Role of political connections in land investment: evidence from rural India

Decentralization in India was implemented as a remedy for the ineffectiveness of government schemes in reaching and benefitting the poor and the necessity of involvement and participation of the very citizenry at the grassroots that are most in need of government intervention and support. However, if this participation itself tends to be dominated by the elite, or prone to corruption, and therefore exclusionary, it becomes a case of the remedy being as bad, if not worse than the malaise. It is in light of the above that this paper attempts a two-part analysis of the IHDS-I and II (India Human Development Survey, first and Second Round) data pertaining to Indian Rural Households, wherein the first part, we examine whether their political connections or lack thereof determine the investment in land by these households. Upon finding that this is indeed the case, the second part is devoted to probing into the significance of possible links that may drive such a positive relationship. Our results show that access to financing instruments of investment by a rural household is indeed more probable in the case of a politically connected household vis-à-vis one lacking such connections.