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MOSL: ECOSCOPE-Are governments really profligate in election years? Low food inflation has not necessarily been good for ruling governments

ECOSCOPE: Are governments really profligate in election years? Low food inflation has not necessarily been good for ruling governments

An analysis of fiscal accounts in the past four general election years (FY99, FY04, FY09 and FY14) suggests two things. First, the belief that the center or individual states are profligate during election years is unfounded. Second, the ruling governments at the center have won the elections when spending growth was higher than budgeted (in FY99 and FY09) and lost the elections when spending growth was lower than budgeted (in FY04 and FY14). This, however, does not hold true for individual states.

Also, the common notion that governments (the center or individual states) breach the fiscal deficit target during election years is unfounded. The center actually showed fiscal conservatism in two of the four instances, overachieving the deficit targets in FY04 and FY14, while there is no uniformity among individual states.

Finally, lower (higher) food inflation does not necessarily benefit (hurt) the ruling government in terms of the election outcome. The
ruling government retained power in FY99 and FY09 amid (very) high inflation and lost in FY04 when inflation was really low. However, the ruling government lost amid high inflation in FY14.