Bribery, democracy and their impact on governance and welfare: The case of rural India

Vol: 
2017/03
Author name: 
Raghbendra Jha
Hari K Nagarajan
Anirudh Tagat
Year: 
2017
Month: 
October
Abstract: 

Participation in welfare programs, administered by local government (Panchayats) is a significant source of consumption expenditure for households in rural India. In the context of imperfect local governance, we hypothesize that access to such programs may be limited, thus creating incentives for households to bribe in order to gain access. Using a 10-year panel dataset, we jointly estimate determinants of bribes, participation in welfare programs, and consequent change in economic welfare of households. We show that bribing does improve program participation and thence private consumption. Factors such as deepening democracy and increased fiscal buoyancy improve the quality of governance and increase the rate of participation in welfare programs and reduce the incidence of bribes.

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