Social Identity

Political reservation in India: The effect on poverty

  • Blog Post Date10 December, 2012
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Nishith Prakash

University of Connecticut

nishith.prakash@uconn.edu

Over the last 60 years, India’s Constitution has set aside seats in parliament for people from historically discriminated groups, the Scheduled Castes and Scheduled Tribes. This column documents one of the first studies to quantify the effects of this policy on poverty. It finds that while more politicians from Scheduled Tribes help to reduce poverty, politicians from Scheduled Castes have no overall effect.



Affirmative action or ‘positive discrimination’ is met with controversy wherever it goes. In India, the debate is particularly fierce surrounding the issue of ‘political reservation’ – or in other words the initiatives to increase representation of minority groups in politics. According to those in favour, such action may result in increased opportunities for groups that have been historically discriminated against. According to those against, the benefits all go to the elite of a disadvantaged group who hardly need support anyway. A further problem is that the policy may place minorities in situations they are not prepared for.

Our recent study adds to the body of work on affirmative action policies by looking at the effect of these programmes on poverty. To do this, we use data from India broken down by state and by year from 1960 to 2000. It is especially important to assess the effectiveness of these policies on India because India accounts for one-third of the world’s poor and a major focus of policy interventions has been to alleviate poverty. Over the last 60 years there has been a rapid decline in poverty, and it is an open question whether affirmative action policies have contributed to this decline. Despite this, there has been little research on the effect of these policies on overall poverty.

Scheduled Caste, Scheduled Tribe

India is known to have one of the most aggressive affirmative action policies in the world. The Indian Constitution recognises that two groups, scheduled castes (SCs) and scheduled tribes (STs) have historically been excluded from Indian society1. In order to correct for past discrimination, these groups now have a reserved share of seats in the state legislative assemblies. Specifically, each state much set aside a share of the number of seats equal to the population share of SC and ST. In our research, we take advantage of the specific rules about the number of seats to be set aside in order to estimate the effect of minority representation in the state legislative assembly on overall poverty.

In theory at least, this policy can have either a positive or negative effect on poverty. Some research finds that minority reservations shift policies and public expenditure towards minority populations. This shift will clearly benefit at least some minorities and has the possibility of helping non-minorities as well. But it is also possible that the benefits of these policies will be captured by the elite members of disadvantaged groups who hardly need help anyway or that these policies will have a negative effect on non-minority groups that outweighs the positive effect elsewhere.

Same idea, different results

We estimate the effect of minority political reservation on poverty using data from the 16 major Indian states over the period 1960-2000. Our main results indicate that minority political reservation reduces poverty. However, the entire reduction in poverty can be attributed to the political reservation for STs alone, as SC reservation appears to have no impact on poverty. Increasing the share of seats reserved for STs by one percentage point, reduces poverty by 1.1 percentage points. This effect is greater in rural areas than in urban areas, and seems to benefit both individuals near the poverty line and those far below it. Our study thus provides the first evidence that minority political reservation not only advances minorities, but decreases overall poverty as well.

At first glance, it may seem surprising that SC and ST reservation has different effects on poverty. However, given that SCs are groups with low social and ritual standing, while STs are distinguished by their tribal culture and physical isolation, we are able to look at some of the reasons that might explains why the effect is different.

  • First, the geographic concentration and isolation of STs may allow public resources to be targeted directly to them without difficulty. This is in contrast to SCs, who are distributed evenly throughout the state and rarely represent a majority in local communities. However, we test this hypothesis using an isolation index, which measures the probability that the average minority in any given state will meet another minority. We do not find evidence that poverty reduction increases when minorities are more geographically concentrated.
  • Second, we explore the fact that STs tend to live in less diverse communities, while member of SCs tend to integrate more. The less diverse ST communities may provide a better opportunity for targeted policies to reduce poverty (Alesina et al. 1999, Miguel and Gugerty 2005). By looking at the effect of political reservation by caste fragmentation, we find that the effect of having more SC politicians on poverty is lower when there is a more diverse community of castes. The same is not true of ST politicians, though this is less not surprising as they are not part of the Hindu caste system and therefore not affected by caste fragmentation.
  • Lastly, we examine the effect of STs having more dedicated support for the Congress Party. The Congress Party has an anti-poverty stance that dates back to 1971 when Indira Gandhi campaigned for prime minister under the slogan “Garibi Hatao” (Abolish Poverty). Given this policy stance and the loyal support from STs, this seems a natural reason for the large effect of ST reservation on poverty. Using measures of support for the Congress Party based on the share of reserved seats won by the Congress Party in the lower Parliament (Lok Sabha), we find that ST reservation is more successful in reducing poverty when there is strong support for the Congress Party.

Further, we explore the effects of the 73rd and 74th constitutional amendments which grant representation for minorities in local government beginning in 1993. In line with our previous results, we find that SC reservation has no effect on poverty before or after 1993. ST reservation, however, leads to larger decreases in rural poverty following the 1993 amendments. Thus the 73rd amendment in particular, which implied a decentralisation of power and required local minority representation in rural areas, increased the ability of ST reservation to reduce poverty.

Positive results – and unintended ones

Overall, this research is the first to quantity the impact of an affirmative action policy on poverty and one of the few to estimate the overall impact. We find that in the period 1960-2000, SC political reservation had no impact on poverty, while ST reservation decreased both the level and intensity of poverty. The positive impact of ST reservations on not only minorities, but the poor in general is in contrast to the typical belief that affirmative action policies only benefit individuals towards the top of the distribution. It is also significant that a similar policy, SC political reservation, has no impact on poverty. This implies that broad affirmative action policies may result in unintended consequences, and each situation should be examined thoroughly based on the specific circumstances.

1. India’s Scheduled Castes and Scheduled Tribes are groups of historically disadvantaged people who have been given express recognition in the Constitution of India.

Further reading

  • Alesina, Alberto, Baqir, Reza and William Easterly. "Public Goods and Ethnic Divisions" Quarterly Journal of Economics, November 1999, 114 (4), pp. 1243--1284.
  • Miguel, Edward and Mary Kay Gugerty. "Ethnic Diversity, Social Sanctions, and Public Goods in Kenya." Journal of Public Economics, 2005, 89, pp. 2325-2368.
  • Chin, Aimee, and Nishith, Prakash. “The Redistributive Effects of Political Reservation for Minorities: Evidence from India.” Journal of Development Economics 2011, 96(2), 265-277.
  • Note: This is based on Chin and Prakash (2011). The author thanks Aimee Chin for comments and Elizabeth Kaletski for research assistance.
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