Despite a history of widely contested and transparent elections, and presence of vibrant and open media, an increasing number of criminally accused politicians are being elected in India. Based on an analysis of elections to State Legislative Assemblies during 2004-2008 in 20 states, this column finds that electing a politician accused of a serious or financial crime adversely affects economic growth and public service delivery in the constituency.

Does the quality of an elected politician affect the economic development outcomes for their constituency? In recent research, we answer this question by looking at the unique setting of India where an ever increasing number of criminally accused politicians are being elected (Prakash et al. 2015). The share of criminally accused politicians has risen from 24% of Members of Parliament in 2004 to 34% in 2014 (The New York Times, 2014). This occurs despite a history of widely contested and transparent elections, and a vibrant and open media. 

While the election of criminally accused candidates to public office is a matter of concern in general, this is particularly problematic for India. This is so because large quantities of funds are distributed by the government through a wide variety of interventions and programmes, and these are often plagued by costly scandals causing losses worth hundreds of billions of dollars (Sukhtankar and Vaishnav 2015). This problem is exacerbated by a severely understaffed judiciary and police force, resulting in extremely slow justice delivery. The result is a situation in which an influx of criminally accused politicians could be especially costly.

We estimate the causal effect of electing criminally accused politicians on the subsequent economic activity of their constituencies. We focus on elections to Indian State Legislative Assemblies in 20 states held from 2004 to 2008. Data from the Election Commission of India (ECI) allows us to not only identify criminally charged candidates but also differentiate between the types of charges and the number of outstanding cases. Since data on local economic conditions (that is, gross domestic product (GDP)) are not available for State Assembly constituencies, we instead rely on satellite data on the intensity of night-lights to measure economic activity at the State Assembly constituency level. Satellite data have been used as a proxy for economic activity (Bleakley and Lin 2012, Henderson et al. 2012, Hodler and Rashky 2014, Storeygard 2014) at both the national and sub-national level. We also use the number of incomplete road projects as a proxy for public good delivery to evaluate the aggregate economic costs of electing lower quality (criminally accused) politicians.

How do criminally accused politicians impact economic activity?

Our analysis examines constituencies with close elections - we compare constituencies which elect a criminally accused candidate with a narrow margin, with those that elected a non-accused candidate with a narrow margin. We find a strong adverse effect of narrowly electing a criminally accused politician on economic outcomes: on average, this resulted in roughly 22 percentage point lower yearly growth in the intensity of night-lights than in the comparison constituencies. When we convert this to GDP growth¹, this is roughly equivalent to roughly 2.3-6.5 percentage point lower GDP growth per year. To put this in perspective, India experienced approximately 6% GDP growth during this period. A constituency which narrowly elected a criminally accused candidate would have experienced only 5.61-5.86% GDP growth per year (as compared to the 6% otherwise). Since this is a yearly estimate, this would compound over the politician’s entire term.

As we discuss below, these effects also extend to our proxy for public good provision. These results show the detrimental effects of electing low quality (criminally accused) politicians in terms of the economic development of their respective constituencies. The foregone growth caused by electing criminally accused politicians must also impact poverty reduction and other micro-level development outcomes.

Do types of accusations matter?

If the effect is being caused by the type of politician (that is, being criminally accused), the type of charge should matter. This is confirmed by the data. Serious and financial charges² have a negative impact larger than that of the average charge. In contrast, the election of politicians accused of only non-financial and non-serious charges, has no impact. Additionally, the size of negative effect varies with the number of underlying accusations.

Where are the costs highest?

The costs of electing criminally accused politicians are concentrated in states which are less developed and have higher levels of corruption. States with weaker judicial, police or political institutions – the so-called BIMAROU - states - seem to face the highest cost burden of electing criminally accused politicians. We find insignificant results of electing criminally accused politicians in non-BIMAROU³, relatively developed and low corruption states. These results show that local context matters for the effect criminally accused politicians can have on their constituencies. Considering evidence that the actions of criminal politicians are more constrained in states with stronger institutions, a criminally accused politician is more able, and therefore more likely to compromise governance where institutions are less developed.

When do the costs arise?

We find that the election of a criminally accused politician does not instantaneously result in lower levels of economic activity. Rather, these costs take time to develop. This is because politicians need to collaborate with local bureaucrats in order to engage in corrupt behaviour (Iyer and Mani 2012). Consequently, a certain amount of time is necessary for corrupt politicians and bureaucrats to form a nexus and to engage in corrupt activities. So we find the negative effects of electing a criminally accused politician to be apparent only in the later years of a politician’s term. Additionally, the effects of neglected public infrastructure such as roads, etc., may take some time to slow down economic activity.

The big picture

These results show that the election of criminally accused politicians, and more generally, low quality politicians can have adverse effects on the economic growth and development of a constituency. Our results are consistent with the literature on patronage democracies. One manifestation of a patronage democracy is the elections of politicians who are able and willing to provide targeted benefits (Burgess et al. 2015). These benefits could be targeted based on class, ethnicity, or, in the context of India, caste. In these democracies, voters do not focus on overall outcomes, such as public good delivery; rather, they focus on whether politicians can deliver targeted transfers to their specific group or caste. Voters may overlook accusations or these might instead serve as a signal of the politician’s willingness to use the office to reward fellow-group members (Chauchard 2014, Wade 1985). If true, our results suggest three consequences. First, this can result in the election of criminally accused candidates, and therefore, potentially explains the ever increasing number of accused politicians who are elected in India. Second, the election of lower quality candidates in patronage democracies leads to lower aggregate growth. Third, these effects however are mediated by the local context, especially the institutional and legal context. In the more developed, and less corrupt states in our sample, the effects of the accused politicians were lower, perhaps due to the strength of institutions.

Although we study a particular context, lower quality politicians are believed to be pervasive in many developing countries. While the underlying cause is often context-specific and may range from caste politics to tribal and ethnic voting, we believe that our analysis is suggestive for other contexts as well.

A column based on the underlying research has appeared on VoxEU.

Notes:

1. Details on the methodology used are in the paper. 
2. The following are included under serious criminal charges: (i) maximum punishment for the offence committed is of five years or more (ii) offence is non-bailable (iii) offences pertaining to electoral violation (iv) offences related to loss to exchequer (financial charges) (v) offences related to assault, murder, kidnap or rape (vi) offences mentioned in Representation of the People Act (vii) offences under Prevention of Corruption Act (viii) offences related to crimes against women.
3. The BIMAROU states are four northern Indian states: Bihar, Madhya Pradesh, Rajasthan, Odisha, and Uttar Pradesh. These remain some of the least developed states of the country. BIMAROU has a resemblance to a Hindi word "Bimar" which means sick.

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