Subtle corruption in India has increased the chances that roads meant to connect isolated areas to the rest of the country would never be built, even though the government had paid for them, a study has found.
Researchers at Princeton University in the US and the Paris School of Economics in France used an innovative technique to examine the Pradhan Mantri Gram Sadak Yojana (PMGSY) - a major road-building programme in India.
The study, published in the Journal of Development Economics, found that almost 500 all-weather roads listed in the road programme's monitoring data as having been completed and paid for were never built.
The researchers connected these "missing roads" to "political corruption" - specifically, to local politicians steering road contracts to favoured businesses in their own social networks.
"Our results indicate that corruption in this programme directly harmed the 857,000 villagers whom the missing roads were meant to serve," said study lead author Jacob N Shapiro, professor at Princeton.
PMGSY is a vast public works programme started in 2000, when the Indian government estimated that more than 300,000 villages across the country were not connected to the outside world by all-weather roads.
The results were surprising because PMGSY had been designed with strong controls to prevent political corruption, the researchers said.
The proposed new roads built under this programme were intended to provide village residents with previously unavailable economic opportunities, and facilitate their access to government services such as education and health care, they said.
However, if contractors took the money but failed to build the roads, those benefits would never materialise, they said.
To seek evidence of corruption, Shapiro and his colleagues looked at thousands of elections for members of the legislative assembly, or MLAs.
After such selections, they analysed the degree to which road-building contracts shifted to contractors who shared the new MLA's surname.
Since Indian surnames are closely linked to caste, religion and geographic provenance, surnames serve as a proxy for the politicians' social networks, researchers said.
They found that after a close election, the share of contractors whose surname matched that of the political winner rose more than 75 per cent, from about four per cent to about seven per cent.
Next, examining data for almost 90,000 roads contracted by PMGSY, Shapiro and his colleagues sought roads that had been paid for but apparently did not exist.
"We found that road contracts allocated to politically connected contractors were significantly more likely never to be constructed," Shapiro said.
"While the programme as a whole appears to have been extremely efficient, political influence clearly led to lower-quality execution," he said.
Researchers said in PMGSY contractors were to submit separate technical and monetary bids; only if they could meet the technical specifications were their monetary bids opened, and the lowest bidder was to receive the contract.
Local politicians were given no role either in selecting contractors or in choosing where roads were to be built - decisions that were made by bureaucrats at the regional level.
One possibility is that the winning politicians' social networks also include connections within the regional bureaucracy that awards the road contracts, and that they ask those connections to put a thumb on the scale to favour one contractor over another, researchers said.
They found when the highest-ranking district official overseeing PMGSY also shared the winning politician's surname, favouritism in the awarding of contracts was more likely.
On the other hand, when bureaucrats were up for promotion and thus facing heightened scrutiny, corruption was less likely, researchers said.
These patterns were exactly what the researchers expected to see if MLAs were influencing contracts through informal bureaucratic connections.