Abstract
What accounts for the persistence of inefficient subsidies? What are the obstacles to their reform? We examine the role of trust in government among farmers in explaining support for reforming India’s energy subsidies. The subsidies under study hold back efforts to provide a reliable supply of agricultural power and contribute to the unsustainable extraction of groundwater. This water-energy nexus in rural India represents both a poverty-perpetuating policy equilibrium and a crisis in environmental governance. Informed by interviews and focus groups, we conduct an original survey of 2010 farmers in Bihar, Gujarat, and Rajasthan and analyze this data on the preferences of “vested interests”—those most affected by potential reform—to demonstrate the crucial role of political trust, especially trust in the national government, in predicting farmers’ political support for reforms. Our findings have practical implications for environmental governance and rural development and contribute to understanding the political economy of social policy reform in a developing democracy.
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Notes
To be sure, migration out of the village, and to urban areas in particular, is a possible adaptation measure (Fishman, Jain, and Kishore, 2016). Farmers may respond to groundwater depletion by searching for alternative livelihoods, and the expectation of the opportunity to migrate may further encourage farmers to extract more groundwater in the short run.
Results from the survey confirm the individual costs of groundwater depletion for borewell-dependent farmers: of the 1533 farmers in the survey who use borewells, 89% say that they are in need of more water for irrigation of their land. Furthermore, among these farmers, the number one reason given for why they cannot get more water is that “no more water is available at all” and the number two reason is that “water is too expensive.” These responses show that depletion of the commons imposes substantial individual-level costs on farmers.
See “Bihar Govt Approves Rs 765 Cr for Diesel Subsidy,” Business Standard. Available at goo.gl/4R7oEy (accessed September 6, 2015).
For measurement of trust more generally, see Naef and Schupp (2009).
Examples can also be found elsewhere. Tsai (2011: 52) examines a village—Turtle Village—in Fujian province of China, finding that because “of the spectacularly poor mismanagement of Turtle Village’s public funds, villagers became unwilling to entrust village officials with their money.”
We do not have data on candidates’ policy positions, which are rarely revealed in formal manifestos. However, we do not believe this information is essential for testing our hypotheses. Even if all candidates adopt the same policy position, it is likely that they do so because adopting the opposite policy position would be futile or electorally unpopular. For example, if trust in government is very low among farmers, all the candidates might hesitate to adopt pro-reform positions while campaigning.
If farmers were stealing electricity, they would naturally prefer reliability and ignore the price. Electricity theft among farmers in Gujarat and Rajasthan, however, is likely rare. Given that electric pumps are stationary, evading payments would be very difficult. Because of the currently low electricity prices for farmers, the benefits from theft would also be low. Even if the state government increased electricity prices, monitoring the power consumption of electric pumps would be relatively easy.
The response categories for both questions are: (1) Distrust very much, (2) Distrust somewhat, (3) Neutral, (4) Somewhat trust, (5) Trust very much, and (6) Don’t know (coded missing for analysis).
We use government caste categories in our regressions: scheduled caste, scheduled tribe, backward caste, general, other, and no caste.
We did not include questions about partisan preferences in the survey. Such questions could be sensitive and might result in preference falsification; they might also induce post-treatment bias in our regressions because trust in government authorities could shape partisan identification.
Source of irrigation is classed as the primary source of irrigation among the following: (1) no irrigation, (2) only surface water, (3) only bore well, and (4) both surface water and borewell.
These community organizations include cooperatives, farmer’s associations, trade unions, welfare organizations, cultural organizations, sports organizations, and current/past panchayat membership.
Specifically, we ask respondents two questions: “How often do you read/listen/watch [state/national] news?” The scale is 1–7, with higher values indicating more exposure. The “news exposure” variable is the average of these two variables, which are highly correlated.
Given that we found a robust association between national trust and perceived policy importance, in Section A7, we further scrutinize the patterns for samples split by the level of state trust. We see little evidence for different effects on electricity policy preferences, but for diesel policy preferences, the effects are driven by farmers with middle and high levels of state trust.
We note that pump ownership may itself may be dependent on access to surface water and surface irrigation, so we caution generalizing from these analyses to regions in India with more extensive networks of canal-fed irrigation.
In Section A8, we analyze the association between national trust and state-specific policy preferences conditional on state trust. We see a uniform pattern for Bihar, whereas in Gujarat and Rajasthan, the positive association between national trust and preference for electricity policy depends on the middle level of state trust. This lack of consistency probably reflects the fact that Prime Minister Modi’s party, the BJP, is also the party in power in the state governments of Gujarat and Rajasthan.
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Acknowledgements
We thank the Cross-Cutting Initiative at Earth Institute at Columbia University for funding and MORSEL India for data collection. We are grateful to seminar participants at Princeton University, Brian Blankenship, and Ram Fishman for helpful comments. Vijay Modi and Tushaar Shah contributed to the study design. The full survey data and survey instrument, as well as all code necessary to replicate the results in this manuscript are available on Dataverse here: https://doi.org/10.7910/DVN/IJKAUR.
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Alkon, M., Urpelainen, J. Trust in Government and Subsidy Reform: Evidence from a Survey of Indian Farmers. St Comp Int Dev 53, 449–476 (2018). https://doi.org/10.1007/s12116-018-9266-1
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DOI: https://doi.org/10.1007/s12116-018-9266-1