anirban mitraA new discussion paper by Anirban Mitra, Shabana Mitra and Arnab Mukherji, KDPE 1711, June 2017.

Non-technical summary

Campaigning in elections is costly. In countries without public funding of election campaigns, such financing necessarily relies on donations by private corporations and individuals. If, furthermore, such donations are subject to restrictive legal limits – which is often the case in several developing nations – then it suggests that election campaigns must be frugal. However, in reality elections in such contexts are rarely low-key: there exists ample anecdotal evidence of voters being bribed with cash or actual consumption goods prior to elections.

The media often reports on cash seized during various elections. For example, in India the amounts ranged from 19.5 million INR (about 0.3 million US$) in the eastern state of Assam to 155 million INR (about 2.4 million US$) in the southern state of Tamil Nadu during the 2014 parliamentary election. There is, however, a clear lack of hard evidence of the extent and form of vote-buying. This is unsurprising, largely because neither political parties nor voters have any incentives for revealing any details regarding the cash (and “kind”) that changes hands. 

In this paper, we propose a methodology to empirically assess the nature and extent of vote-buying using data on elections from all the major Indian states. Our approach to the problem is novel: we look at the consumption patterns of households and examine how they vary before and after elections. The idea is to capture the actual change (presumably, rise) in expenditure by the voters as a result of any cash transfer they might receive from the campaigning parties. 

Our two key sources of data are the National Sample Survey (NSS) rounds on household consumption expenditure, conducted during 2004-2012, and state assembly elections data for that period. Each NSS consumption module contains detailed information on the surveyed households’ monthly consumption expenditure on over 300 different commodities. Each of these survey rounds takes a year to complete and covers all states. For every surveyed household we have information on the date of the survey. Combining this with the data on state assembly elections, we are able to ascertain whether a household is reporting on consumption close to elections. Given that in a particular year only some states have elections, we have a sample with different groups: there are households that reported their consumption just a few days before they voted and those that did so many days before or after voting. In fact, we construct ‘time windows’ of different lengths prior to election dates to see how the consumption pattern changes. We compare these groups with the ‘reference group’, which comprises households in neighbouring (non-election) states that were surveyed on similar dates. In this manner, we tackle the main challenge regarding identification since the timing of surveys is independent of that of state assembly elections.

We find that households tend to spend more on a range of staples, and, to an extent, on ‘intoxicants’. The expenditures on education-related items (books, school uniforms, etc.) increase too. Moreover, the effects are quite substantial. Take the case of pulses: there is an increase in consumption of pulses worth around 50 INR per-capita for households surveyed close to election dates. Given that the average per-capita monthly spending on pulses is around 460 INR, this implies about a 10% increase. These “spikes” disappear with (chronological) distance from elections. Using our estimates, the approximate monetised value of the consumption spikes in a district on average turns out to be 2,900 million INR. This figure, when aggregated over a 5–year period (to allow for all states to have elections) comes to around 9% of India’s GDP. These estimates are too substantial to be explained by legal public spending and indicates the presence of the “black economy” in Indian elections.

You can download the complete paper here.