Poverty, heterogeneous elite, and allocation of public spending: Panel evidence from the Indian States

Abstract

In this paper, we explore how in the world’s largest democracy, India, the presence of different elite groups – the dominant landed and capitalist elite and the minority elite (who are the elected representatives of the marginalised women and low caste population) – could affect the nature and extent of public spending on various accounts, especially education. Our results suggest that the dominant landed elite tends to be unresponsive to the underlying poverty rate while the capitalist elite respond to the poverty rate by increasing the share of education spending. After controlling for all other factors, presence of the minority elite has a limited impact, if at all. Results are robust to alternative specifications.