Prof. Tariq Thachil: The Politics of Unspent Funds in India’s Municipal Governments

We study a unique form of fiscal dysfunction — persistent budgetary underspending and the accumulation of unspent funds. This problem has been fleetingly noted across several low-and-middle income countries (LMICs), but rarely studied, and is unanticipated by theories of corruption or clientelism. We first document pervasive and growing unspent funds across 130 north Indian small towns over a thirteen year period (2008 to 2020), using hand-coded information from rarely accessed budget documents. Next, we draw on qualitative fieldwork to illustrate low awareness of this pervasive problem among not only citizens, but elected town officials. These finding  motivate an information experiment, fielded on 4076 citizens and 3362 politicians. We find informing citizens increases their willingness to sanction their government along several fronts. We find directionally similar, albeit weaker effects among elected representatives. More broadly, our study suggests the need to pay greater attention to the distinct challenge posed by local government underspending in LMICs like India.