Abstract:-

We study the implications of two historical institutions, direct British rule, and the heterogeneous land tenure institutions implemented by the British, on the disparity in present-day development using district-level data from India. Using nightlights per capita as a proxy for district-level per capita income, we find that modern districts that were historically under direct British rule had significantly less nightlights per capita in 1993 relative to modern districts that were historically under indirect British rule. The large gap persists even after including correlates of development such as educational attainment, health, and physical and financial infrastructure. Looking at the growth pattern from 1993 to 2013, directly ruled districts had a lower annual growth rate compared to indirectly ruled districts. Much of the development gap between areas under the indirect rule and direct rule can be accounted for by the adverse effect of landlord-based revenue collection systems in the directly ruled areas.
(joint with Karan Talathi)