Does Local Urban Governance Status Matter? Evidence from India

We exploit quasi-random variation around the multi-threshold criteria used to classify Census Towns (CTs) and focus on settlements near the thresholds that are likely to obtain statutory recognition. Using a local fuzzy regression discontinuity design and a multi-threshold criteria, we show that meeting the CT eligibility in 2001 raises the probability of statutory recognition by 2011. Instrumenting statutory recognition with CT eligibility, we estimate the effects of ULB status on local public goods provision: government schools increase by 13.86 (primary), 7.72 (middle), and 4.89 (secondary) units, healthcare infrastructure expands by 2.53 hospitals and 3.00 family welfare centers, and financial access deepens with 4.09 cooperative banks and 2.84 agricultural credit societies. Community amenities also improve, while sports infrastructure declines by 5.71 facilities, consistent with reallocation of urban land. The corresponding reduced-form estimates are directionally consistent and indicate that crossing the CT eligibility frontier improves public goods provision. Our findings indicate that timely municipalization of emerging urban areas can expand provision of public goods.