Do Public Policy Dynamics Stimulate Anti-Incumbency Waves? Results from Indian States

India left aside the economic philosophy of import-substitution led growth model in 1991, and increasingly integrated itself with the world economy. While the GDP growth of the country has been commendable in global comparison, devolution of actual development at state level is a relevant research question. It has been argued that India’s poorer growth prospect in recent times is a result of the counterproductive policies adopted over last decade, particularly since 2009. The present analysis contributes to this debate by exploring two key questions. First, it enquires how the government policies on social sector, measured by inflation adjusted average per capita social sector expenditure (PCSSE) and per capita grants-in-aid disbursement (PCGAD), contribute to economic development, as reflected through inflation and inequality adjusted Monthly Per Capita Consumption Expenditure (MPCE), across various states over the last two decades. Second, it also attempts to explain the influence of the development dynamics, as reflected through growth in MPCE, on General Election outcomes. The analysis clearly indicates that the government policies in the social sector crucially influence the development process, which in turn may significantly affect the General Election outcomes. Given these findings, it is concluded that there is room for introspecting on recent restructuring on Centre-State financial devolutions.