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John Samuel Raja D: Here's the stimulus

John Samuel Raja D  |  New Delhi 

Economists and industrialists who’re upset that the government isn’t spending enough to stimulate the economy — a 5.5 per cent fiscal deficit, apparently, isn’t enough! — have reason to celebrate. With the elections due in another few months, Goldman Sachs estimates official spending by political parties could be around $400 million, and unofficial spending (beyond the limits imposed by the Election Commission) could be several times that. If you assume candidates spend five times what’s allowed, that’ll take the total spending to around $2 billion.

While that represents around 0.2 per cent of GDP (and around one per cent of the total spending in the budget), its true impact will be felt in its intensity, given that it will be spent within a matter of weeks. That’s great news for transporters, advertisers, event-management firms and, of course, the media. And if, as is expected, there is an unstable Third Front government that is sworn in, another election, and more spending, could once again be in the offing. A sobering thought, though, is where the money comes from — political funding by companies, after all, is often the result of cosy deals struck between them and politicians.

First Published: Thu, February 19 2009. 00:32 IST