Confidence in State and Rural Local Governments in India Aditi Singhal * Sugata Bag † Abstract Performance of political institutions (governments), working at different levels of the hierarchy (centre, state and local), are important to determine the health of the democracy and in breeding confidence in each one of them. Satisfaction from and effectiveness of these political institutions can be reflected in the perception of the voters and therefore, also in the level of confidence that public has in each one of them. Public confidence in them also acts as an empowering influence as it enables the government to engage in greater policy innovation and risk taking. While, low level of public confidence, threatens the authority and stability of a government. This study delves into the inter-linkages between having confidence in political institutions, working at different levels of the hierarchy. The analysis in this paper makes use of simultaneous equations model in order to analyse the inter-linkages between confidence in state government and in rural local government (known as Panchayats), in case of India. Results from the analysis suggests that the level of confidence and faith in local level institutions have a significant positive causal effect on the confidence in higher level institutions which highlights that the experience of the citizens with the lower level institutions creates an impression of the efficacy of higher level institutions. * Ph.D. Scholar, Department of Economics, Delhi School of Economics, University of Delhi, India. Contact: aditisinghal@econdse.org † Assistant Professor, Department of Economics, Delhi School of Economics, University of Delhi. Contact: sugata@econdse.org