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Fiscal Incentives for Conflict: Evidence from India's Red Corridor

Abstract : Can tax regimes shape the incentives to engage in armed conflict? Indian mining royalties benefit the States, but are set by the central government. India’s Maoist belt is mineral-rich, and States are responsible for counter-insurgency operations. We exploit the introduction of a 10% ad valorem tax on iron ore that increased royalty collections of the affected states by a factor of 10. We find that the royalty hike was followed by a significant intensification of violence in districts with important iron ore deposits. The royalty increase was also followed by an increase in illegal mining activity in iron mines.
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https://halshs.archives-ouvertes.fr/halshs-02921132
Contributor : Caroline Bauer <>
Submitted on : Saturday, December 12, 2020 - 2:28:17 PM
Last modification on : Friday, July 2, 2021 - 10:44:02 AM

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Jacob Shapiro, Oliver Vanden Eynde. Fiscal Incentives for Conflict: Evidence from India's Red Corridor. 2020. ⟨halshs-02921132v2⟩

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