INDIA’S PATH TO HUMAN DEVELOPMENT: WHY PARTY AFFILIATION IS AT THE CENTER OF INDIA’S HDI STORY

Abstract

In this paper, I explore the politics behind human development levels across different states in India. Previous research has found strong correlation between fiscal transfers from the Central Government and the states of political interest for the party in power at the Center, namely, the states where it is in power, the states where its coalition partners are in power, and the states which do not have its main opposition in power but are of political interest to the Central Government. I build up on this research to show that these transfers are a result of bargains between the Center and the states, which not only affects transfers but also regional policies of the state governments. I show that these bargains that result in differentiated fiscal transfers and regional policies have a combined effect of the rate of change of Inequality-Adjusted Human Development Index, wherein the states with parties in power that are not the leading party of the national coalition are likely to see a greater rate of increase in the rate of human development than the states with the Leading Parties in power. I also find that these trends not only have a short-term effect but because of the lasting impact of policy decisions, they tend to have a more significant impact in the long term.