Peer review

A perverse consequence of having decentralized local governments in developing countries is the misuse of public office for private gains by local leaders. This leads to a type of political elite capture where resources are diverted from the rest of the society towards the ones with political power. A large body of literature has explored such elite capture in terms of illegally apportioning benefits of public welfare programs but the possibility of such elite capture in access to energy sources, such as electricity and liquefied petroleum gas (LPG), has not been studied. Using a nationally representative household survey data from India, we find corroborative evidence that households with political connections, or elite households, are more likely to have access to energy utilities compared to the non-elites. We use linear and non-linear regressions as well as propensity score matching methods to estimate these effects by controlling for a host of observed demographic characteristics as well as time-invariant regional characteristics. We do not find evidence of illegal access to electricity among elites. However, for access to LPG we find that the major mediating channel is the black market. We also find heterogeneity in elite capture effects such that rural areas are more prone to capture and caste-based social networks facilitate leveraging the political connections better. Our findings have important policy implications and provide a rationale for recent government policies where direct transfer of welfare scheme benefits are being made to intended recipients, to avoid capture by bureaucrats and elites in a thrust to eliminate the role of middlemen.

Text in English