- People in the know would infer the inherent connection existing between the elections and the Annual Budget presented listing out the priorities of the Union Government for the ensuing year. This annual ritual is one of the most keenly awaited exercises are stating the obvious. Moreso, if the Budget happens to be nearer to the national or state elections. This offers an opportunity for the ruling dispensation to impress upon the electorate with intended sops, incentives, and not-so-thinly veiled inducements. Of course, there is the Model Code of Conduct (MCC) monitored assiduously by the Election Commission of India acting as an effective impediment for the Union Government to go ahead with announcing freebies freely.
PC: Hemant Singh
- This year too the Budget will be presented even as the five state assembly elections are due in the coming weeks, including the most crucial Uttar Pradesh, amid the EC’s Model Code of Conduct in force. Looking back, the EC in 2017 had forbidden the Government of India from announcing state-specific schemes or broaching achievements relating to the five poll-bound states in the Budget speech. Also, the 2012 Budget infamously known for Pranab Mukherjee’s retrospective taxation fiasco, was postponed to Mar 16 for state polls to conclude. Note that the EC has not issued specific directions this year like 2017 though MCC’s usual strictures against announcing any financial grants or promises that have the effect of influencing voters should still apply.
- Nonetheless, elections have other effects on Budgets, and most importantly usher in much-needed reforms on certain ailing sectors. For instance, poll-bound UP’s and Punjab’s electricity commissions 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. Thus, it is almost certain Budget will steer clear of signaling anything on electricity reform. Interestingly, sometimes election Budgets do the other thing – when MCC is not in force, they give generous doles.
PC: WHO
- Look not far than the Congress’s 2008 Budget – general elections were in 2009 – that announced the farm loan waiver. That particular sop was thought to have helped Congress come back to power. However, 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 at the hustings. It’s a no-brainer that sops alone cannot win elections, and sometimes elections can be won even without competing on giving the best sop. A case in point is the election year 2019 when Congress came up with the basic income transfer scheme, NYAY.
- However, BJP’s Budget proposed a limited income transfer scheme to farmers. BJP won a thumping majority, thanks to other factors. Remember, BJP also won in 2019 despite elections being held in the middle of slowing GDP growth. Do not conclude that the economy is irrelevant. It is extremely relevant most times because it is one of the defining factors determining how voters feel about themselves against existential challenges. Crucial factors like job losses and rising inflation do matter testing the economy-election hypothesis to the core. Results of the ensuing elections will reveal this bare.
