Election cycles and electricity provision: Evidence from a quasi-experiment with Indian special elections

a r t i c l e i n f o Available online xxxx JEL classification: D72 D78 H44 H73 Keywords: Electoral cycles Electricity supply Night lights India We present evidence from India showing that state governments induce electoral cycles in electricity service provision. Our data and research strategy allow us to build on models of political business cycles and targeted distribution in two important ways. First, we demonstrate that by manipulating the flow of critical inputs into economic activity like electricity, elected leaders can influence economic outcomes even in contexts where they have constrained fiscal capacity. Second, we identify the effect of elections on electricity provision by focus-ing on special elections held for exogenous reasons. Our results show that state governments induce substantive increases in electricity service to constituencies that hold special elections. Manipulation of the power supply is stronger in contested constituencies and during special elections held in states where the government commands only a small majority. Overall, we find no evidence of positive welfare effects from the electoral manipulation of electricity supply. An influential literature asserts that democratic governments have strong incentives to use their leverage over economic policies to improve their electoral prospects, generating political business cycles in the process. Most empirical research evaluating the existence of political business cycles draws on the industrialized world, where government control over economic policies can have significant impact on the national economy. 2 In much of the developing world, however, governments face constraints on fiscal capacity and budget shortfalls which may limit their ability to influence economic conditions in ways that are meaningful to the majority of voters. By focusing on special elections held to fill unexpected vacancies in Indian state legislatures, this paper demonstrates a means by which elected leaders in developing countries can influence economic outcomes through an alternative channel: by manipulating the flow and quality of public services that are critical inputs into economic activity. Our data and research strategy allow us to build on the existing literature on political business cycles in several ways. First, using a dataset of some 4000 state-level assembly constituencies observed from 1992 to 2009, we examine whether Indian state governments manipulate the provision of electricity before elections. Electricity is the lifeblood of the modern economy and a basic input into many pro-Yet, persistent power shortages in many developing countries require governments to actively manage the supply and distribution of power …