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Quid Pro Quo: Builders, Politicians, and Election Finance in India- Working Paper 276

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  • Devesh Kapur, Milan Vaishnav

Abstract

In developing countries where elections are costly and accountability mechanisms weak, politicians often turn to illicit means of financing campaigns. This paper examines one such channel of illicit campaign finance: India’s real estate sector. Politicians and builders allegedly engage in a quid pro quo, whereby the former park their illicit assets with the latter, and the latter rely on the former for favorable dispensation. At election time, however, builders need to re-route funds to politicians as a form of indirect election finance. One observable implication is that the demand for cement, the indispensible raw material used in the sector, should contract during elections since builders need to inject funds into campaigns. Using a novel monthly-level data set, we demonstrate that cement consumption does exhibit a political business cycle consistent with our hypothesis. Additional tests provide confidence in the robustness and interpretation of our findings.

Suggested Citation

  • Devesh Kapur, Milan Vaishnav, 2011. "Quid Pro Quo: Builders, Politicians, and Election Finance in India- Working Paper 276," Working Papers 276, Center for Global Development.
    • Handle: RePEc:cgd:wpaper:276
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    Cited by:

    1. Das, Upasak & Maiorano, Diego, 2019. "Post-clientelistic initiatives in a patronage democracy: The distributive politics of India’s MGNREGA," World Development, Elsevier, vol. 117(C), pages 239-252.
    2. Ganesh Manjhi & Meeta Keswani Mehra, 2019. "A Dynamic Analysis of Special Interest Politics and Electoral Competition," Dynamic Games and Applications, Springer, vol. 9(1), pages 142-164, March.
    3. Sandip Sukhtankar, 2012. "Sweetening the Deal? Political Connections and Sugar Mills in India," American Economic Journal: Applied Economics, American Economic Association, vol. 4(3), pages 43-63, July.
    4. Raphael Susewind, 2015. "Spatial Segregation, Real Estate Markets and the Political Economy of Corruption in Lucknow, India," Journal of South Asian Development, , vol. 10(3), pages 267-291, December.

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    More about this item

    Keywords

    elections; election finance; corruption; political economy; India;
    All these keywords.

    JEL classification:

    • P16 - Political Economy and Comparative Economic Systems - - Capitalist Economies - - - Capitalist Institutions; Welfare State
    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles

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