October, 2012

Independent Judiciary and Rent Seeking: Evidence from the Indian Constitution

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Economists have argued that an independent judiciary will enforce legislative bargains with interest groups beyond the legislative term, increasing the durability of rents and transfers, and thereby increasing rent seeking. This research is inconsistent with the Indian experience, where an independent judiciary blocked wealth transfers and rents. In response, the Indian Parliament suspended independent judicial review for a list of preferred legislation, called the Ninth Schedule, enabling wealth transfers and rents through constitutional amendments. In this paper, I provide a general framework to analyze the role of an independent judiciary in rent seeking to explain the Indian experience. Using evidence from Indian legislative and constitutional history, and the legislation in the Ninth Schedule, I show that it is not the independence of the judiciary in isolation; but the constellation of constitutional rules enforced by an independent judiciary, that determines the amount and durability of rents and wealth transfers.

 

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