Can elections be the required stimulus for the economy??

Recession is slowly but steadily strengthening its grip onto our economy. Threats like fear of more job losses, further downside in stock markets, slowing demand, depreciating rupee still looms large on us. The government has reacted by introducing various stimulus packages and by giving sector specific sops but such is the effect of the slowdown that nothing seems to be working.

However there is a glimmer of hope! Well that’s what it looks like keeping in mind the timing of the Elections. The government efforts coupled with the timing of the elections might as well be the required fuel to re-ignite the economy.

Remember the election campaign always comes in with a huge inflow of funds by the various political parties involved in it. The resultant effect would be increase in spending and this in turn is going to trigger a lot of activity across different sectors.

Many industries like automobile, telecom, hotel, advertising etc. stand to benefit from it directly. Apart from the direct benefits the indirect benefits would be through increase in fuel consumption, food and beverages, electronics (through increase in demand for audio/visual equipments).

Few IT companies also stand to benefit from it especially with technology having the ability penetrate deeper and thereby increasing the effectiveness of communication.

A direct indication of the positive impact is the good numbers posted by the automobile companies for the month of January. A part of the increase in the sales figures of these auto makers can be attributed to the direct effect of the build up to the election. High end cars, SUV's and multi-purpose vehicles will find a lot of favour with politicians especially with election campaigns involving a lot of travelling especially to remote places. A similar effect is bound to happen in other sectors and this might just be a precursor to the positive effect election might have on our economy.

There is a chance that current election coupled with the stimulus packages introduced by the government might correct the situation and put our economy back in track.