Nexus Between Political Concentration, Fractionalisation, Fiscal Federalism and Human Development: A State-wise Analysis

This article examines the link between development outcomes and both political concentration and religious polarisation, analysing how the state’s decision-making process operates within the framework of fiscal federalism, with a focus on the Indian states. To evaluate the effects of religious diversity, coalition governments and political concentration on human development, composite indices such as the ‘fractionalisation index’ and ‘polarisation index’ have been constructed. A dynamic panel-data model is applied to explore the causal relationship between political concentration and development outcomes. The results demonstrate a significant inverse relationship between religious polarisation, diversity and human development, along with a notable influence of political concentration on human development. JEL Codes: D72, O53, Z12, O15