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Clientelistic politics and pro-poor targeting

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Past research has provided evidence of clientelistic politics by local governments in delivery of private good benefits and manipulation of local budgets by elected officials at upper tiers. Dilip Mookherjee discusses research in West Bengal, India.

Image courtesy of interviewee. July 29, 2024

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This video discusses the evolution and challenges of decentralization in India, particularly in West Bengal, since the late 1990s. Decentralization aimed to improve the targeting of welfare benefits by empowering local leaders with better information to serve needy communities and increase accountability. However, experiences over the past few decades have revealed issues such as local elite capture and clientelism. Elite capture occurs when local leaders prioritize the interests of wealthy individuals over the truly needy, while clientelism refers to the practice of local incumbents directing benefits to secure votes.

The speaker notes that, in West Bengal, elite capture was not a significant problem due to previous land reforms. Instead, clientelism was prevalent, with elections influencing the distribution of grants more than the actual needs of communities. Despite these challenges, a surprising finding from recent research indicated that the existing system of resource allocation based on political opportunism was actually more effective at targeting resources to the poor than a proposed formula-based redistribution method.

The speaker emphasizes the need for better information for effective governance and acknowledges that while some benefits are still misallocated, the current system may be preferable given the state's limitations. This video concludes by noting that policies must be context-specific, as what works in one region may not apply to another due to varying political and socio-economic conditions.

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Here are some key quotes from the video:

1. **On the Aim of Decentralization**:
- "Decentralization... was kind of happening in the late 1990s in India, when the aim was to improve the targeting of welfare benefits..."

2. **Importance of Local Information**:
- "... bringing in more information that was available at the local level to local leaders and local communities about who was truly needy."

3. **Challenge of Local Elite Capture**:
- "One is... what is being referred to as local elite capture. So the local government leaders may be dancing to the tune of local landlords, rich people who diverts benefits to them instead of the truly needy."

4. **Opportunism and Clientelism**:
- "The other is clientelism, which is... the local political incumbent is trying to direct benefits, in an opportunistic fashion to garner more votes."

5. **Disappointments from Decentralization**:
- "The experience over the last 20, 30 years... has been that there have been some disappointments."

6. **The Case of West Bengal**:
- "In West Bengal, it turned out... had carried out a land reform in the late 1970s. So the problem of elite capture was not a significant one."

7. **Need for Central Control**:
- "So the question... is it time to now bring back some central control?"

8. **Performance of Local Leaders**:
- "... local leaders were actually better informed about the allocation of need across local areas than what was captured in the state formula."

9. **Political Dynamics**:
- "When the party is chasing votes, it tends to make deals with citizen groups that are more likely to reciprocate..."

10. **Conclusion on Current System**:
- "Perhaps it still makes sense to stick with the current system... at this intermediate stage of development in India or in West Bengal."

11. **Limitations of Clientelism**:
- "Clientelism operates by making deals with particular subgroups of the poor leaving out other equally deserving..."

12. **Convideoual Specificity of Solutions**:
- "We cannot take for granted what the right policy solution should be. It's very convideo specific."

These quotes encapsulate the challenges and dynamics of decentralization and welfare targeting in India, particularly in the convideo of West Bengal.

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X-TIMESTAMP-MAP:LOCAL=00:00:00.000,MPEGTS=900000

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Decentralization, was kind

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of happening in the late 1990s in India,

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when the aim was to, improve the targeting

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of welfare benefits by

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bringing in more information

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that was available at the local level to local leaders

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and local communities about who was truly needy.

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It was also, to ensure greater accountability

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that local leaders, who had to win local elections,

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would have to be responsive to the needs of local people

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and be seen to, be doing a good job

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by the local population.

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So it was a, an effort to enhance local democracy as well.

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But the experience over the last 20, 30 years, has been

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that there have been some disappointments,

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and there have been two kinds of problems

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with decentralization.

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The way it's actually functioned on the ground, one is,

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what is being referred to as a local elite capture.

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So the local government leaders may be dancing to the tune

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of local landlords, rich people who,

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and divert benefits to them instead of, the truly needy.

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Uh, the other is Clientelism, which is

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that the local political incumbent is trying

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to direct benefits, in an opportunistic fashion

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to garner more votes.

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And, this kind of opportunism means

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that they direct benefits towards regions,

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that are more likely to reciprocate, with their votes

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and, towards areas where elections are more contested.

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And also to local governments that are controlled

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by the same party as at the higher level at

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the district level, for instance.

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So in West Bengal, India, which is

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where the study is located, west Bengal, it turned out,

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had carried out a land reform in the late 1970s.

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So the problem of elite capture was not a significant one.

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And I have done previous studies showing that

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that elite capture was not a significant problem,

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but instead, clientele was,

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there were contested local elections,

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and the left party, which had been in power almost

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continuously since the nine, late 1970s, was indeed

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allocating grants

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to different local governments in an opportunistic fashion

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to, to gar more votes.

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So that kind of allocation may end up directing resources

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to areas that were not so needy.

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And so creating this problem of targeting grants

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to, to the needy areas.

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And so the, the question that,

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is being asked now in many policy circles is, is it,

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is it time to now bring back some central control?

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Uh, and one way of doing that is to direct grants

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to local governments based on a formula, on some kind

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of a central formula, which is based on information

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available to state

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and, central governments about the relative

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need of different areas.

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So that's the, the, the question here,

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the policy question is, would

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moving back from decentralization

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and recentralizing the program in this way,

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would it improve the targeting of resources?

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There been many studies on West Bengal and particular,

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and also the rest of India and generally worldwide.

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Uh, I mean, there is this wonderful, monograph

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by Mansuri and Rao, which,

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I think reviewed more than a thousand papers,

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looking at the, the, the, the performance

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of decentralization and, and problems are very capture

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and client and so on.

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So the problem is well known that the question is,

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you know, solutions.

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And there have been relatively few attempts to study it.

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There are, there are, I mean,

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there are some nice papers in the context of Brazil

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and Indonesia as well as in, recent student of mine,

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Lisa Taino also looked at the targeting

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of drought relief in South India,

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but there was no such study in the context of West Wing all,

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and West Wing all is interesting

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because we know so much about Clientelism in that context.

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And elite capture is not a significant problem.

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I, I've been working in West Wing all for quite a while,

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over 25 years now, I've been conducting these surveys,

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agricultural surveys, village government surveys,

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community surveys, and household surveys.

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And so we have a panel.

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Uh, so first we have a representative sample

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of villages all over West Bengal.

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And then within villages, household selected according

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to a stratified random sampling scheme.

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So the, the, to ensure representativeness

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of all different groups within, within, within the, the,

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the state in, in, in rural parts of the state.

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Uh, so we have data, very extremely detailed data,

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the households reporting

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what welfare benefits they received.

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So we don't rely on administrative data, which is subject

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to a lot of concerns because the corruption

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and client often gets hidden.

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The, the administrations often post data on the

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websites, which are not accurate.

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So what we can really trust is households reports of

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what they actually received.

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And so we are tracking about 24 households, 2,400, sorry,

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households over 10 years.

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And we have a year by year account of, of,

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benefits they received of different kinds.

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And this is pretty comprehensive,

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all the welfare benefits they received of different kinds.

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And then finally, we conduct, a, a poll, which is,

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you know, within about six months of a recent election

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where we simulate, you know, an an, an election where

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a household, each household head, fills out a poll

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that selects, one of the political parties from the,

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the local contestants, anonymously.

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And we have the data,

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therefore, where we can connect the receipt

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of household benefits

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with the way the household heads are voting.

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And we match the, the, the responses in our poll.

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And they, with, with the actual election, the, the,

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you know, the, the vote counts in the local booth.

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And, on average, you know, the, they're,

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they're actually quite accurate.

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So we have reason to believe

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that the data is really high quality here.

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I mean, going into the study,

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we didn't quite know what to expect.

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I mean, we expected, all kinds of targeting problems

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because it's quite conceivable that political opportunism

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of, of the, the incumbent party would be

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to direct resources to areas

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where elections are more contested

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or into local governments which are controlled

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by the same party, and that need not coincide with

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where the poor truly reside.

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Um, I mean, there is this thing about, you know,

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in in the political economy literature, it's well known

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that quite often governments take their loyal

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supporters for granted.

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And, and chase swing voters

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and swing voters are often more educated,

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more well off and so forth.

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So there may be all, all of these biases

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that we were expecting, what we found, and

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therefore we expected, that some kind of,

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formula-based grants would do a better job.

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The question is, which formula to be used?

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So the State Finance commissioner of West Bengal,

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which recommends how grants should be devolved

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to local governments, has a formula

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where they use seven criteria for,

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the backwardness of a region.

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Uh, and it builds in things like infrastructure,

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the proportion of households that belong to scheduled costs

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and tribes, the fraction of households

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that are, food insecure

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that are illiterate and so forth.

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So they have this formula as well as the size of the,

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of the region, in terms of the number of households.

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So there is this particular formula that is actually used

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by the West Bank, all government in devolving grants.

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So we said, well, what if we use the same formula

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for all other grants, for the welfare program?

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And, however these are grants, mind you

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to local governments within a particular

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local government area.

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You know, a local government oversees about eight

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or nine villages, the allocation

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of resources within those villages.

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We still leave it to the local government leaders

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because there's just no way we can, we can sort of get past

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that state capacity in India is not that well developed, so

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that welfare benefits can be d you know, directly delivered

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to, to individual residents.

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We just have to leave that job to the,

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to the lowest level of, of village government.

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Anyway, so that was the question.

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What we are doing is changing the allocation

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of grants across local governments.

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And what we found to our surprise,

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was actually the, the system

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that was actually performing was doing a better job in terms

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of propo targeting than the counterfactual of

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what would have been, generated, had the switch

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to formula-based grants.

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Uh, so we were surprised,

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and then we wanted to understand

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why, why was this happening?

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And the answer is roughly the following.

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The opportunism of, of the elron government, which was kind

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of the reigning incumbent in most

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of West Bengal at the time, was clientele.

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And clientele is based on a quid pro quo between

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the party and the citizen.

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I give you the benefits in return, you vote for me.

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And when the party is chasing votes, it tends to make deals

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with citizen groups that are more likely to reciprocate,

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and the citizens that are more likely

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to reciprocate are poorer citizens

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because the benefits matter a lot more to them.

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So the political democracy has this inbuilt mechanism,

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at least clientele has this inbuilt mechanism of

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making parties want to direct benefits to the poor.

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And there could have been offsetting effects, you know,

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the swing water effect that I referred to earlier,

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or, you know, where elections are more contested

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and whether alignment patterns match up with poverty.

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And it turns out that those didn't really vary

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systematically with the level of local poverty.

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So this last effect that poorer citizens are more likely

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to reciprocate with their votes was the dominant one.

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And the second reason was that the state formula

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for allocating grants was not informative enough.

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The local leaders were actually better informed about the

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allocation of need across local areas

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than was captured in the state formula.

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So this partly reflects the, the shortcomings

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of the information available to the central government.

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So the, the, the message is that, well, it's not as if,

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you know, whatever decentralization is doing

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is not subject to problems.

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20% of benefits are still leaking to the non-poor.

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But if you have to improve on it,

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you need the central government to have, access

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to much better and more detailed information.

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Moreover, you know, we were still delegating benefits

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to local governments.

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The intra village targeting was still left

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to local governments because of the lack of state capacity.

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And that's partly because the,

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the central government doesn't have a, a, a,

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a reliable roster of households in each and every village.

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It doesn't have information about how much land they own

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or what the size of their families

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or how many disabled people there are in each family

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as a result of this lack of information.

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Moreover, they don't have most

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of them, no, a lot of them do.

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But, you know, significant fraction, 20,

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30% do not have bank accounts, functioning bank accounts.

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So there's no way for the central government

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to directly send transfers to, to,

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individual households.

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So you're still relying on local governments.

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But what you see in the west, for instance,

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with social security in the United States, for instance,

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most people have functioning bank accounts,

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and the state has information about the needs

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of each and every household.

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So it can use formula which are based

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on much better information.

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So this, so we, anyway, the, the, the, the bottom line was

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that at this intermediate stage of development in India

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or in West Bengal where central state capacity is not

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so well developed, perhaps it still makes sense to stick

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with the current system.

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So first, you know, we are looking only at

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private welfare benefits.

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We are not looking at, public, public goods.

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We are not looking at roads or schools

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or health services here.

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Uh, and it's conceivable,

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and it's often been argued by scholars of clientelism,

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that clientelism, which operates through the delivery

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of private benefits is of come, often comes at the expense

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of failures to deliver public services.

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In fact, this is a way for incumbents

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to shield themselves from political competition,

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by making this sort of quick pro quo packed with voters.

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And so the voters are afraid to vote out the incumbent,

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even though it may be doing a terrible job with schools and

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and roads,

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because they have something personally to, to, to,

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to lose if, if, if they were to vote against it.

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So, there is this that, so that,

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that aspect of it is neglected.

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And I think, so that is a really, I think an Im a,

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a vital concern

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'cause the delivery of public services

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is woefully inadequate in West Bengal as with the rest

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of India and many developing countries.

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So I think that's a very important qualification.

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The second qualification is that, you know,

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propo targeting is not the only criterion of fairness.

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Fairness also involves treating everybody equitably.

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And so quite often Clanism operates by making deals

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with particular subgroups of the poor particular costs.

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For instance, may, may enter into some kind of a cozy deal

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with the reigning, government,

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leaving out other equally deserving costs in the code.

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So there's a lack of horizontal equity.

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You know, you may get vertical equity,

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but you don't necessarily get horizontal equity.

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And the third qualification is that West Bengal, as I said,

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has had a

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Land reform program. So

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elite capture is not a problem in other parts of India,

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elite capture is a much more serious problem.

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So I think we would not want to generalize

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beyond West Bengal to other Indian states.

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And the work that, my student Lisa did

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for South India actually indicates,

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that the state does have access to good,

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information about

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where droughts occur based on rainfall data.

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So with respect to drought relief, which is

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what she studied, the central government

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and formula-based grants would probably do a much better

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job, therefore, you know, so we cannot take for granted

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what the right policy solution should be.

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It's very context specific.

00:00 - Decentralization, was kind of happening in the late 1990s in India, when the aim was to, improve the targeting of welfare benefits by bringing in more information that was available at the local level to local leaders

00:20 - and local communities about who was truly needy. It was also, to ensure greater accountability that local leaders, who had to win local elections, would have to be responsive to the needs of local people and be seen to, be doing a good job by the local population. So it was a, an effort to enhance local democracy as well. But the experience over the last 20, 30 years, has been that there have been some disappointments, and there have been two kinds of problems

00:56 - with decentralization. The way it's actually functioned on the ground, one is, what is being referred to as a local elite capture. So the local government leaders may be dancing to the tune of local landlords, rich people who, and divert benefits to them instead of, the truly needy. the other is Clientelism, which is that the local political incumbent is trying to direct benefits, in an opportunistic fashion to garner more votes.

01:36 - And, this kind of opportunism means that they direct benefits towards regions, that are more likely to reciprocate, with their votes and, towards areas where elections are more contested. And also to local governments that are controlled by the same party as at the higher level at the district level, for instance. So in West Bengal, India, which is where the study is located, west Bengal, it turned out, had carried out a land reform in the late 1970s.

02:11 - So the problem of elite capture was not a significant one. And I have done previous studies showing that that elite capture was not a significant problem, but instead, clientele was, there were contested local elections, and the left party, which had been in power almost continuously since the nine, late 1970s, was indeed allocating grants to different local governments in an opportunistic fashion to, to gar more votes.

02:39 - So that kind of allocation may end up directing resources to areas that were not so needy. And so creating this problem of targeting grants to, to the needy areas. And so the, the question that, is being asked now in many policy circles is, is it, is it time to now bring back some central control? and one way of doing that is to direct grants to local governments based on a formula, on some kind of a central formula, which is based on information

03:14 - available to state and, central governments about the relative need of different areas. So that's the, the, the question here, the policy question is, would moving back from decentralization and recentralizing the program in this way, would it improve the targeting of resources? There been many studies on West Bengal and particular, and also the rest of India and generally worldwide.

03:40 - I mean, there is this wonderful, monograph by Mansuri and Rao, which, I think reviewed more than a thousand papers, looking at the, the, the, the performance of decentralization and, and problems are very capture and client and so on. So the problem is well known that the question is, you know, solutions. And there have been relatively few attempts to study it. There are, there are, I mean,

04:04 - there are some nice papers in the context of Brazil and Indonesia as well as in, recent student of mine, Lisa Taino also looked at the targeting of drought relief in South India, but there was no such study in the context of West Wing all, and West Wing all is interesting because we know so much about Clientelism in that context. And elite capture is not a significant problem. I, I've been working in West Wing all for quite a while, over 25 years now, I've been conducting these surveys,

04:33 - agricultural surveys, village government surveys, community surveys, and household surveys. And so we have a panel. so first we have a representative sample of villages all over West Bengal. And then within villages, household selected according to a stratified random sampling scheme. So the, the, to ensure representativeness of all different groups within, within, within the, the, the state in, in, in rural parts of the state.

05:01 - so we have data, very extremely detailed data, the households reporting what welfare benefits they received. So we don't rely on administrative data, which is subject to a lot of concerns because the corruption and client often gets hidden. The, the administrations often post data on the websites, which are not accurate. So what we can really trust is households reports of what they actually received.

05:24 - And so we are tracking about 24 households, 2,400, sorry, households over 10 years. And we have a year by year account of, of, benefits they received of different kinds. And this is pretty comprehensive, all the welfare benefits they received of different kinds. And then finally, we conduct, a, a poll, which is, you know, within about six months of a recent election where we simulate, you know, an an, an election where a household, each household head, fills out a poll

06:00 - that selects, one of the political parties from the, the local contestants, anonymously. And we have the data, therefore, where we can connect the receipt of household benefits with the way the household heads are voting. And we match the, the, the responses in our poll. And they, with, with the actual election, the, the, you know, the, the vote counts in the local booth. And, on average, you know, the, they're,

06:28 - they're actually quite accurate. So we have reason to believe that the data is really high quality here. I mean, going into the study, we didn't quite know what to expect. I mean, we expected, all kinds of targeting problems because it's quite conceivable that political opportunism of, of the, the incumbent party would be to direct resources to areas where elections are more contested

06:55 - or into local governments which are controlled by the same party, and that need not coincide with where the poor truly reside. I mean, there is this thing about, you know, in in the political economy literature, it's well known that quite often governments take their loyal supporters for granted. And, and chase swing voters and swing voters are often more educated, more well off and so forth.

07:20 - So there may be all, all of these biases that we were expecting, what we found, and therefore we expected, that some kind of, formula-based grants would do a better job. The question is, which formula to be used? So the State Finance commissioner of West Bengal, which recommends how grants should be devolved to local governments, has a formula where they use seven criteria for, the backwardness of a region.

07:45 - and it builds in things like infrastructure, the proportion of households that belong to scheduled costs and tribes, the fraction of households that are, food insecure that are illiterate and so forth. So they have this formula as well as the size of the, of the region, in terms of the number of households. So there is this particular formula that is actually used by the West Bank, all government in devolving grants. So we said, well, what if we use the same formula

08:20 - for all other grants, for the welfare program? And, however these are grants, mind you to local governments within a particular local government area. You know, a local government oversees about eight or nine villages, the allocation of resources within those villages. We still leave it to the local government leaders because there's just no way we can, we can sort of get past that state capacity in India is not that well developed, so

08:50 - that welfare benefits can be d you know, directly delivered to, to individual residents. We just have to leave that job to the, to the lowest level of, of village government. Anyway, so that was the question. What we are doing is changing the allocation of grants across local governments. And what we found to our surprise, was actually the, the system that was actually performing was doing a better job in terms

09:19 - of propo targeting than the counterfactual of what would have been, generated, had the switch to formula-based grants. so we were surprised, and then we wanted to understand why, why was this happening? And the answer is roughly the following. The opportunism of, of the elron government, which was kind of the reigning incumbent in most of West Bengal at the time, was clientele.

09:49 - And clientele is based on a quid pro quo between the party and the citizen. I give you the benefits in return, you vote for me. And when the party is chasing votes, it tends to make deals with citizen groups that are more likely to reciprocate, and the citizens that are more likely to reciprocate are poorer citizens because the benefits matter a lot more to them. So the political democracy has this inbuilt mechanism, at least clientele has this inbuilt mechanism of

10:24 - making parties want to direct benefits to the poor. And there could have been offsetting effects, you know, the swing water effect that I referred to earlier, or, you know, where elections are more contested and whether alignment patterns match up with poverty. And it turns out that those didn't really vary systematically with the level of local poverty. So this last effect that poorer citizens are more likely to reciprocate with their votes was the dominant one. And the second reason was that the state formula

10:55 - for allocating grants was not informative enough. The local leaders were actually better informed about the allocation of need across local areas than was captured in the state formula. So this partly reflects the, the shortcomings of the information available to the central government. So the, the, the message is that, well, it's not as if, you know, whatever decentralization is doing is not subject to problems. 20% of benefits are still leaking to the non-poor.

11:26 - But if you have to improve on it, you need the central government to have, access to much better and more detailed information. Moreover, you know, we were still delegating benefits to local governments. The intra village targeting was still left to local governments because of the lack of state capacity. And that's partly because the, the central government doesn't have a, a, a, a reliable roster of households in each and every village.

11:57 - It doesn't have information about how much land they own or what the size of their families or how many disabled people there are in each family as a result of this lack of information. Moreover, they don't have most of them, no, a lot of them do. But, you know, significant fraction, 20, 30% do not have bank accounts, functioning bank accounts. So there's no way for the central government to directly send transfers to, to,

12:21 - individual households. So you're still relying on local governments. But what you see in the west, for instance, with social security in the United States, for instance, most people have functioning bank accounts, and the state has information about the needs of each and every household. So it can use formula which are based on much better information. So this, so we, anyway, the, the, the, the bottom line was

12:46 - that at this intermediate stage of development in India or in West Bengal where central state capacity is not so well developed, perhaps it still makes sense to stick with the current system. So first, you know, we are looking only at private welfare benefits. We are not looking at, public, public goods. We are not looking at roads or schools or health services here. and it's conceivable,

13:11 - and it's often been argued by scholars of clientelism, that clientelism, which operates through the delivery of private benefits is of come, often comes at the expense of failures to deliver public services. In fact, this is a way for incumbents to shield themselves from political competition, by making this sort of quick pro quo packed with voters. And so the voters are afraid to vote out the incumbent, even though it may be doing a terrible job with schools and and roads,

13:45 - because they have something personally to, to, to, to lose if, if, if they were to vote against it. So, there is this that, so that, that aspect of it is neglected. And I think, so that is a really, I think an Im a, a vital concern 'cause the delivery of public services is woefully inadequate in West Bengal as with the rest of India and many developing countries. So I think that's a very important qualification.

14:11 - The second qualification is that, you know, propo targeting is not the only criterion of fairness. Fairness also involves treating everybody equitably. And so quite often Clanism operates by making deals with particular subgroups of the poor particular costs. For instance, may, may enter into some kind of a cozy deal with the reigning, government, leaving out other equally deserving costs in the code. So there's a lack of horizontal equity. You know, you may get vertical equity,

14:43 - but you don't necessarily get horizontal equity. And the third qualification is that West Bengal, as I said, has had a Land reform program. So elite capture is not a problem in other parts of India, elite capture is a much more serious problem. So I think we would not want to generalize beyond West Bengal to other Indian states. And the work that, my student Lisa did for South India actually indicates,

15:07 - that the state does have access to good, information about where droughts occur based on rainfall data. So with respect to drought relief, which is what she studied, the central government and formula-based grants would probably do a much better job, therefore, you know, so we cannot take for granted what the right policy solution should be. It's very context specific.

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