Trust in Government and Subsidy Reform: Evidence from a Survey of Indian Farmers

What accounts for the persistence of inefficient subsidies? What are the obstacles to their reform? We examine the role of trust in government among farmers in explaining support for reforming India’s energy subsidies. The subsidies under study hold back efforts to provide a reliable supply of agricultural power and contribute to the unsustainable extraction of groundwater. This water-energy nexus in rural India represents both a poverty-perpetuating policy equilibrium and a crisis in environmental governance. Informed by interviews and focus groups, we conduct an original survey of 2010 farmers in Bihar, Gujarat, and Rajasthan and analyze this data on the preferences of “vested interests”—those most affected by potential reform—to demonstrate the crucial role of political trust, especially trust in the national government, in predicting farmers’ political support for reforms. Our findings have practical implications for environmental governance and rural development and contribute to understanding the political economy of social policy reform in a developing democracy.