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Budget 2013: Austerity could defy pre-election history

Finance Minister P Chidambaram could defy history if he presents a largely austere Budget on February 28, ahead of general elections next year.
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Budget 2013: Austerity could defy pre-election history

Finance Minister P Chidambaram could defy history if he presents a largely austere Budget on February 28, ahead of general elections next year.

A Standard Chartered analysis shows that since the 1990s, spending invariably rises in the two years leading up to a general election.

For example, the government during 1991-96 cut average real expenditure by an annualised 4 per cent in the first two years of its term, but raised it by 3.6 per cent in the final three years, according to Stanchart.

The trajectory was similar for the governments in power from 1999-2004 (2.8 per cent versus 9.0 per cent) and 2004-09 (-1.9 per cent versus 14 per cent), the lender says.

The biggest welfare move expected in the current budget is the food security bill, which will likely raise annual food subsidies to Rs 1.12 lakh crore from Rs 75,000 crore now, a hike of almost 50 per cent, Stanchart predicts, quoting government estimates.

Copyright @ Thomson Reuters 2013



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