THE POLITICS OF FOOD DISTRIBUTION IN INDIA A R N A V M O D Y I N - PowerPoint PPT Presentation

THE POLITICS OF FOOD DISTRIBUTION IN INDIA A R N A V M O D Y I N T E R N A T I O N A L R E L A T I O N S H O N O R S T H E S I S

Topic • Distributive Politics and the Political Business Cycle • The influence of politics and elections on food distribution to Indian states through the Public Distribution System (PDS)  States that are aligned and swing benefit  States that are aligned and have a greater representation in parliament benefit

Introduction • Costs $13.6 billion a year (~1% of GDP) • Procurement of grains • 29 states from farmers Farmer • Elections every five years • Single member constituency • Allocation to states first past the post based on number of Center majoritarian system families • Distribution to fair price shops within states State • Sale of subsidized grains to eligible Shops beneficiaries

Literature Review and Theory Ration shops are crucial in Voters represented by meeting daily food needs for members of a majority party two-thirds of the population receive more benefits The central incumbent has Gordon and Kang 2015 discretionary influence in PDS Political Business Cycles in India: Fiscal policies and pre- A perception that pre-election election increase in budget policies will continue post- deficit election Khemani 2004

Literature Review and Theory Goodwill leakages and Leakage of goodwill (credit) to alignment state government from central government policies Arulampalam et al. 2009 States that are swing and/or Aligned Swing Effect have a larger representation in parliament are deemed more Arulampalam et al. 2009 important

Hypotheses Hypothesis 1: Aligned Swing Effect States that are aligned with the central government and are swing • receive a higher percentage offtake and more ad-hoc allocations of wheat and rice Hypothesis 2: Political Business Cycle States experience a higher percentage offtake closer to elections • States that are aligned and swing receive a higher percentage • offtake closer to elections Hypothesis 3: Importance States with a larger number of national constituencies receive a • higher percentage offtake and more ad-hoc allocations of wheat and rice

Summary Statistics Name (units) Mean Std Dev Min Max Source # Obs offtake st (%) 91.43% 25.91 0% 298.60% IndiaStat 1,667 adhoc st 0.32 0.47 0 1 IndiaStat 1,667 allied st 0.47 0.50 0 1 ECI 1,667 months st 30.94 18.5 0 74 ECI 1,667 netswing st 0.38 0.49 0 1 - 1,632 stateswing st 0.47 0.50 0 1 - 1,632 centralswing st 0.28 0.45 0 1 - 1,632 close_3 st 0.07 0.25 0 1 - 1,667 close_6 st 0.12 0.319 0 1 - 1,667 close_12 st 0.22 0.41 0 1 - 1,667 seats st 18.9 18.88 1 80 ECI 1652 income st (INR) 75,290 39,698 11,051 224,138 RBI 1,652

Hypothesis 1: Aligned Swing Effect OLS OLS OLS OLS Probit Probit Probit (1) (2) (3) (4) (5) (6) (7) adhoc st adhoc st adhoc st offtake st offtake st offtake st adhoc st -1.18 -4.00 -2.02 -0.03 -0.08 -0.13 -0.10 allied st (2.46) (2.41) (2.48) (0.05) (0.14) (0.17) (0.13) -2.49 -0.05 -0.18 netswing st (3.83) (0.05) (0.16) 6.92* 0.13** 0.39** allied st x netswing st (3.38) (0.05) (0.17) -12.22** -0.05 stateswing st (0.040) (0.21) 16.17*** 0.31 allied st x stateswing (5.74) (0.27) -11.48* -0.55** centralswing st (5.62) (0.27) 8.59* 0.39* allied st x centralswing (4.44) (0.21) 0.49** 0.09 0.05 0.11 excess_rainfall st (0.18) (0.14) (0.15) (0.13) 15.34 14.33 17.02 0.03 1.5** 1.41 1.58** log(income st ) (11.09) (12.38) (10.33) (0.04) (0.65) (0.82) (0.64) # Obs 1,652 1,620 1,601 1,652 1,593 1,561 1,542 R 2 0.17 0.18 0.18 0.16 0.12 0.13 0.12 All models include state fixed effects, year fixed effects and clustered standard errors at the state level Robust standard errors in parentheses *p<0.10, **p<0.05, ***p <0.01

Coefficient Plots Allied Non-Swing Allied Non-Swing Non-Allied Swing Non-Allied Swing Allied Swing Allied Swing State Swing Central Swing -20 -10 0 10 20 30 -20 -10 0 10 20 Allied Non-Swing The aligned swing effect is significant at the 90 percent Non-Allied Swing confidence interval Allied Swing -10 -5 0 5 10 15 Net Swing

Hypothesis 2: Political Business Cycle OLS OLS OLS OLS OLS OLS OLS (8) (9) (10) (11) (12) (13) (14) offtake st offtake st offtake st offtake st offtake st offtake st offtake st 0.06* 0.01 -0.05 months st (0.073) (0.04) (0.30) 0.002 1.13 1.00 1.38 1.19 months 2 st (0.006) (2.74) (2.55) (2.44) (2.75) -2.20 -0.71 allied st (3.14) (3.91) 0.10 -0.03 months st x allied st (0.08) (0.39) 0.002 months 2 st x allied st (0.006) -2.39 -2.39 -3.09 close_3 st (4.38) (4.38) (3.21) -3.23 -0.79 -4.60 close_6 st (3.98) (2.93) (2.41) 2.82 2.84 close_12 st (2.84) (2.84) -11.71* -11.69* -5.90 close_3 st x allied st (5.83) (5.85) (5.72) 6.09 6.18 -2.31 close_6 st x allied st (6.07) (4.78) (5.08) 0.02 -0.04 close_12 st x allied st (4.12) (4.13) 1.64 1.94 1.79 2.13 1.99 2.01 2.01 log(income st ) (4.01) (4.23) (4.46) (4.07) (4.11) (4.11) (4.12) 1,667 1,667 1,667 1,652 1,652 # Obs 1,652 1,652 0.16 0.17 0.17 0.17 0.17 R 2 0.17 0.16 All models include state fixed effects and clustered standard errors at the state level Robust standard errors in parentheses *p<0.10, **p<0.05, ***p <0.01

Hypothesis 3: Importance OLS OLS OLS OLS Probit (15) (16) (17) (18) (19) offtake st offtake st offtake st adhoc st adhoc st -1.41 -5.56** -3.65 -1.15** -0.44** allied st (3.54) (2.07) (4.72) (0.07) (0.19) -0.61*** seats st (0.16) 0.18 allied st x seats st (0.17) -4.83*** -10.07*** -0.19*** -0.63*** log(seats st ) (0. 57) (2.16) (0.03) (0.10) 2.74*** 2.37 0.078*** 0.24*** allied st x log(seats st ) (0.486) (1.94) (0.02) (0.07) 13.83 -2.80 13.21 0.43** 1.32** excess_rainfall st (10.80) (1.64) (10.95) (0.18) (0.64) 0.03 0.09 log(income st ) (0.04) (0.13) year FE      state FE     cluster(state)     cluster(year)  # Obs 1,652 1,652 1,652 1,652 1,593 R 2 0.17 0.04 0.17 0.16 0.12 Robust standard errors in parentheses *p<0.10, **p<0.05, ***p <0.01

Margins Plot (Model 18) Average Marginal Effects of Allied States With 95% CIs .4 .2 0 Uttar Pradesh, Maharashtra, West Bengal, Bihar, Tamil Nadu, Madhya Pradesh, Karnataka, Gujarat, Andhra -.2 Pradesh, Rajasthan, Odisha, Kerala -.4 0 .5 1 1.5 2 2.5 3 3.5 4 4.5 logseats OLS regression with adhoc st as the dependent variable, state fixed effects, year fixed effects and standard errors clustered at the state level

Conclusion Two main theoretical notions: Some states are more important than others at different times • Leaders can identify goodwill generation by policies and parties • to which voters will attribute this generated goodwill States that are allied and swing receive higher offtakes and are more 1 likely to receive ad-hoc allocations - States that are not allied and swing receive lower offtakes 2 No substantial evidence of a political business cycle States that have more seats and are allied receive higher offtakes and 3 are more likely to receive ad-hoc allocations - Larger states that are not allied receive lower allocations of food

Conclusion States that are allied and swing receive higher offtakes and are more likely to receive ad-hoc 1 allocations - States that are not allied and swing receive lower offtakes No substantial evidence of a 2 political business cycle States that have more seats and are allied receive higher offtakes and are more likely to receive 3 ad-hoc allocations - Larger states that are not allied receive a lower allocation of food

APPENDIX

Additional Models: Aligned Swing Effect OLS OLS OLS OLS OLS OLS (20) (21) (22) (23) (24) (25) adhoc st Adhoc st offtake st offtake st offtake st adhoc st 0.16 0.72 -0.81 0.21 -0.05 -0.85 allied st (2.74) (2.77) (4.25) 4.02 (2.62) (2.66) -1.91 netswing_05 st (3.62) 4.01 allied st x netswing_05 st (4.15) -3.63 netswing_10 st (3.57) 2.40 allied st x netswing_10 st (3.99) 6.13 stateswing_02 st (5.38) 15.69 allied st x stateswing_02 st (13.76) -12.24** stateswing_10 st (5.78) 6.70 allied st x stateswing_10 st (5.75) -4.94 centralswing_02 st (4.01) 3.33 allied st x centralswing_02 st (4.01) -7.90 centralswing_05 st (5.72) 4.83 allied st x centralswing_05 st (5.28) 13.92 14.87 15.69 13.04 15.93 17.43 log(income st ) (10.69) (10.59) (13.76) (12.27) (10.88) (10.39) # Obs 1,649 1,652 1,620 1,620 1,652 1,601 All models include state fixed effects, year fixed effects and clustered standard errors at the state level Robust standard errors in parentheses *p<0.10, **p<0.05, ***p <0.01

Coefficient Plots Allied Non-Swing Allied Non-Swing Non-Allied Swing Non-Allied Swing Allied Swing Allied Swing State Swing Central Swing -20 -10 0 10 20 -20 -10 0 10 20 30 Allied Non-Swing The aligned swing effect is significant at the 95 percent Non-Allied Swing confidence interval for state swing and net swing Allied Swing Net Swing -10 -5 0 5 10 15

Margins Plot (Model 19) Average Marginal Effects of Allied States With 95% CIs .2 .1 0 -.1 -.2 0 .5 1 1.5 2 2.5 3 3.5 4 4.5 logseats Probit regression with adhoc st as the dependent variable, state fixed effects, year fixed effects and standard errors clustered at the state level