When NPM Meets Local Politics: Political Economy of Urban Water Supply Reforms in India

Abstract

ABSTRACT This study examines whether political alignment—defined as elected representatives at different tiers of government belonging to the same political party or coalition—and political competition shape the implementation and performance of a New Public Management (NPM)‐based urban water supply reform in Nagpur, India. We capture reform implementation using status of capital works and performance is evaluated through indicators of financial sustainability—measured by households' willingness to pay (WTP) water tariffs—and water service delivery outcomes. We capture political alignment and political competition by matching municipal election data with a unique household survey and estimate outcomes using multinomial logit and inverse probability weighted regressions. The findings show that political alignment and higher political competition are associated with faster completion of capital works and improved service delivery. However, these gains coexist with lower WTP water tariffs. Thus, NPM‐oriented reforms remain deeply embedded in local political contexts in developing countries with politics simultaneously enabling implementation and service delivery, and constraining financial sustainability.