Political Competition and Human Development: Evidence from the Indian States

Bharatee Bhusana Dasha* & Sacchidananda Mukherjeeaa National Institute of Public Finance and Policy (NIPFP), New Delhi - 110067, IndiaCorrespondence Address: Dr. Bharatee Bhusana Dash, National Institute of Public Finance and Policy (NIPFP), 18/2, Satsang Vihar Marg, Special Institutional Area, New Delhi, 110067 India. Email: bharatee_dash@yahoo.co.inAn Online Appendix is available for this article which can be accessed via the online version of this journal available at http://dx.doi.org/10.1080/00220388.2014.947280AbstractRecently, it has been argued that political competition may have similar effects on economic performance as it does on market competition. This study empirically examines this proposition by linking political competition with the Human Development Index (HDI) of the Indian states. The findings suggest that politically-competitive governments perform well along the HDI. A more detailed analysis also shows that rural India benefits most from the intense political competition compared to urban India. We also found that if the same government rules a state for a relatively long period, it helps the state to achieve a higher HDI score. Increasing voter participation is found to be positively associated with HDI score, but this finding is confined to the sample of major Indian states. Increasing public spending on developmental activities is also found to have a positive and significant effect on HDI performance.