The Political Economy of Informal Institutions in India

Abstract

This paper examines how Hindu monastic institutions (mutts) shape local development and politics in the Indian state of Karnataka. I assemble a new geocoded dataset on 253 mutts and link it to subdistrict and constituency-level panel data from SHRUG. Exploiting pre-1990 mutt exposure and the timing of economic liberalisation and democratic decentralisation in a difference-in-differences design, I show that mutt-exposed areas experience faster structural transformation out of agriculture, with larger gains in nonfarm and skilled employment. These areas also build more secondary schools, colleges, and student hostels per capita and exhibit tighter electoral competition.