthier politicians, and improve beneficiary selection suggesting reduced political opportunism. 14. These findings provide some important insights into the political economy and the institutional setting for panchayats. In future research we hope to examine the role of land reform in reducing economic and social inequality, and the quality of government. We will also examine the determinants and implications of social, economic and political participation.

10 1 1. INTRODUCTION 1.1 The 73rd amendment to the Indian constitution, passed in 1993, has been one of the most important pieces of legislation in recent Indian history. Its goals are: a) To systematize the functioning of Panchayati Raj Institutions (PRIs) by mandating regular elections to the three tiers of local government, and requiring states to both increase PRIs taxation and spending power, and PRIs allocation of state and central discretionary funds. At the same time there is an effort to improve the transparency of local government by requiring that gram sabhas or village councils be held at regular intervals, between four to six times a year, to discuss budgetary allocations, select beneficiaries and conduct other important panchayat business. b) To ensure that disadvantaged groups within village communities are granted a voice in local deliberations, the 73rd amendment also mandated that 1/3 rd of all elected positions in Panchayats, including Panchayat president, be reserved for women. Similarly elected positions in Panchayats are to be reserved for Scheduled Castes and Tribes in proportion to their population share 1.2 All national governments since 1993 have been committed to the implementation of the amendment, and state governments have complied with varying degrees of commitment. The current United Progressive Alliance (UPA) government in Delhi has gone even further by substantially increasing panchayat budgets and possibly giving them the authority to administer important schemes like the Employment Guarantee Scheme. 1.3 This experiment in decentralization is, arguably, one of the most ambitious innovations in local government undertaken by a low income country. The stated aim is to improve citizens' ability to access and influence the public service delivery system and to directly tackle social exclusion by a system of political reservations. Despite the breadth of this democratic experiment, there is remarkably little quantitative evidence on how well the experiment has worked. There is, however, a large and growing qualitative and "action research" literature on Panchayats that come to a diverse set of conclusions - reflecting the difficulties of studying such a broad topic in a complex country. A comprehensive review of this literature is beyond the scope of this report but overviews can be found in World Bank (2000), Matthew and Buch (2000), and Crook and Manor (1998). 1.4 Quantitative analyses of Panchayats using large samples are rarer, however. An exception is the important work by Chattopadhyay and Duflo (2004a) on the causal impact of women's reservations on Panchayat action in Rajasthan and West Bengal. They find that reservations improve the ability of women to govern, in a way that is congruent with the desires of women in the population. Work by Alsop, Krishna and Sjoblom (2000), also on Rajasthan and Madhya Pradesh, highlights the role of reservation in reducing the systematic exclusion of women and disadvantaged groups from decision making processes at the local level. Bardhan and Mookherjee (2003) examine the role of elected village councils in affecting land reform in the Indian state of West Bengal, and Foster and Rosenzweig (2001) examine how decentralization interacts with land ownership patterns to affect public good outcomes. Finally,

11 2 Chaudhuri and Heller (2004) have, more recently, completed a survey studying the impact of the "People's Campaign for Decentralized Planning" in Kerala showing that it increased the level of participatory planning in panchayats, had a positive impact on development performance and on social inclusion, but that levels of participation have declined in recent years - findings that are consistent with our study. 1.5 But, given the scope of the experiment and regional focus of the existing quantitative work, a large number of open questions remain. How does the political economy of village democracy really work? What determines the quality of village politicians? How well has decentralization worked in early adopter states such as Kerala and Karnataka? What is the impact of caste reservations? Do village meetings open to all citizens (Gram Sabhas) succeed in increasing the voice of the poor and disadvantaged? Answering these questions is crucial in formulating Panchayat policy. 1.6 The above questions also point to a need for a sound, quantitative evidentiary base to provide some answers to these questions. This motivates the research that underlies this report. 1.7 The report is based on four research papers ( Panchayats and Resource Allocation: A Comparison of the South Indian States, The Politics of Public Good Provision: Evidence from Indian Local Governments, Participatory Democracy in Action: Survey Evidence from India," and Political Selection and the Quality of Government: Evidence from South India ). We will summarize each of them, and then draw on the findings to discuss their implications for policy. We aim in these summaries to provide a sense of our findings using basic econometric tools, but for details on the theory and empirical methodology underlying our results we refer the readers to the actual papers. The actual papers can be found in the Annexes A-D.

12 3 2. PANCHAYATS AND RESOURCE ALLOCATION: A COMPARISON OF THE INDIAN STATES The four states in our sample provide an interesting contrast in their approach to panchayat decentralization. Kerala has taken decentralization the furthest among them, with forty percent of state expenditures mandated to be allocated to panchayats, with regular gram sabhas and high levels of citizen participation. Karnataka has also been a pioneer in panchayat decentralization, and was the first Indian state to mandate regular panchayat elections. Andhra Pradesh, under the former Chief Minister Chandrababu Naidu tried to find alternatives to the panchayat system via the Janmabhoomi program. Tamil Nadu, of all the states in our sample, has probably the weakest gram panchayats with much of the power held by higher levels of government. 2.2 An important question that remains in understanding the relative impact of the decentralization process in these four states is the extent to which their political history and social structure have affected the functioning of local governments. There is considerable evidence demonstrating that the Travancore region that is currently part of the state of Kerala has a long history of progressive policies (Jeffrey, 1993). Similarly Mysore state which is currently part of the state of Karnataka was also ruled by relatively autonomous rulers who placed a special emphasis on education and economic development (Bhagavan, 2003). Recent work by Banerjee and Iyer (2003) has shown that there are strong path dependencies in land tenure policies - specifically whether the region of India had a zamindari or ryotwari system in place during British Rule. These systems which were established early in the 19th century are shown to have significant contemporary impacts on a variety of indicators of development. Furthermore, scholars have argued that differences in cultural systems can have an important effect of human development (e.g. Dyson and Moore, 1983). Given these path-dependencies and the cultural differences, it is possible that Kerala is different because "Kerala is Kerala". There is something special about the state that makes it particularly hospitable to good, equitable governance. If such path -dependencies prove to be definitive, then policy options are likely to be relatively small. 2.3 The sampling strategy employed by this research project allows us to compare the states, controlling for differences that may come from historical or cultural path-dependencies. Details of the sampling strategy are available in the paper in the Appendix, but, in brief, we compare villages on either side of the current borders of the four states which belonged to the same political entity prior to the state s reorganization in These villages have additionally been matched by majority language. Map 1 shows the districts that were selected, with each dot representing a village. Since, the villages across each pair of borders share a common history till 1956, and speak the same majority language, any differences we observe between the matched villages cannot be because of different political histories prior to 1956, or because of different language - which proxy for local kinship structure and social organization 2. The differences have to be attributed to changes that have occurred after The comparison is particularly 1 This section summarizes results from the paper Tim Besley, Rohini Pande and Vijayendra Rao. Panchayats and Resource Allocation: A Comparison of the South Indian States, mimeo, Kolar district in Karnataka is an exception since it was part of old Mysore state, it was selected, however, because it shares large cultural affinities with Chithoor district in AP and Dharmapuri in Tamil Nadu.

13 4 interesting because the states provide an excellent comparison of differences in the implementation of the 73rd amendment. 2.4 What do we learn from our results? First, they provide more information on different aspects of Kerala's sophisticated political culture. Table 2.1 presents these results. Kerala has the highest voter turnout in all types of election among the four states. Households in Kerala are most likely to participate in political activities. Furthermore, Kerala s electorate is among the least likely to vote for candidates based on caste or religious lines and most likely to vote based on party lines. Kerala has a more active civic culture with active participation in gram sabhas (See Chaudhuri and Heller (2004) for more on gram sabhas in Kerala) as is seen in Table 2.2. Table 2.2 also reveals an interesting composition effect: while having the highest gram sabha attendance, Kerala has at the same time the lowest attendance for beneficiary selection. This may imply that in Kerala, gram sabhas are devoted to more substantial issues. In addition, those attending the Gram Sabha in Kerala are much more likely to speak during the meeting than those in other states. Levels of land inequality are high in Kerala, as measured by the average fraction of landless households in a village, in table 2.8. However, the fraction of villages in which the upper caste holds the majority of the land is lowest in Kerala. This implies that land inequality is less likely to be driven by caste based inequality than in the other states. Kerala, perhaps influenced by this active political culture, also dominates the other states in the availability of public goods, as reflected in Table 2.3. However, all our indicators of current investments on public goods by the panchayats are lower in Kerala than in the other states (Table 2.4). Similarly we find that Kerala lags behind Andhra Pradesh in the provision of BPL cards and behind other states in public works programs (Table 2.5). To some extent this is because of Kerala's higher levels of development and lower levels of poverty. But, other evidence from the World Bank's fiscal decentralization study (World Bank, 2004) suggests that fiscal constraints have reduced the availability of funds to panchayats resulting in lower levels of GP activity. 2.5 Tamil Nadu GPs in our sample are at the other end. They lag all the other states in the provision of most public goods (other than water tanks and bus stops, Table 2.3). More importantly, current levels of activity by GPs are also below other states as seen in Table 2.4. This is also true in the provision of private benefits such as BPL cards, housing and electricity (Table 2.5). On the other hand, villagers in Tamil Nadu, are second only to those in Kerala in their political and civic participation - they are more likely to vote than villagers in AP and Karnataka, and more likely to pay taxes (Tables 2.1, and respectively 2.2). 2.6 It is interesting to note that the remaining two states, Karnataka and AP are rather similar, despite purported efforts in AP to circumvent the panchayat system. Since KA has been far ahead of AP in promoting democratic decentralization, it is interesting that this has not led to large differences in the provision of public goods (except for paved roads, Table 2.3), or indeed even in current GP activity in public goods provision (Table 2.4). On private benefits Karnataka leads all the states in overall activism - particularly in the provision of toilets and electricity. But AP leads the states in providing BPL cards and public works projects. Karnataka is the most likely state to have an NGO active in the village, but it is also the least likely to have held a gram sabha in the last six months (Table 2.6) - which can largely be attributed to drought conditions in

14 5 the state at the time of the survey. However, even though AP faced the same climatic conditions, it was far more likely than Karnataka to have held gram sabhas. 2.7 There are also some interesting results on the willingness to pay for public services shown in Table 2.7. Here we see that households in Kerala are much more likely to say that they are willing to pay more for public services across the board. We also observe a greater willingness to pay for public services in TN compared to the Andhra Pradesh and Karnataka. Note also that in the means, we see that in all the states except KA close to 50% of our respondents say that they are willing to pay more for one or more public services. While willingness to pay questions have important flaws, these results suggest a large gap between the demand and supply of service provision. They also point to a potential for increased participation by villagers in public good provision. 2.8 Finally, it is also interesting to note the strong caste influences in Karnataka. Karnataka villages have the highest proportion of land owned by upper castes (36 per cent, as given in Table 2.8). Perhaps as a consequence, Karnataka voters are far more likely than those in other states to vote along caste or religious lines. 2.9 Having explored broad patterns of differences across the states that reflect differences in state policies since 1956, in the next three sections we turn to a detailed examination of the political economy of panchayats.

15 6 Map 2.1: Sampling Strategy

16 7 Table 2.1 Political participation, mean comparison Participate State political Voted GP Voted MLA Voted MP Vote group Vote party Vote candidate Andhra (0.435) (0.427) (0.342) (0.427) (0.242) (0.338) (0.485) Karnataka (0.224) (0.452) (0.413) (0.452) (0.349) (0.225) (0.483) Kerala (0.463) (0.363) (0.297) (0.363) (0.270) (0.488) (0.339) TamilNadu (0.290) (0.399) (0.392) (0.399) (0.287) (0.168) (0.490) All (0.361) (0.417) (0.375) (0.417) (0.303) (0.350) (0.484) Notes: standard deviations in parenthesis Political participation, regression Participate State political Voted GP Voted MLA Voted MP Vote group Vote party Vote candidate Andhra (2.311) (3.588) (2.754) (3.588) (0.286) (7.780) (3.152) Karnataka (11.224) (6.103) (9.859) (6.103) (4.810) (11.812) (6.060) TamilNadu (7.264) (3.823) (9.109) (3.823) (0.089) (12.261) (9.741) Pradhan's Village (1.601) (1.086) (0.372) (1.086) (1.688) (0.724) (0.898) Reserved GP (0.218) (0.183) (0.243) (0.183) (0.061) (0.871) (1.889) female (7.488) (0.163) (11.553) (0.163) (2.994) (3.498) (4.952) SCST (2.528) (0.731) (0.222) (0.731) (0.226) (2.234) (0.322) wealthy (1.282) (5.051) (2.913) (5.051) (0.263) (0.585) (2.858) landless (1.807) (4.344) (1.504) (4.344) (1.802) (2.035) (0.564) politician (7.928) N Adj R-sq Notes: 1) "Participate political" is an indicator variable, equal to 1 if the household took part in any political activities, such as going to rallies hand out leaflets, give speeches, writing pamphlets, giving money or support in kind for political campaigns 2)"Vote group" is an indicator variable, equal to 1 if the main reason for voting for the Pradhan candidate is his religion, caste, gender, neighborhood, or friend group 3) "Vote party" is an indicator variable, equal to 1 if the main reason for voting for the Pradhan candidate is his party 4) "Vote candidate" is an indicator variable, equal to 1 if the main reason for voting for the Pradhan candidate is an individual characteristic or accomplishment: income, education, land ownership, promises, previous record, active in village, or gave the most money 5)absolute values of t-statistics clustered by block in parenthesis 6)block pair fixed effects included in regression

17 8 Table 2.2 Gram Sabha participation and house tax payment, mean comparison Attend GS for State Attend GS beneficiary GS speaking taxpay Andhra (0.309) (0.248) (0.455) (0.484) Karnataka (0.348) (0.301) (0.186) (0.333) Kerala (0.489) (0.464) (0.500) (0.283) TamilNadu (0.338) (0.397) (0.435) (0.313) All (0.399) (0.416) (0.473) (0.380) Notes: standard deviations in parenthesis Gram Sabha participation and house tax payment, regression Attend GS for State Attend GS beneficiary GS speaking taxpay Andhra (5.024) (9.917) (5.128) (8.702) Karnataka (5.656) (11.023) (15.822) (2.772) TamilNadu (6.161) (6.351) (5.927) (1.632) Pradhan's Village (1.377) (0.591) (0.693) (1.928) Reserved GP (0.108) (2.534) (1.182) (0.625) female (11.768) (2.860) (2.737) (4.111) SCST (1.344) (0.331) (0.553) (1.049) wealthy (0.527) (0.772) (0.949) (3.414) landless (1.214) (1.338) (1.831) (4.110) politician (9.636) (2.519) N Adj R-sq Notes: 1)absolute values of t-statistics clustered by block in parenthesis 2)block pair fixed effects included in regression

18 9 Table 2.3 Current level of public goods, mean comparison State Schools per 1000 inhabitants Health facilities per 1000 inhabitants Number drinking water sources Number overhead tanks Bus stop in village (dummy) Proportion paved road Proportion road with light Andhra (1.534) (0.512) (2.713) (0.931) (0.504) (0.213) (0.258) Karnataka (1.098) (0.210) (2.454) (0.748) (0.495) (0.182) (0.263) Kerala (1.137) (1.621) (9.906) (0.451) (0.153) (0.200) (0.281) TamilNadu (1.061) (0.529) (1.778) (0.821) (0.478) (0.301) (0.280) All (1.234) (1.386) (6.652) (0.825) (0.498) (0.302) (0.272) Notes: standard deviations in parenthesis Current level of public goods, regression State Schools per 1000 inhabitants Health facilities per 1000 inhabitants Number drinking water sources Number overhead tanks Bus stop in village (dummy) Proportion paved road Proportion road with light Andhra (1.806) (10.460) (5.325) (2.497) (6.597) (5.891) (2.422) Karnataka (5.083) (13.776) (4.785) (3.675) (13.091) (7.070) (3.098) TamilNadu (5.419) (9.677) (7.137) (6.715) (18.896) (0.721) (3.271) Prad. Village (1.750) (0.185) (3.101) (3.830) (3.814) (1.350) (1.873) Reserved GP (0.158) (0.572) (1.120) (0.241) (0.992) (1.138) (0.297) N Adj R-sq Notes: 1)absolute values of t-statistics clustered by block in parenthesis 2)block pair fixed effects included in regression

19 Table 2.4 GP activity, means comparison State Overall GP activity GP activism in schools (count) GP activism in GP activism in health (count) water (count) GP activism in sanitation (count) GP activism in transport (count) GP activism in road (count) GP activism in electricity (count) GP activism in irrigation (count) Andhra (0.227) (0.653) (0.587) (0.675) (0.802) (0.447) (0.832) (0.783) (0.530) Karnataka (0.291) (0.596) (0.583) (0.646) (0.663) (0.370) (0.780) (1.217) (0.327) Kerala (0.238) (0.537) (0.654) (0.513) (0.497) (0.283) (0.607) (0.774) (0.394) TamilNadu (0.201) (0.573) (0.508) (0.582) (0.332) (0.216) (0.542) (0.698) (0.292) All (0.260) (0.587) (0.592) (0.606) (0.601) (0.330) (0.739) (0.952) (0.372) Notes:1)standard deviations in parenthesis 2)Overall GP activity is the ratio of sectors in which GP was active, to total sectors 3)Activities are after last election GP activity, regressions State Overall GP activity GP activism in schools (count) GP activism in GP activism in health (count) water (count) GP activism in sanitation (count) GP activism in transport (count) GP activism in road (count) GP activism in electricity (count) GP activism in irrigation (count) Andhra (1.375) (0.824) (1.459) (1.898) (2.428) (0.551) (2.330) (0.229) (1.390) Karnataka (1.776) (0.685) (3.048) (2.040) (2.537) (1.691) (2.978) (2.009) (0.997) TamilNadu (1.781) (0.094) (1.551) (1.273) (1.450) (1.349) (1.794) (0.118) (0.122) Prad. Village (3.899) (1.425) (2.299) (2.509) (1.938) (1.983) (4.252) (2.381) (0.212) Reserved GP (0.273) (0.178) (0.383) (0.398) (0.631) (0.476) (0.165) (0.381) (0.024) N Adj R-sq Notes: 1)absolute values of t-statistics clustered by block in parenthesis 2)block pair fixed effects included in regression 10

20 11 Table 2.5 Private benefits (public works and BPL cards), mean comparison State Any GP provision House GP provision Toilet GP Provision Water GP Provision Electricity GP provision BPL received Received money for public works Andhra (0.209) (0.156) (0.074) (0.053) (0.111) (0.468) (0.334) Karnataka (0.327) (0.154) (0.175) (0.039) (0.260) (0.302) (0.220) Kerala (0.199) (0.138) (0.135) (0.000) (0.117) (0.457) (0.136) TamilNadu (0.150) (0.075) (0.075) (0.075) (0.083) (0.434) (0.139) All (0.246) (0.133) (0.133) (0.049) (0.177) (0.414) (0.205) Notes: standard deviations in parenthesis Private benefits (public works and BPL cards), regression State Any GP provision House GP provision Toilet GP Provision Water GP Provision Electricity GP provision BPL received Received money for public works Andhra (0.220) (1.344) (0.797) (0.569) (2.871) (1.981) (3.484) Karnataka (5.969) (1.610) (4.147) (0.139) (3.033) (0.407) (1.088) TamilNadu (3.063) (3.263) (0.122) (1.726) (3.732) (0.872) (3.536) Pradhan's Village (0.770) (0.081) (1.394) (0.711) (0.174) (1.195) (0.810) Reserved GP (0.942) (1.354) (0.038) (0.918) (0.778) (0.602) (0.882) female (0.943) (1.769) (1.881) (0.045) (1.440) (0.401) (0.751) SCST (3.020) (2.377) (0.140) (0.219) (3.103) (3.930) (3.886) wealthy (5.311) (3.757) (1.312) (0.468) (4.160) (4.079) (0.171) landless (1.914) (1.007) (1.365) (0.438) (1.554) (4.850) (2.764) politician (1.889) (0.429) (2.394) (2.467) (1.483) (1.365) (2.363) N Adj R-sq Notes: 1)absolute values of t-statistics clustered by block in parenthesis 2)block pair fixed effects included in regression

21 12 Table 2.6 Village level activities, mean comparison GS held last State NGO active 6mo Andhra Pradesh (0.468) (0.457) Karnataka (0.487) (0.463) Kerala (0.316) (0.125) Tamil Nadu (0.456) (0.471) All states (0.471) (0.427) Notes: standard deviations in parenthesis Village level activities, regression State NGO active GS held last 6mo Andhra (1.375) (1.459) Karnataka (1.776) (3.048) Tamil Nadu (1.781) (1.551) Prad. Village (3.899) (2.299) Reserved GP (0.273) (0.383) N Adj R-sq Notes: 1)absolute values of t-statistics clustered by block in parenthesis 2)block pair fixed effects included in regression

22 13 Table 2.7 Household willingness to pay, mean comparison State Willing provide roads Willing provide anganwadi Willing provide Health subc Willing provide P. school Willing provide dr water Willing provide any Andhra (0.470) (0.407) (0.440) (0.420) (0.448) (0.500) Karnataka (0.304) (0.277) (0.144) (0.285) (0.287) (0.392) Kerala (0.471) (0.481) (0.483) (0.473) (0.490) (0.498) TamilNadu (0.478) (0.457) (0.455) (0.464) (0.473) (0.496) All (0.438) (0.420) (0.410) (0.422) (0.439) (0.487) Notes: standard deviations in parenthesis Household willingness to pay, regression State Willing provide roads Willing provide anganwadi Willing provide Health subc Willing provide P. school Willing provide dr water Willing provide any Andhra (0.232) (4.108) (2.683) (2.819) (3.741) (0.821) Karnataka (6.429) (8.444) (8.842) (7.458) (10.691) (12.258) TamilNadu (0.893) (1.908) (1.719) (0.851) (2.241) (1.982) Pradhan's Village (0.613) (2.204) (2.098) (2.170) (1.040) (1.747) Reserved GP (0.171) (0.460) (0.502) (0.079) (1.523) (0.760) female (4.104) (3.871) (4.318) (4.414) (6.235) (7.324) SCST (0.075) (0.150) (0.400) (0.061) (0.899) (1.071) wealthy (1.547) (2.482) (2.401) (2.912) (1.116) (3.363) landless (0.901) (1.952) (1.715) (2.026) (1.712) (4.208) politician (1.524) (1.033) (2.476) (0.865) (0.589) (0.056) N Adj R-sq Notes: 1)absolute values of t-statistics clustered by block in parenthesis 2)block pair fixed effects included in regression

23 14 Table 2.8 Inequality and caste domination, mean comparisons Upper caste land dominance (dummy) Upper caste land proportion Fraction landless hhs Andhra Pradesh (0.380) (0.260) (0.235) Karnataka (0.473) (0.277) (0.188) Kerala (0.283) (0.201) (0.247) Tamil Nadu (0.426) (0.331) (0.283) All states (0.419) (0.284) (0.253) Notes: 1) Upper caste land dominance is an indicator variable, equals 1 if upper castes own more than half the land in the village 2)Standard deviations in parenthesis

24 15 3. CASTE RESERVATIONS AND THE POLITICS OF PUBLIC GOOD PROVISION The 73rd constitutional amendment mandated political reservation in favor of SC/ST for the Pradhan position, and required that the extent of such reservation in a state reflect the SC/ST population share in that state. The amendment also required that no GP be reserved for the same group for two consecutive elections. The choice of which GPs to reserve was left to individual states. Typically, the same fraction of GPs are reserved in every district in a state. 3.2 A GP has responsibilities of civic administration with limited independent taxation powers. On average, roughly 10 percent of a GP's total revenue come from own revenues with the remainder consisting of transfers from higher levels of government. While the ambit of GP policy influence varies across Indian states GPs typically perform (at least) two distinct policy tasks. The first is beneficiary selection for central and state welfare schemes. We consider this policy task as provision of low spill-over public goods because the benefits are likely to accrue to individual households. These are schemes which provide beneficiary households with funds to acquire household public goods such as housing and private electricity and water supply. Eligibility for these schemes is usually restricted to households below the official poverty line. In addition, most schemes require that a minimum fraction of beneficiaries be SC/ST. The second area of GP policy activism is the construction and maintenance of village public goods such as street-lights, roads and drains. Using the same logic, we consider this policy task as provision of high spill-over public goods. The GP decides the distribution of these public goods within the village, and the quality of such public good provision. 3.3 Schedule XI of the Indian Constitution defines the functional items for which states may devolve responsibility to Panchayats. Panchayat legislation requires that the Pradhan consult with villagers (via gram sabha meetings) and ward members in deciding the choice of beneficiaries and allocation of public goods. However, final decision-making powers in a GP are vested with the Pradhan. 3.4 In this section we use information from an independent audit of village facilities to construct an index of GP activity on high spill-over (i.e. village-level) public goods. This index measures whether the GP undertook any construction or improvement activity on within-village roads, drains, street-lights and water sources since the last GP election. The index is normalized to lie between 0 and 1. Roughly 79% of our sample villages experienced GP activism on at least one of these public goods. 3.5 We use data from household surveys in a random sub-sample of 193 villages to measure the provision of low spill-over (household) public goods. In every sampled village twenty one household surveys were conducted, of which four were with SC/ST households and one was with an elected Panchayat representative. 3 This section summarizes results Timothy Besley, Rohini Pande, Lupin Rahman and Vijayendra Rao. (2004a), The Politics of Public Good Provision: Evidence from Indian Local Governments, Journal of the European Economics Association, 2(2-3),

25 An additional household survey was conducted with the Pradhan if s/he resided in that village, and with a ward member otherwise (in six villages both a ward member and Pradhan interview were conducted). 3.7 This gives us a total of 4059 households of which 981 were SC/ST. We measure a household's exposure to low spill-over public goods by a dummy which equals one if it had a house or toilet built under a government scheme or if it received a private water or electricity connection via a government scheme since the last GP election. Approximately 7% of the sample households fall in this category. 3.8 We are interested in the implications of political reservation and Pradhan proximity for the allocation of high and low spill-over public goods across and within villages. We capture a village's reservation status by an indicator variable which equals one if the village belongs to a GP reserved for SC/ST. We use two variables to measure the political influence of a village - the first equals one if the Pradhan resides in that village, and the second equals one if the GP headquarters are in that village. Household Level Evidence 3.9 The results are reported in Table 3.2, columns (1) through (4). In column (1) we see that, in line with scheme guidelines, household (i.e. low spill-over) public goods are targeted towards SC/ST households - on average, a SC/ST household is 6 percent more likely to receive such a public good. In column (2) we find that the extent of such targeting is enhanced by living in a reserved GP. Relative to living in a non-reserved GP, living in a reserved GP increases a SC/ST household's likelihood of getting such a public good by 7 percentage points. In columns (3) and (4) we examine whether the targeting of a SC/ST household is affected by location in the Pradhan s village or in the GP headquarter. The results show that these two locations do not affect targeting. This suggests that enhanced targeting of SC/ST households only comes from reservation. We have seen so far that SC/ST Pradhans allocate low-spillover public goods to SC/ST households within villages. Now we move to investigate the allocation across villages. Village Level Evidence 3.10 In our household-level regressions (columns (1)-(4)) we controlled for all village characteristics by using village fixed effects. The magnitude of the village fixed effects is in fact a village-level measure of household public goods provision. In columns (5) and (6) we examine whether village level political power influences this measure. None of our measures of political power - whether the Pradhan position is reserved for SC/ST, whether it is the Pradhan's village and/or GP headquarters - affects village-level allocation of household public goods. Household public goods have low spill-overs and are targeted towards SC/STs. Hence we expect non- SC/ST and SC/ST Pradhans' to differ in their propensity to allocate resources towards such public goods. Given this, it is unsurprising that the overall incidence of targeted public goods is unrelated to Pradhan's residence. However, it is surprising that this is also the case when the Pradhan position is reserved for SC/ST. It appears that political reservation is relevant for within-village allocation of low spill-over goods but not for overall village allocation.