The political consequences of resource scarcity: Targeted spending in a water-stressed democracy

Abstract

We study whether resource scarcity enhances the scope for targeted spending in India. Farmers without access to groundwater during dry seasons cope using a large public-aid program controlled by local politicians. We leverage a multidimensional regression discontinuity for exogenous variation in whether local politicians are aligned with the state’s ruling party. We find that the state government channels disproportionate funds to politically-aligned jurisdictions in water-stressed areas and gains votes in subsequent elections. However, we find no partisan differences in aid allocation for non-water-stressed areas, suggesting a selective targeting of public funds to garner votes in the highest-return regions.