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Electionomics: Tug of war between elections & economics

, May 13, 2014, 2 Comments

Elections Economics-MarketExpressSocial science has two fundamental branches i.e. politics and economics. Recently, elections are tempting people to get involve into it, which has divergent the focus from economic scenario. Elections and economics are mutually exclusive variables and still affecting each other.

Elections have contagious effect, spreading across the country on the cost of an economy. Indian economy is anticipated to grow below 5% in FY2013 due to political uncertainty ahead of general elections. However, gloomy economy is not hampering the rate of expenditure on election campaigning. Consensus estimates the expenditure of around $5 billion on campaigning for elections next month, a sum second only to the most expensive US presidential campaign of all time. In terms of utility, consumers are not satisfied with sluggish growth, high inflation rate, lackluster manufacturing performance and other economic indicators in 2013.

In contrast, level of satisfaction is persistently high for the one or the other political party. Each party is ready to provide maximum satisfaction to all consumers either in kind or in cash. Distribution of clothes, beer, food and money during elections cannot solve social problems like hunger, malnutrition, unemployment and poverty. Strong measures are required to provide food security, employment guarantee, equality, inclusive growth and sustainable development in India. Overdose of the Congress Party in the centre led to the diminishing marginal utility among people.

Economists are concerned about current account deficit (CAD) but politicians have no idea about campaigning account deficit (CAD). There is a possibility to reduce economic CAD, while political CAD is difficult to contain in the current scenario. Lower the current account deficit would spur the growth, whereas higher the campaigning account deficit slides down the revenue of the economy which would lead to a stage of depression.

On a global front, volatility among member of the political parties is higher than exchange rate volatility in the economy. Still, all the political parties are concerned about economic conditions and promising for the healthy economy in their manifestoes. If they are capable to handle political environment of the country then they are sufficient of control the economy in a better way. Political improvement is a necessary condition for the economic development.

Elections, Economics & Performance-MarketExpressIn the figure, the blue line is moving upward, implies a dominance of election in India and the red line shows a concern over economic conditions as they are worsening day by day. We expect to reach at a point of equilibrium, where the importance given to elections and economy can be balanced for a sustainable development in the economy. There is a need of economical elections in the country or economy to be elective which is easy to cure.

We should be aware of expenditure is a component of fiscal policy which is funded by our tax money. Economical framework and implementation of that is what India needed for elections. Hosting expensive dinners, creating chaos on the roads cannot grant a victory on an economic cost.

Elections and economics of the country are sailing on the same boat with different directions. Let’s see where the boat would reach at the end of the year. Political crisis outweigh the economic crisis or the other way round.

  • Avneesh

    no wonder ‘economics’ was once called ‘political economy’!!

    • vani aggarwal

      exactly..both works simultaneously!