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election & budgets economic condition are more important|myshopscart

The Union Budget Elections & budgets:Economic conditions are more important this year will be presented while EC’s Model Code of Conduct is in force across five states, including India’s most populous one, UP. In 2017, EC had forbidden GoI from announcing state-specific schemes or broaching achievements relating to the five poll-bound states in the Budget speech. The 2012 Budget, now infamous for Pranab Mukherjee’s retrospective taxation fiasco, was postponed to March 16 for state polls to conclude. This year, EC hasn’t issued specific directions like 2017 though MCC’s usual strictures against announcing “any financial grants or promises” that have the effect of influencing voters should still apply.

But elections have other effects on budgets. For example, UP’s and Punjab’s discoms are among the most debt-ridden. They urgently require reforms worked out for the electricity sector to come into effect. But these reforms are usually unpopular, because they attack subsidies, especially those given to farmers. So, it is almost certain today’s Budget will steer clear of signalling anything on electricity reform. Sometimes ‘election budgets’ do the other thing – when MCC is not in force, they give generous doles. The best recent example is Congress’s 2008 Budget – general elections were in 2009 – that announced the farm loan waiver. That sop was thought to have helped Congress come back to power. But when Congress increased allocation for food security in the 2013 Budget – general elections were in 2014 – and followed it up with a food security law, voters remained unimpressed and the party was thrashed.

The lesson here is that sops alone can’t win elections, and sometimes you can win elections even without competing on giving the best sop. In the election year 2019, Congress came up with the basic income transfer scheme, Nyay. But BJP’s Budget proposed a limited income transfer scheme to farmers. BJP won a thumping majority – thanks to other factors.

However, BJP also won in 2019 despite elections being held in the middle of slowing GDP growth. This should not be seen by parties, including BJP, as indicating that the economy is irrelevant. It’s very, very relevant most times because it is one of the factors that determine how voters feel about themselves. UP polls, being held amidst job losses and rising inflation, will be a test of the economy-election hypothesis.

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