Does Good Economics Make for Good Politics? Evidence from Indian States

Abstract

The proposition that voters reward incumbent governments that perform well economically is considered received wisdom in many democracies. We examine this hypothesis in India, a developing democracy where scholars have found limited evidence of economic voting. Using a unique state-level panel dataset covering the years 1980-2012, we find that there is no relationship between growth and electoral performance in the aggregate. However, since 2000, there do appear to be increasing electoral returns to governments that deliver higher rates of economic growth. The positive returns to growth are much larger than those to improved law and order, while inflation has no clear impact. The results suggest a significant shift in Indian voter behavior.

Keywords: economic voting, voter behavior, elections, India

JEL Classification: D72, P16