Are Large-scale Poverty Alleviation Programmes Implemented with Electoral Goals in Mind? A Study of the National Rural Employment Guarantee Scheme in India

Abstract

Impact evaluations of poverty alleviation programmes often do not take into account political placement and implementation effort while estimating effectiveness. This can give rise to biased estimates if politicians make policy decisions regarding implementation with electoral returns in mind. Using a novel dataset, I examine the effect of electoral competitiveness on the implementation of the National Rural Employment Guarantee Scheme (NREGS) in India. Results from cross-sectional regressions indicate that expenditure on the programme as a proportion of available funds was higher by 0.185 to 0.195 percentage points for an additional percentage point decline in vote share to the Indian National Congress (INC), the main driver of the NREGS. This is partially consistent with the idea of electoral opportunism and Downsian competition where other political parties who may have leveraged the programme better than the INC. Using methods proposed by Altonji, Elder and Taber (2000) and Oster (2013), I conclude it unlikely that unobservables can explain away this result.