Religious Diversity and Provision of Public Goods in Rural India : Evidence from Village Level Data

India is renowned for its diversity in terms of religion and ethnicity, and this diversity has long been viewed as a potential obstacle to the provision of public goods in rural areas. However, recent studies suggest that religious diversity could also have positive effects on the provision of public goods. In this paper, we use village-level data from India to create a fractionalization index based on the population share of different religious groups. We examine the impact of religious fractionalization on the provision of four types of public goods: roads, drainage, schools, and hospitals. Our results indicate that villages with higher levels of religious fractionalization have better provision of public goods than those with lower levels of fractionalization. This finding suggests that religious diversity can be a source of healthy competition and efficient utilization of resources at the village level, leading to improved provision of public goods. We discuss the possible mechanisms behind these findings and highlight the implications for economic growth and development in rural India